Legality of Electronic Signatures -- CLE Webinar 7.12.16

LegalityofElectronicSignaturesSummer2016ReggieDavisGeneralCounselDamonMinoDirector,LegalIndustry

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Int_WB_AmpYourLegalNPS_06_15_NA

Contents 1.  HostIntroducLons

2.  WhatisaneSignature?

3.  eSignatureLaw

1.  StatutoryAnalysis

2.  InternaLonalOverview

3.  PracLcalConsideraLon

4.  AuthenLcaLon&Security–HowDocuSignworks

5.  Conclusion

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

ElectronicSignaturesareEverywhere,andComeinManyForms

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Anelectronicsignatureisan“electronicsound,symbolorprocess,afachedtoorlogicallyassociatedwithacontractorotherrecordandexecutedoradoptedbyapersonwiththeintenttosigntherecord.”

-15USC7006(ESIGNAct)

Electronicsignaturesdonotneedtolooklikeahandwri3ensignature!

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.

ElectronicSignaturevs.DigitalSignatureAnelectronicsignatureistheproductofanyelectronicmeansofsigning.

AdigitalsignatureistheproductofaspecificcryptographicprocesscalledPublicKeyInfrastructure•  Digitalsignaturesarenotalwayselectronic

signatures,andviceversa

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SigningwithaDigitalCerCficate

DigitalsignaturesareuncommonintheUnitedStates,butaretheindustrystandardinmanypartsoftheworld.

eIDAS paves the way for a unified EU eSignature market

LegiLmizesCloud-basedsignaturesbyremovingsmartcardrequirements

EnforcesPan-EUInteroperability(July1st,2016)

MandatoryAdopLonbyallMemberStates

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

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

“BecausethedocumentsweresignedelectronicallythroughacompanycalledDocuSign,plainLffswereabletoshowthe

precisemomentsthatthesedocumentswerecreated,electronicallydeliveredandsigned.”

Sollnerv.Linton(2014Cal.Super.Ct.July2014)

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.

ANribu?onZulkiewskiv.GeneralAmericanLife

UnderUETA(Michigan),anelectronicsignaturemaybeafributedtoapersonby“anyreasonablemeans”.Here,GeneralAmericanusedacombinaLonofemailandpersonalinformaLon.

IdleconjectureaboutimpersonaLonisnotenoughtoovercomereasonablefactssupporLngafribuLon.

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RecordIntegrity

Adamsv.Quicksilver.Thevendor’ssystemdidnotprotectthesignedrecordagainstpost-execuLonalteraLon,andthepost-execuLonaudittrailmaintainedbythevendorshowedthattwoQuicksilveremployeeshadaccessedtherecorda`eritwasfirstsavedandsubmifedforstorage.

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.

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

BenefitsofElectronicSignature

•  Documentscanbesignedremotely

•  Counterpartscanbesentsimultaneously,buttrackedinasingleworkstream

•  Electronicdocumentscanincluderequiredfields,ensuringthatkeyinformaLonisfilledinpriortocompleLon

•  RealLmeinformaLononstatusofdocuments

•  ReducedcostandhasslebyeliminaLngpaper,mail,couriers,etc

•  Improvedclientexperience•  Lessnon-billableadministraLveLme

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Ques?ons?

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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