November 02, 2020

MONTH-IN-BRIEF: Internet Law & Cyber-Security

Juliet Moringiello, Sara Beth A.R. Kohut

Internet Law

USPTO Releases Report on Artificial Intelligence

By Dredeir Roberts, In-House Counsel at Core States Group and ABA Business Law Fellow

On October 6, 2020, the United States Patent and Trademark Office (USPTO) released a report on artificial intelligence titled “Public Views on Artificial Intelligence and Intellectual Property Policy” (the Report). The Report is the result of USPTO experts examining responses from their August 27, 2019 and October 30, 2019 requests for comments on patenting artificial intelligence (AI) inventions and other intellectual property considerations for AI. Part 1 of the Report focuses on the legal considerations for patenting AI. Part 2 focuses on all other intellectual property protections available to AI technology. The USPTO hopes this Report helps examiners and stakeholders better understand the intellectual property rights available to AI technology.

Ninth Circuit Refuses to Enforce Modified Terms Despite "Change of Terms" Clause

By John E. Ottaviani, Partridge Snow & Hahn LLP

Rachel Stover agreed in 2014 to Experian’s terms of use, which contained a mandatory arbitration provision, and a “change of terms” provision, which stated that she would be bound to future versions of the contract by using Experian’s products or accessing its website.  In 2018, Stover accessed Experian’s website (which contained an exception to mandatory arbitration for Fair Credit Reporting Act (FCRA) claims), then filed a complaint alleging that Experian violated the FCRA for Experian’s alleged failure to clearly disclose to consumers that certain Experian generated credit scores were not industry Fair Isaac scores.  But in Stover v. Experian Holdings, Inc., No. 19-55204 (9th Cir. Oct. 21, 2020), the Ninth Circuit refused to allow Stover to take advantage of the 2018 changes and required her to arbitrate under the 2014 terms.

Experian found itself in the unusual position of arguing that its 2018 terms did not apply to Stover’s claims, because Stover did not review and assent to the new terms.  The Ninth Circuit agreed, citing its 2007 decision in Douglas v. United States District Court for the Central District of California. In that case, the Ninth Circuit held that modifications to an online contract were unenforceable where the customer had no notice of the changes other than website postings. Similarly, in the Stover decision, the Ninth Circuit held that in order for changes in terms to be binding pursuant to a “change of terms” clause in the original contract, both parties to the contract, not just the drafting party, must have notice of the change in terms. Because there was no evidence that Stover had notice of the change of terms when she visited Experian’s website in 2018 and no such allegations in the complaint, the Ninth Circuit held that Stover failed to meet her burden to demonstrate “that the 2018 terms constituted a valid contract between the parties, so the 2014 terms apply,” and mandated arbitration.

The decision is consistent with the Ninth Circuit’s decision in Douglas.  For more on the topic of modifying online contracts, see Juliet Moringiello and John Ottaviani, “Online Contracts: We May Modify These Terms at Any Time, Right?” in the May 2016 issue of Business Law Today.

Justice Thomas Criticizes CDA Immunity Shield

By Roxanne M. Eastes, Young Conaway Stargatt & Taylor, LLP

On October 13, 2020, Justice Clarence Thomas called upon the U.S. Supreme Court to rein in the “Big Tech Liability Shield” in Section 230 of the Communications Decency Act in a 10-page statement following the denial of certiorari in Malwarebytes, Inc. v. Enigma Software Group USA, LLC. Justice Thomas opined that the lower courts have been interpreting Section 230, which gives tech companies broad immunity for filtering content on its websites, too broadly, permitting some of the world’s largest internet companies to escape responsibility for harmful third-party generated content.

While Justice Thomas agreed that the Malwarebytes case was not the right case to examine Section 230, he explained that “in an appropriate case, it behooves us to do so.” The original purpose of the 1996 statute was to protect internet platforms from being held responsible for controversial content that users posted and subsequently be litigated out of business. The Justice reasoned, however, that most of the major internet platforms in existence today did not exist at the time the statute was enacted and that the lower courts had “departed from the most natural reading of the text” and expanded Section 230’s protections far beyond the provisions of the statute. He pointed out that the U.S. Supreme Court had never had the opportunity to interpret the statute, which has recently come under criticism from the President and Congress.

Juliet Moringiello

Commonwealth Professor of Business Law, Widener University Commonwealth Law School

Juliet Moringiello is the Commonwealth Professor of Business Law at Widener University Commonwealth Law School in Harrisburg, PA, where she teaches Property, Bankruptcy, Secured Transactions, Sales, and a seminar on Cities in Crisis. She earned her B.S.F.S. at Georgetown University, her J.D. at Fordham University School of Law, and her LL.M in Legal Education at Temple University School of Law. Professor Moringiello is Chair of the Pennsylvania Bar Association Business Law Section, a Uniform Law Commissioner for Pennsylvania, and a member of the American Law Institute. She is also a Fellow of the American College of Commercial Finance Lawyers and has held several leadership positions in the American Bar Association Business Law Section.

Sara Beth A.R. Kohut

Co-Chair; Cybersecurity, Privacy, and Data Protection Group; Young Conaway

Sara Beth’s practice focuses on advising legal representatives for future claimants in connection with asbestos mass tort insolvency matters and settlement trusts. She has also represented national and local businesses in cases involving intellectual property, corporate and commercial issues in the federal and state courts in Delaware. Sara Beth has advised clients on strategies for protecting intellectual property rights and complying with obligations governing the privacy and security of sensitive data. She currently co-chairs Young Conaway’s Cybersecurity, Privacy, and Data Protection group.