legality of electronic signatures -- cle webinar 7.12.16
TRANSCRIPT
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LegalityofElectronicSignaturesSummer2016ReggieDavisGeneralCounselDamonMinoDirector,LegalIndustry
DOCUSIGNCONFIDENTIAL
Int_WB_AmpYourLegalNPS_06_15_NA
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Contents 1. HostIntroducLons
2. WhatisaneSignature?
3. eSignatureLaw
1. StatutoryAnalysis
2. InternaLonalOverview
3. PracLcalConsideraLon
4. AuthenLcaLon&Security–HowDocuSignworks
5. Conclusion
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YourHostsReggieDavis• DocuSignGeneralCounsel
• “ImpactGeneralCounseloftheYear2016”‒ TheRecorder
• “GeneralCounseloftheYear-2013”‒ SiliconValleyBusinessJournal
• “MostInnovaLveLegalTeam–2012”‒ InsideCounselMagazine
• LiLgaLonPartnerHancock,Rothert&Bunsho`• GeneralCounsel,Zynga• VP&AGC,Yahoo!
DamonMiño• DocuSignDirectorLegalIndustryVer?cal
• ResponsibleforDocuSign’sSoluLonforLawFirms• JD,NorthwesternUniversitySchoolofLaw• CorporateTransacLonAforney• In-HouseIPLicensingAforney• Ariba,3-PAR,LinkedIn,DocuSign
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ElectronicSignaturesareEverywhere,andComeinManyForms
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Anelectronicsignatureisan“electronicsound,symbolorprocess,afachedtoorlogicallyassociatedwithacontractorotherrecordandexecutedoradoptedbyapersonwiththeintenttosigntherecord.”
-15USC7006(ESIGNAct)
Electronicsignaturesdonotneedtolooklikeahandwri3ensignature!
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LegalFounda?onforElectronicContractsandSignaturesCommonLaw(contractformaLonbasedonoffer,acceptance,consideraLon)
LegislaLon
• UnitedStates(stateandfederal)‒ UETA‒ ESIGN
• InternaLonal‒ eIADS(EUregulaLonNo910/2014)
‒ RepealsEuropeanDirecLve1999/93/EC‒ ElectronicTransacLonsAct(UK)‒ UniformElectronicCommerceAct(Canada)‒ 1996UNCITRALModelLawonElectronicCommerce‒ Manymore(60+countrieshavelawsenablingelectronicsignatures)
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UniformElectronicTransac?onsAct(UETA)
• Dra`edbyUniformLawCommission(responsibleforUCC)in1999• ResponsetostatesadopLnginconsistentlawstogovernelectronicrecords
andagreements.• Overlaystatutethatamendsstatelawsorrulesthatrequire“wriLng”or
“signature”• Adoptedquickly,butCaliforniaadoptedwithanumberofexcepLons• Nowadoptedin47states+DC,PuertoRico,VirginIslands
‒ NewYork,Washington,andIllinoisalsohavelawspermiqngelectronicsignaturethataren’tbasedonUETA
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ElectronicSignaturesinGlobalandNa?onalCommerceAct(ESIGN)
• PassedbyCongressin2000• FederalversionofUETA• ConsumerprotecLons
‒ IftheconsumerhasarighttoreceiveinformaLononpaper,itmaybeprovidedelectronicallyonlyifconsumerdisclosurerequirementsaremet
‒ Improperconsumerdisclosuredoesnotrendertheunderlyingcontractinvalid‒ ConsumernoLcerequirementsmirroredinsomestates’implementaLonofUETA
• PreempLonofnonconformingstatelaws‒ LawsconformingtothemodelUETAarenotpreempted
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GeneralRuleofValidity
CentralconceptofUETA,ESIGN,andotherstatelaws:
Asignature,contract,orotherrecordrelatedtoanytransacLonmaynotbedeniedlegaleffect,validity,orenforceabilitysolelybecauseitisinelectronicform.
Nospecifictechnologyorprocessmustbeused,andESIGNspecificallypreemptsanystatelawthatwouldrequireorgivegreaterlegalstatustoaparLculartechnology
PermissiveratherthanproscripLve–nooneisrequiredtodobusinesselectronically,butiftheparLeschoosetodosoitmaynotbedeniedvalidityonthosegrounds
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Interna?onalLandscape
MostCivilLawcountries(includingmostofEuropeandLaLnAmerica)followa“twoLer”approachtoelectronicsignature,modeledonthe1996UNCITRALModellawonElectronicCommerce.
• “Simple”electronicsignatureisadmissibleasevidence,andgenerallysufficientforcommercialtransacLons
• “QualifiedElectronicSignature”mayhaveextralegalweight(suchasapresumpLonofauthenLcity),ormayberequiredforcertainpurposes,suchassubmiqngdocumentstogovernmentagencies.
• QESmustusespecificcryptographictechnologycalledPublicKeyInfrastructure(PKI)• ThePKIprocessinvolvesadigitalcerLficate,whichmustbeissuedbyaCerLficateAuthoritythatis
approvedbythegovernment(orissuedbythegovernmentitself)DOCUSIGNCONFIDENTIAL
MostCommonlawjurisdicLons,includingtheUS,Canada,theUK,andAustralia,followa“minimalist”model,whereelectronicsignaturesarethelegalequivalentofahandwrifensignature.
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ElectronicSignaturevs.DigitalSignatureAnelectronicsignatureistheproductofanyelectronicmeansofsigning.
AdigitalsignatureistheproductofaspecificcryptographicprocesscalledPublicKeyInfrastructure• Digitalsignaturesarenotalwayselectronic
signatures,andviceversa
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SigningwithaDigitalCerCficate
DigitalsignaturesareuncommonintheUnitedStates,butaretheindustrystandardinmanypartsoftheworld.
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eIDAS paves the way for a unified EU eSignature market
LegiLmizesCloud-basedsignaturesbyremovingsmartcardrequirements
EnforcesPan-EUInteroperability(July1st,2016)
MandatoryAdopLonbyallMemberStates
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Prac?calIssuesusingElectronicSignature
LegalSufficiencyvs.Enforceability
• UETAandESIGNanswerthequesLon“isitasignature?”• TheydonotanswerthequesLon“isityoursignature?”‒ AfribuLonwillbeamaferoffact,justasitiswithawetsignature
Evidence
• AdmissibleunderFRE,butsubjecttothesamerules‒ Lorrainev.MarkelAmericanInsuranceCompany,241FRD534(D.Md.2007)
• Electronicprocesso`enprovidesmoreevidencethanapaperprocess‒ TimeandDatestamp,IPaddress,etc.
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Considera?onsinImplemen?ngElectronicSignature
• AremydocumentsexcludedfromESIGNandUETA?‒ Cantheybeelectronicallysigned/recordedundersomeotherruleorstatute?
‒ Probatelaw(electronicwillspermifedinOhio,liflecaselawelsewhere)‒ Courtrules‒ PorLonsoftheUCC
• Howwillourprocessaddress:
‒ ESIGNConsumerConsent(whenitapplies)‒ NoLceandDelivery‒ Signatureprocess–intentandaNribu?on‒ Recipient’srighttoretaincopies‒ Documentintegrityandaudittrails
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Whatisholdingusback?
“Weneedahandwrifensignaturefor…”‒ Proofincourt‒ ‘Important’documents‒ ‘legal’documents
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‒ Consumeragreements‒ InternaLonalagreements‒ Governmentaudits
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Provingasignatureincourt
“Isthisyoursignature,madam?”
Iftheallegedsignerdeniesit,howdoyouproveit?
• Otherevidence
• Witnesses(ifavailable)
• HandwriLngexperts
• MustchallengeopposinghandwriLngexpert
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Whattherealcourtssay
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DocuSignasanExample
250M+TransacLons900K+DocumentsSigned/Day11CourtCasesover12+years0InvalidDocuSignSignatures
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“BecausethedocumentsweresignedelectronicallythroughacompanycalledDocuSign,plainLffswereabletoshowthe
precisemomentsthatthesedocumentswerecreated,electronicallydeliveredandsigned.”
Sollnerv.Linton(2014Cal.Super.Ct.July2014)
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SufficiencyofElectronicSignaturesandRecordsBarwickv.GEICO(2011Ark.128)
ArkansasSupremeCourtrejectedargumentthatelectronicwaiverofmedicalbenefitswasnota“signedwriLng”,ciLngtheplainlanguageoftheArkansasUETA.
ElectronicSignaturesmeetStatuteofFraudswriLngrequirements• Sha3uckv.Klotzbach,14Mass.L.Rep.360(Super.Ct.,Mass.,
December11,2001);• Rosenfeldv.Zerneck,4Misc.3d193,776N.Y.S.2d458(Sup.Ct.,Kings
Co.2004)(butseeVistaDevelopersCorp.v.VFPRealtyLLC,17Misc.3d914,847N.Y.S.2d416(Sup.Ct.,QueensCo.2007)–Signedemailscouldbeusedtoprovetheexistenceofarealestatecontract.
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eCommerce:ClickwrapandBrowsewrapAgreements
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Ftejav.Facebook
Onlinetermsheldtobeenforceablewhere:
• Termspresentedinhyperlinkimmediatelybelow“SignUp”bufon
• SignUpprocessinvolvedmulLplesteps
ThefactthatFacebookdidnotforceFtejatoreviewthetermswasconsideredirrelevant
Jerezv.JDCloseouts
Onlinetermsheldtobeunenforceablewhere:
• TermsofSalewerenotdirectlyreferencedintheorderprocess
• Termswerepresentedonlyonthe“aboutus”page
Thecourtdeterminedthatthecontracttermsweren’t“reasonablycommunicated”
Asageneralrule,clickwrap,wheretheusertakessomeaffirmaLveacLon,andhasreasonablenoLceofthecontractterms,hasbeenenforced.
Browsewrap,wherethetermsareavailable,butnoacLonisrequiredtoacceptoracknowledgethem,aremuchlesslikelytobeenforced.
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ANribu?onZulkiewskiv.GeneralAmericanLife
UnderUETA(Michigan),anelectronicsignaturemaybeafributedtoapersonby“anyreasonablemeans”.Here,GeneralAmericanusedacombinaLonofemailandpersonalinformaLon.
IdleconjectureaboutimpersonaLonisnotenoughtoovercomereasonablefactssupporLngafribuLon.
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RecordIntegrity
Adamsv.Quicksilver.Thevendor’ssystemdidnotprotectthesignedrecordagainstpost-execuLonalteraLon,andthepost-execuLonaudittrailmaintainedbythevendorshowedthattwoQuicksilveremployeeshadaccessedtherecorda`eritwasfirstsavedandsubmifedforstorage.
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OriginalRecordvs.ProofofProcess
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Person v. Google, Inc. The court relied on proof of process as opposed to proof by the document itself to support defense. Bar-Ayal v. Time Warner Cable Inc. Clearly presented agreements will be enforced unless unconscionable. Court accepted a re-enactment of the agreement formation process (where the plaintiff had to click on the Accept button eight times) in order to refute the plaintiff’s claim that he never saw the agreement. Hook v. Intelius Evidence of process alone is sufficient to support a finding that the process used is standard in the industry and produces an accurate result.
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RecentCasesRuizv.MossBros(CACourtofAppeal,December23,2014)
• theCourtrefusedtoenforceanemployer’sarbitraLonagreement,findingthattheemployerdidnotpresentsufficientevidencethattheelectronicsignatureonthearbitraLonagreementwas“theact”oftheemployee
• ThedecisionreflectedthatauthenLcaLonmustbeproven(justasitmustwithapapersignature),butstatesthattheburdentodosois“notgreat”
J.B.B.InvestmentPartnersv.Fair(CACourtofAppeal,December30,2014)
• theCourtheldthatthedefendant’stypednameinanemaildidnotconsLtuteanelectronicsignatureunderUETA,becausetherewasnodemonstraLonthatheintendedtoenteranagreementelectronically
• TheCourtacknowledgedthatconsenttodobusinesselectronicallyneedn’tbeexplicit,butitmustbeprovednonetheless
ThekeylessonfromthesetwocasesisthattheformaliLesmafer.Failuretokeepadequaterecordsorobtainproperconsentcanimpactenforceability
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ANribu?on
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1.SignerIden?ty
IDCheck
ElectronicNotary
Industry-LeadingChoiceofAuthen?ca?onOp?ons
EnterpriseAdd-OnStandardMethod
AccessCode
SMS
Phone
ThirdParty
SocialID
DigitalCerts
Primary MulLfactoradd-ons
EmailAddress
Federated/SSO
DocuSignAccount
KBAorInPerson
2.AuditTrail
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BenefitsofElectronicSignature
• Documentscanbesignedremotely
• Counterpartscanbesentsimultaneously,buttrackedinasingleworkstream
• Electronicdocumentscanincluderequiredfields,ensuringthatkeyinformaLonisfilledinpriortocompleLon
• RealLmeinformaLononstatusofdocuments
• ReducedcostandhasslebyeliminaLngpaper,mail,couriers,etc
• Improvedclientexperience• Lessnon-billableadministraLveLme
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Ques?ons?
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FAQ(thesearetheoneswehearmosto`enfromlawyers)• WhataboutnotarizaLon?
• E-notaryispermifedinthemajorityofstates,buttherehasbeenverylifleadopLon• onlyVirginiaallowsremotenotary–allotherstatessLllrequirephysicalpresence• NotarizaLoniso`enusedwhennotlegallyrequired.ElectronicalternaLvesexistthatmay
servethesamefuncLonifnotaryisusedforpolicyratherthanlegalreasons• Canagreementsbebackdated?Orsignedinadvance?
• MostesignaturesoluLonsrecordtheactualLmeasignatureeventoccurs.Freeformfieldsmaybeusedtoenteranotherdate,buttheaudittrailwillreflecttherealLmeofsignature
• SoluLonslike“signaturepageescrow”canbeusedtocollectsignaturesinadvance• Howcanweensurethesigneractuallyreadthedocument?
• Howdoyoudoitnow?Noonecanbeforcedtoreadadocument,butyoucanincreasetheodds(orcreatebeferevidence)withpracLceslikerequiringiniLalsnexttokeyterms
• Makesureitisatleastpossibletoreadthem–forexample,ifdocumentsareafachedtoanemail,makesuretherecipienthastherightso`waretoopenthem.
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