Electronic Agents
under the Law
Reconciling the Promise of
Agency Law Doctrine with
Contract, Tort and Property Law
Restrictions on Electronic Agent
Deployment
Some Looming Issues
•Business practice divergence
• Who should utilize electronic agents
• Content providers vs. users
•Substantial transaction efficiency &
marketing opportunity enhancement
captured by e-agents
•Use threatening to web content and
service providers (disintermediation,
“excessive” price visibility)
•However, restrictions on consumer use
of electronic agents have substantial
anti-competitive impact
Laws Applicable to eAgency
•Uniform Electronic Transactions Act
(UETA)
•Electronic Signatures in Global and
National Commerce Act (E-SIGN)
•Uniform Computer Information
Transactions Act (UCITA)
•Other laws potentially governing use
of eAgents
• Tort-tresspass, IP-infringement,
Antitrust
Growing Significance of Electronic Agents
• Relatively new legal concept
• Legal recognition of electronic agents needed to
legitimize emerging electronic commerce methods
(manifestation of mutual assent)
• Common implementation (user interface to process
consumer transactions on business-to-consumer
(B2C) electronic commerce websites)
• Bots offer great potential for customer satisfaction &
economic efficiency, are often denied website access
• Seller implementation of electronic agents
• Buyer implementation of electronic agents
Bots vs. Search Engines
• Bots
•Bots serve as loyal agents for the benefit of the
consumer user
•focus their efforts much more closely on satisfying
only user criteria
•tendency towards personification - the essence of
loyalty expected of a traditional human/humandirected agents
• Search Engines
•significant methodological flaws in the indexing,
ranking and presentation of search results
•search results are also intentionally skewed to rank
some results more highly than would be produced by
objective ranking metrics
•Search engines perform much closer to the original,
primitive conception of electronic agents as mere tools
Bots vs. Search Engines
•Key difference between bots and
search engines
•Bots are more likely to produce
results consistent with primarily
addressing the consumer needs
while search engines are more likely
to produce results biased by their
technical flaws & other sources of
conflicts of interest
Traditional vs. eAgency Law
•UETA envisions that the computer
and information science
communities will continue innovating
to refine electronic agents
•Laws foresee electronic agents may
evolve away from “tools”
•Roles such as negotiation, making
judgments & value assessments
Traditional vs. eAgency Law
• Eventually capable of implementing
negotiation through the assessment
of tradeoffs among various contract
terms
• Computer science & IST
communities are pushing the
envelope of electronic agents to
employ judgment using expert
systems and artificial intelligence
Traditional vs. eAgency Law
• Public Policy Context Electronic Agents
• UCITA & UETA accept agency law
• Each envisions automated, mechanical or
computerized communications
• Act as substitutes for human agents in:
– Negotiation or conclusion of contracts
– Principal is bound by acts of eAgents in same
situations as if human agents used
Electronic Agent under UETA
• Computer program, or electronic or other
automated means
• Used by a person to initiate an action or
respond to electronic messages or
performances
• On the person’s behalf
• Without review or action by an individual
• May manifest assent to a record or term after
an opportunity for review
Automated Transactions
• Contracts formed without human intervention
by one or both parties
• Assent may occur after eAgent starts
performance
– Delivery of licensed information or
– Making a payment due
• Enabling review - communication must be in
form that reasonably configured eAgent could
be technically capable of using
Role of Humans vs. eAgents
• eAgents are semiautonomous
– Humans generally write & configure underlying
software
– Humans & firms are principles benefited by
eAgent activities
• eAgents may
– Perform preliminary negotiations
– Information delivery & discovery
– Create contracts through mutual assent
• Offer, acceptance, document processing
– Performance of contracts
• Deliver electronic performances, incl Payments
• Document processing
Bots
• Shopping bots scour web info on goods given
human’s predetermined specifications
• Can site limit information discovery?
– Consumers approach “perfect info”
– Auction or shopping sites consider listings are
proprietary data
• eBay v. Bidder’s Edge (N.D.Cal.2000)
– Bots trespass w/ continually requests for listing
updates
– Do “terms & conditions” of website use prevent
automated comparison shopping?
Why are ‘Bots Important?
• ‘Bots Share Information Advantages
Traditionally Held by Primary
Aggregators with Secondary
Aggregators for Shopping Benefit of
Clients
• ‘Bots Focus Search Engine
Technology and Legal Rights on
Databases
– Impact Rights to Post and Aggregate
Content
Why are ‘Bots Important?
• Emerging Legal Issues Span Various
Fields
– Tort, Intellectual Property, License Assent &
Restrictions, Consumer Protection,
Antitrust, eAgency
• Expect Significant Impact of ‘Bots &
Regulation on:
– Content Aggregation, P2P Technologies &
Markets, Monitoring Website Infringement,
Automated Bargaining
Economic Impact of Bots
• Perfect Competition Model & Efficient
Markets Presume Perfect Information
• ‘Bots Rely on Network Effects to
Reduce Search Costs, Increase
Comparisons, Approach Perfect Info
• ‘Bots Facilitate “Bidding Profits to Zero”
– But, shopper’s price-tunnel vision arguably
ignores relevance of service
• Information Asymmetries Undermine
Market Clearance, cause Adverse
Selection
What are Sustainable Business
Model(s) for Bots?
• Bot Innovation Unsustainable w/o Effective Revenue
Model
– Innovation constantly needed to refine search, retrieval,
analysis & retain unfettered data access For Free then Fee
once Audience is Captivated
– Online Infomediary or Personal Shopping Asst.
• Fee for Service
– Fixed/Variable per transaction, metered as what?!?
– Micro-Payments would permit initial growth
•
•
•
•
Subscription Model
Eyeballs & Ad referrals enable mass personalization
Slotting Preferences
PII Profiling for Resale
‘Bots are Subset of Search
Engine Architecture
• ‘Bots have Many Operations & Legal
Issues Similar to Search Engines
– EX: IP, Affiliation, Linking, Framing, Caching
• Shopping Bot a/k/a/ Crawler, Spider
• Autonomous Software Performs Search,
Selection, Arrangement, Analysis, Linking
• Low Cost, Operates in Representative
Role, Functionality Enabled by Network
Effects
Disincentives to Tolerate
Uncontrolled Bot Activity
• Bots Could “Bid Profits to Zero”
• Historical Reluctance to Revealing
Proprietary Information
• Game Theory: Bargaining Strength
Compromised
• Direct Comparisons: Sales Lost to
Competitors
• Eyeballs Diverted from Preferred Order of
Impressions
• Bots Maliciously Invade Server Space
– Could be indistinguishable from hack/attacker
Three Models of ‘Bot
Interaction for Content Sites
• Benign Tolerance
– Broaden exposure, increase traffic & sales
• Cooperative
– Negotiate linking agreements & ‘Bot
affiliation, slotting fees – these approach
form as distribution agreements
• Hostile Opposition
– Active technical & legal maneuvers to
prevent ‘Bot probes, internalize value of
postings, suppress non-competitive terms
Are Bots Cyber-Trespassers?
• Trespass to Chattels, Land or Sui Generis
• CompuServe v. Cyber Promotions, 962 F.Supp.1015
(S.D.Oh.1997) (spam is trespass)
• Thrifty-Tel, Inc. v. Bezenek, 46 Cal.App.4th 1559 (1996)
(misappropriation of long distance service)
• eBay v. Bidder’s Edge, 100 F.Supp.2d 1058
(N.D.Ca.2000) (PII, trespass, site congestion)
• Register.com v. Verio, 126 F.Supp.2d 238 (SDNY 2000)
(enjoined extraction of WHOIS info from dom. name
registrar, congestion)
• Ticketmaster v. Tickets.com, (C.D.Cal.3.27.00)
• Computer Fraud & Abuse Act, 18 USC §1030
• Intel v. Hamidi (Cal.S.Ct.2003) (no trespass to chattel
unless email harms target computer server)
Do Bots Infringe IP?
• Kelly v. Arriba Soft, 2002 US App.LEXIS 1786
(9th Cir.2002) (Thumbnails - fair use)
• BT v. Prodigy, (UK patent on hyperlink)
• A&M v. Napster, (contributory infringement,
central database)
• NBA v. Motorola, 105 F.3d 841 (2d Cir. 1997)
(state misappropriation narrowed)
• DMCA anti-circumvention
• Other Linking, Framing & Caching Restraints
• Sui Generis Database Protections (e.g., EU)
Antitrust & Consumer
Protection
• Monopolization of Essential Facility
• Refusal to Deal – bar info access to
‘Bots
• Preventing Price Comparison is
Anticompetitive, Erects Barriers to Entry
• Search Results Biased by Slotting Fees
– Unfair & deceptive trade practice in
obfuscating ‘Bot’s bias
• Non-Objective Search Results AntiCompetitive
eAgents under Agency Law
• UETA, E-SIGN & UCITA Encourage
Equivalence of Electronic Agents
• Disclosure of Principles vs. Agents
– Anonymizer conceals principal’s identity
• Principal’s Rights/Needs to Use Agents
• Third party’s Rights to Refuse to Deal
w/ Particular Agents or Classes of
Agents
Robot Exclusion Standards
• Industry Convention (standard) as respect
method to exclude search engines, bots &
spiders from copying or indexing content
• Defined & Tutorals:
• http://www.robotstxt.org/wc/norobots.html
• http://www.searchengineworld.com/robots/
• http://www.dwfaq.com/Tutorials/Miscellaneous/robot_
txt.asp
• Google’s index avoidance recommendation
• http://www.google.com/webmasters/remove.html
Enforceable Contracts Require
Mutual Assent
• Mutual Assent Arises when:
– Offer, acceptance, consideration, legal
objective, S/F (writing vs. oral)
• Website Terms & Conditions
– Licenses (EULA) are contracts too!
– Enforceability of shrink/click/browse wraps
– Nature of terms included (e.g., adhesion,
waive fundamental rights)
– Robot exclusion?
e-Contracting Departures
from Traditional Practice
• Mutual Assent can be Implied from the
parties’ conduct
• Implication strongest when regularly &
objectively discernable
– EX: everybody expects to pay taxi fare
• Implication weaker in other contexts
– EX: Tickets (cruise, sporting event), claim
checks (pkg., coatroom), open source
(Linux)
e-Contracting Departures
from Traditional Practice
• The 4 Wraps: Shrink; Click; Box; Browse
• Shrink-Wrap Software Agreements
– Accept standardized terms or return to decline
– Pro CD v. Zeidenberg, 86 F.3d 1447 (7th
Cir.1996) (shrink wrap license use
restriction enforceable)
• Increasingly enforceable because ubiquitous
• UCITA mass-market licenses
– Consumer must have opportunity to review &
archive terms
e-Contracting Departures from
Traditional Practice
• Click-Wrap Agreements
– Software licenses appear when
installed
– Specht v. Netscape
• Online license terms accessible before
download & installation of software or
receipt of content
• eAgents “work” for content provider
• Terms in the Box
– Retaining hardware purchase implies
acceptance of software license
– Gateway 2000
Browse Wrap/Click Free
• Mutual Assent implied from mere
browsing
• Everyone surfer knows that there are
terms & conditions for website use
• BUT, stealth terms seldom equivalent to
terms negotiated by market equals, risks
unknown
– Cause surprise, unconscionable, adhesion,
take-it-or-leave-it
• EX: Robot Exclusion Standard?!?