Automation, artificial intelligence and legal issues
By Newyorka Musabelliu and Chris Chang – January 2020 It is not surprising that the law cannot keep up with the growth in artificial intelligence. Patent applications have already been filed on behalf of and in the name of a machine called Dabus that used AI to design two products[1]. Nevertheless, progress is being made regarding law reform in this space. In December 2019 the Australian Law Reform Commission released a report for law reform in connection with artificial intelligence over the next five years[2] and the World Intellectual Property Organization (WIPO) announced a public consultation process on artificial intelligence and intellectual property policy[3]. Below are some of the associated legal issues[4]. Table of Contents Key takeaways The implementation of different types of permanent controls, checks and balances on the AI which cannot be overridden is important given the different types of risks. The ALRC report notes recent commentary and states “appropriate design choices are crucial for automated systems to achieve consistency with concepts such as transparency and accountability; predictability and consistency; and equality before the law” and calls for effective regulation of technological developments. There are doubts as to whether mere principle based regulation will suffice and therefore the task of drafting such legislation will be both challenging and interesting. IP Law There are a multitude of issues to consider in view of the current landscape but, in summary, it is important to ensure the retention of personal control over the creative process and provide the input to at least a substantial part of the end result. Otherwise the risk is that you will lose rights in works authored by AI or jointly authored with AI unless reform addresses this. Reform debate primarily focuses on ownership where the work has been created by AI. Who should own the intellectual property rights (1) no-one (2) the AI, or (3) an interested party such as the producer. The latter is in our opinion the preferred option. In any other scenario this would be unsatisfactory to many businesses who have invested in AI and the fruits of the AI’s labour, including adaptations and compilations etc of those works. If left unaddressed, questions as to whether inventions presently created by AI can be registered as patents by persons other than the AI[5], or whether future applications based on such inventions are in fact already part of the prior art base and do not constitute inventive steps may also arise, and so forth. Who should be responsible for infringement by AI? We suggest the principles of agency law should apply. This question also opens the doors to liability for other positive acts of AI and questions concerning torts to the person for example which, given current advances in AI, is a possibility. Admin Law Even when automated systems are deployed carefully and effectively by government agencies, questions remain as to their compatibility with core administrative law principles and the rule of law. In particular, it is not yet clear whether (or how) such systems can be said to act with procedural fairness. The legality of actions and decisions by public bodies is called into question as is transparency and accountability of government decisions (in particular, whether automated decision-making software can provide adequate reasons that would in turn facilitate access to judicial and merits review where appropriate)[6]. The independent scrutiny of automated systems prior to implementation is already envisaged by the ALRC e.g. by way of algorithmic impact assessment[7] and therefore creators of AI are no doubt already focusing upon how to demonstrate compliance such tests if they havnt already done so. Privacy Law Information handled about individuals may not satisfy the definition of personal information under the Privacy Act 1988 (Cth) if the relevant person is for example allocated a code and is therefore not identifiable. Collection by AI may also occur without knowledge or consent (both of the public and the owner of the AI). Permanent checks and balances are likely to already be in place. Directors’ duties and defences It is important for directors to understand the technology upon which they place any reliance, and any limitations if they intend to rely on the safe harbor provisions contained in s.189 of the Corporations Act 2001 (Cth). Discrimination Studies have shown that inadvertent discrimination may occur in the AI’s implementation of its algorithms. Misuse of big data Other issues raised include the propensity for improper use of big data in the financial sector, and consumer law. The WIPO statement of issues goes into greater detail[8]. Discussion BACKGROUND AND STATUS OF AI As the phrase suggests, “artificial intelligence” (AI) is designed with the objective of imitating human intelligence artificially (and as has been proven, exceeding human intelligence in many ways, in the same way traditional computers have served us for so many years). Human intelligence includes accurate perception, analysis, logic / rationale, the ability to make calculated decisions based on objectives and, ultimately, solve problems. It also includes creativity. Machine learning has been available for years (e.g. for the purposes of electronic discovery in litigation). Algorithms are programmed in machines designed to learn both from large amounts of historic data and through their own, “personal”, experience and evolution, to make accurate predictions. Aside from significant advances in the use of artificial intelligence in the legal sector, we note some other examples of developments in recent times: The advanced use of AI as applied to gastrointestinal diagnostics. In particular, AI has been used in the “automated detection of disease and differentiation of pathology subtypes and disease severity[9]”; In October 2011, Takahiro Yamaguchi and So Kanno explored the link between the machine and art. The “Senseless Drawing Bot” is an autonomous device that sits on a skateboard which draws abstract lines using many colors. The robot moves from side to side, riding the wave of today’s modern graffiti. The lines drawn are complex and create abstract modern graffiti and one would have a difficult time arguing that the same work, if originally created by a human,
Damages for Republication of Defamatory Statement by Third Party
Milne v Ell [2017] NSWSC 555 Home This case serves as a reminder of how liability for defamatory statements can extend to the republication of the statement by third parties, even where the republication has not been expressly authorised (but impliedly authorised). In summary, an original publisher will be liable for the repetition of his or her original defamatory publication, including in altered form where the republication adheres to the sense and substance of the original publication and: he or she expressly or impliedly requested or authorised the repetition of the original publication; he or she intended that the repetition should take place; the repetition is the natural and probable consequence of the original publication; or there is a duty or obligation on the recipient of the original publication to repeat the original publication. The defendant, Mr Ell, originally brought an action for defamation against the plaintiff, Ms Milne and Mr Ell was awarded $15,000 in damages plus costs in 2014. Shortly after the 2014 judgement, Mr Ell was contacted by a journalist to whom Mr Ell said (referring to Ms Milne) “She’s not a fit and proper person to be a councillor…” (Statement). This and other statements were subsequently published by the journalist in a printed article appearing in NSW and QLD as well as online. Ms Milne succeeded in obtaining an award of damages for defamation against Mr Ell arising from the Statement, and its subsequent republication by the journalist. In summary, it was held: Requirement of specificity of pleading imputations: The words “She’s not a fit and proper person to be a councillor…” referring to Ms Milne were sufficient by themselves to give rise to a defamatory imputation (i.e. they constituted an act or condition asserted of or attributed to a person). It was unnecessary for the pleading in the statement of claim to be more specific in the circumstances. Defence of honest opinion / fair comment: The imputation was one which related to a matter of public interest (because it related to whether or not a public officer was a fit and proper person to hold the position). On the question of whether or not the Statement was an expression of opinion rather than fact, the Court is required to examine the context, including whether the imputation is a “bare comment”, denuded of the facts upon which it is based or notorious facts presumed to be known by the reader, or without any of the other elements necessary to substantiate the defence. In the circumstances a reasonable recipient would understand the Statement as a statement of fact and not the offering of an opinion based upon stated facts. Accordingly, because the Statement was not an opinion and was not based upon stated facts, the defence of honest opinion / fair comment did not apply. Republication: The republication of the Statement made to the journalist was the natural and probable result of uttering the words in the Statement to the person (who was known to Mr Ell to be a journalist) and Mr Ell was therefore liable for its republication. In the circumstances of a press conference, or interview by the press, express authority or a request to publish is not necessary. Damages: In determining the amount of damages to be awarded in any defamation proceedings, the court is to ensure that there is an appropriate and rational relationship between the harm sustained by the plaintiff and the amount of damages awarded. The purposes of an award of damages have been described as including: the consolation to the personal distress and hurt caused by the publication; reparation for the harm done to the personal and business reputation of the person defamed; and vindication of the reputation of the person defamed. If there had been no republication in this case then the damages would have been nominal (if any). In terms of the republication, the relevant publication issue had sales of approximately 36,000 newspapers and a readership of approximately 135,000. The online publication also caused additional damage and, in some respects, notwithstanding its withdrawal from the website, it may still be causing damage. The judge also accepted the “grapevine” effect of the publication of the article in print and the broadcasting of the website so that the damage was not confined to those that read the article or opened and/or downloaded the website article. Taking into account the fact that a public apology had been published by the publishers of the article (thereby vindicating Ms Milne to an extent), damages of $45,000 were awarded to Ms Milne plus costs. C
Unfair Contract Term Protections for Small Businesses
BACKGROUND Following public consultation processes, new laws[1] came into force on 12 November 2016 which extended existing consumer protection laws against unfair contract terms to “small business contracts” (e.g. business to business contracts). Under these laws, small businesses can also have an “unfair” term in a “standard form contract” declared as void in specified circumstances. In doing so they would not have to comply with the term. Findings identified in the Explanatory Memorandum to the Treasury Legislation Amendment (Small Business and Unfair Contract Terms) Bill 2015 suggest that, like consumers, small businesses are vulnerable to the inclusion of unfair terms in standard form contracts as they often lack: the resources to identify unfair terms, appreciate their significance and determine whether they can manage the associated risks; the resources to engage in negotiations over the terms of a contract; the bargaining power to successfully negotiate the terms of a contract; and/or the resources and bargaining power to resist the enforcement of unfair contract terms. The stated objective of this reform[2] is to promote fairness in contractual dealings with small businesses with regard to standard form contracts. This will reduce small business detriment and have positive impacts on the broader economy by increasing small business certainty and confidence, and providing for a more efficient allocation of risk. WHEN DOES PROTECTION TO CONSUMERS / SMALL BUSINESSES APPLY The unfair contract terms protection provisions are contained in ss23 – 28 of Schedule 2 to the Competition and Consumer Act 2010 (Cth) (Australian Consumer Law). Section 23 provides that a term of a “consumer contract” and “small business contract” is void if the term is “unfair” and the contract is a “standard form contract”. We do not examine consumer contracts which were protected prior to the amendments but examine the concepts of “small business contracts”, “standard form contracts” and when terms will be considered to be “unfair”. Small business contract In summary, in order for the contract to be a small business contract, each of the following must apply: The contract must be for the supply of goods or services or a sale or grant of an interest in land; At least one of the parties to the contract is a business that employs less than 20 people[3]; and The upfront price[4] payable under the contract is $300,000 or less, or the contract is for a duration of more than 12 months and the upfront price is $1,000,000 or less. Standard form contracts Standard form contracts are everywhere for example IT services contracts, advertising services contracts, mobile phone contracts, licences of office space, gym memberships etc. They are an efficient and effective way for businesses to contract. The Court will take into account any facts that it considers to be relevant however at the time of writing it “must” take into account the following in determining whether a contract is a standard form contract: whether one of the parties has all or most of the bargaining power relating to the transaction; whether the contract was prepared by one party before any discussion relating to the transaction occurred between the parties; whether another party was, in effect, required either to accept or reject the terms of the contract (other than certain excluded terms discussed below)in the form in which they were presented; whether another party was given an effective opportunity to negotiate the terms (other than certain excluded terms discussed below); and whether the terms of the contract (other than certain excluded terms discussed below) take into account the specific characteristics of another party or the particular transaction. Excluded terms: the protection does not extend to terms to the extent that they define the main subject matter of the contract, set the upfront price payable under the contract, or are terms required by law. Excluded contracts: the protection does not extend to contracts which are individually negotiated, or to certain types of contracts such as contracts of marine salvage or towage, a charterparty of a ship, and contracts for the carriage of goods by ship, constitutions of companies or managed investment schemes or other kinds of bodies. After 12 November 2016: The contract needs to have been entered into, renewed or rolled over after 12 November 2016. The law also applies to amendments to contracts after 12 November 2016 but not to the terms which have not been amended. Unfair terms There is a three limb test to unfairness. A term will be “unfair” if: it would cause a significant imbalance to the parties’ rights and obligations arising under the contract; it is not reasonably necessary in order to protect the legitimate interests of the party who would be advantaged by them; and it would cause detriment to a party if it were to be applied or relied on. The Court “must” take into account the extent to which the term was transparent[5] and the contract as a whole. Make sure your print is not too fine! Some prescribed examples of the types of terms which may be unfair are as follows: a term that permits, or has the effect of permitting, one party (but not another party) to avoid or limit performance of the contract; a term that permits, or has the effect of permitting, one party (but not another party) to terminate the contract; a term that penalises, or has the effect of penalising, one party (but not another party) for a breach or termination of the contract; a term that permits, or has the effect of permitting, one party (but not another party) to vary the terms of the contract; a term that permits, or has the effect of permitting, one party (but not another party) to renew or not renew the contract; a term that permits, or has the effect of permitting, one party to vary the upfront price payable under the contract without the right of another party to terminate the contract; a term that permits, or has the effect of permitting, one party unilaterally to vary the characteristics of