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Artificial Intelligence Update – July 2021

July 13, 2021

Challenges with the New California B.O.T. Act

Artificial intelligence has become so advanced that a person may mistake online interactions with computers (a.k.a. “bots”) as interactions with another person.  The use of bots—“automated online account[s] where all or substantially all of the actions or posts of that account are not the result of a person[,]” Cal. Bus. & Prof. Code §§ 17940(a)—is the target of California’s Bolstering Online Transparency (“B.O.T.”) Act, which makes it “unlawful for any person to use a bot to communicate or interact with another person in California online, with the intent to mislead the other person about its artificial identity for the purpose of knowingly deceiving the person about the content of the communication in order to incentivize a purchase or sale of goods or services in a commercial transaction or to influence a vote in an election.”  § 17941(a).  This Act has the potential to generate litigation under various related causes of action. 

Consumer Class Action Litigation

Although there is no private right of action under the B.O.T. Act, this statute may generate class actions alleging violations of other consumer protection statutes based on the behavior prohibited by the B.O.T. Act, such as consumer claims under California’s Unfair Competition Law (“UCL”).  It would not be the first time that courts allow statutes without a private right of action to serve as the “unlawful” predicate acts for claims under the UCL.  For example, courts have allowed alleged violations of the Illegal Gambling Business Act, 18 U.S.C. § 1955, and California Penal Code § 330b, neither of which provide for private enforcement, to serve as bases for actionable claims under the UCL.  

Already, one class action has been filed in New York federal court under the UCL’s “unlawful” prong using the B.O.T. Act as the requisite predicate act.  Plaintiffs claimed that defendant Noom’s trial cancellation process, which is allegedly designed to prevent cancellation and enable automatic renewal, requires consumers to find and communicate with undisclosed bots, a practice that falls squarely within the B.O.T. Act’s prohibition, and therefore constitutes a violation of the UCL.  Defendant Noom moved to dismiss plaintiff’s claim on the ground that it sounded in fraud and did not have the requisite specificity required under Rule 9(b).  Specifically, Noom argued that the BOT Act requires pleading “intent to mislead” and the plaintiff failed to plead this intent with specificity.  These issues remain pending before the court and, to date, no other court has addressed them either.  Given at least one plaintiff’s attempt, other plaintiffs may bring similar claims under the BOT Act. 

In addition to Rule 9(b) challenges, Defendants may be able to raise a variety of free speech defenses, including anti-SLAPP defenses.  They may also be able to quickly defeat these types of actions by relying on immunity under the statute if they have made the requisite safe harbor disclosures that the communications are with a bot.  Making these disclosures is likely the quickest way to avoid (and subsequently defeat) possible actions based on the B.O.T. Act.       

Suits and Discovery Regarding Anonymous Online Activity

One issue that will likely arise is the difficulty in being able to identify the proper defendants when a person is harmed by an online actor or bot.  In this technological era, it has become easier to interact with (and thereby injure) others without revealing one’s identity, such as through the use of a pseudonym or false profile.  The anonymity provided by advancements in technology has enabled actors to perform acts under a false name that they would not otherwise do.  

One potential tool to address this difficulty is filing lawsuits against “Doe defendants.”  In recent years there have been many defamation actions filed against Doe defendants based on anonymous speech on social media.  For example, in California, a person may be able to file a suit against a Doe defendant and use the discovery process to figure out the proper defendant(s).  In Ingrid & Isabel, LLC v. Does 1-10, No. 18-CV-00408, 2018 WL 798883, *1 (N.D. Cal. Feb. 8, 2018), the plaintiff, a patent owner, filed a motion asking the court to let it serve a subpoena on a third party (Amazon) because plaintiff had not been able to identify the Doe defendants allegedly manufacturing and selling products, including through Amazon’s site, in violation of plaintiff’s patents.  Id.  After the plaintiff made the requisite showings, including that the complaint would survive a motion to dismiss, the Northern District of California found good cause and granted a subpoena allowing reasonable, limited discovery necessary to identify the Doe defendants.  Id.  

Litigants seeking to establish a violation of the B.O.T. Act, should be prepared to establish a prima facie case early on in the litigation given the potential challenges that may arise in seeking to reveal the identities of anonymous defendants.  This is important because as part of the strategy resisting discovery of their identities, the Doe defendants may assert other defenses.  For example, they might raise the right to speak anonymously on the internet or other free speech defenses that could defeat the complaint at the motion to dismiss stage.  

The B.O.T. Act aims to protect Californians from being misled by interactions with undisclosed bots into making purchases or voting in a particular way.  Although the statute does not provide a private right of action, that is unlikely to prevent suits based on conduct prohibited by the statute, as evident by the pending Noom case in New York.  Potential plaintiffs need to be prepared to face challenges in establishing a prima facie case and identifying the proper defendants while potential defendants should be aware of steps they can take to minimize their risk of liability, including making requisite disclosures under the safe harbor.