||Doing an online business requires almost the same or potentially higher legal risks as operating in the real world. These risks take many forms like copyright infringement, trademark infringement, copyright ownership, Privacy, liability and intellectual property issues, just to name a few. Professional legal advice from a legal expert is the most important when choosing the structure for your business.
Poornam Media Representatives, Linta Mathew and Kichu Mubarak covered an exclusive interview with David Snead, E-commerce Attorney & Internet Lawyer. He is referred to as Web Hosting’s best-known legal expert. The conversation offers a credible legal perspective on actions in the Web hosting business and general developments in legislation. A special mention and thanks to Neetu Elsa Ninan who helped us to compile a good set of questions. Read through…
Legal knowledge required for starting a business
Kichu Mubarak: I have an idea for an online business. What are the basic rules and regulations that I have to abide by when I start my business? Does the size of my business affect how it is regulated?
David Snead says : You need to start out with the laws of your home country, that every business must follow in starting a new company. You also need to do some investigation to determine whether the business you’re interested in starting is legal in your country. Many countries restrict certain types of businesses. For example, it is illegal in the U.S. to start an online gambling company.
Once you’ve finished the preliminary investigation, you should review how the laws of your country, and the country where your business will be hosted, affect things. You need to look at issues including contract law, on-line liability, warranties, intellectual property, and other similar areas that may be different on-line than they are off.
Linta Mathew : What are the legal considerations that are relevant when I want to make my online business a joint venture at some point of time? What if I want to stop the joint venture at some point of time and continue on my own.
David Snead says : The key issue in a joint venture is to determine who owns what, and how you will unwind the transaction once it finishes. It’s important to remember that no business lasts forever, so it is crucial that you focus on the end as well as the beginning. The most important issue for on-line businesses is to determine how to divide the intellectual property, and any profits that come to the partners after the venture dissolves. These considerations are important anytime a joint venture is considered.
One other point is whether a joint venture is appropriate. While joint ventures are common in many parts of the world, they are much less common in the ten most industrialized countries. Approaching a company in one of those countries about the possibility of a joint venture may be an unwise marketing move.
Choosing the domain name: Legal constraints
Kichu Mubarak: What are the legal implications of choosing a name for my domain?
David Snead says : There is no country in the world that allows you to pick a domain name that infringes the rights of others. You can avoid significant heartache if you choose a domain name that is not similar to anything already out there. Resist the temptation to choose something close to a popular brand or domain name. You will spend money and time defending your decision, and it will be a distraction from your business.
Another important point is to choose something unique. Don’t choose “generic” names that can easily be combined with other names. This will make it easy for competitors to choose similar names, and you will have weak protection of your own.
Security issues in online contracts
Linta Mathew : When agreements are made over the Internet, what is the significance of Digital signature legislation? Has it in any way brought about more security compared to the legal tools that already existed?
David Snead says : Digital signature legislation, and other legislation approving online consents are crucial in affirming online, or “click wrap” agreements. Failure to have these laws in place significantly undermines the ability of companies to do business online.
Kichu Mubarak: Are there any inherent limits to the existing legal schemes that Digital signature legislation could help to overcome?
David Snead says : No.
Legal risks in Online Business - Issues of Privacy
Linta Mathew : Privacy is one of the major risks posed by the Internet. What legal concerns should I keep in mind, when I collect personal information from individuals who visit or post comments to the site?
David Snead says : Always remember that the information you collect is the individual’s and not yours. If you are going to commercialize the information, disclose, in great detail, how you will use it, for what purpose, and how your vendors may use it.
Many countries have privacy legislation that follows the data. So, for example, if you process personal information from a national of the European Union, in a country outside the EU, you may remain responsible for complying with EU legislation governing processing personal data.
Kichu Mubarak: Imagine a situation where I guarantee my customers the uptime that my Data Center has guaranteed me. If the data center my servers are hosted with suffers fire and explosion, that affects all the websites hosted in my server, am I liable for the downtime? If yes, is the data center liable to me too? How do I proceed with this matter legally in case I have to.
David Snead says : In most cases, this is all going to be resolved in your contract - both with your customer and with the data center. If you have not included an “acts of God” clause, also referred to as a “Force Majeure” provision, you may be responsible for downtime. Also, if you don’t have a limitation of liability clause, your liability may be unlimited. The same thing can be said for your data center.
Some countries have statutory schemes for addressing these issues, so it’s important to remember that local law may prevail over civil contracts.
Linta Mathew : If someone is caught making a spamming or a hacking attempt to my server or website, what are the legal actions that can be taken against him and how should I proceed?
David Snead says : This will depend on two things: what your contract says, and what the laws of your country, and the country in which the spammer is located, say.
Kichu Mubarak: What are the technical challenges that hamper law enforcement’s ability to locate and prosecute criminals that operate online?
David Snead says : Dynamic IP addresses are the most difficult issue to resolve. They force law enforcement entities to file numerous requests for information in order to track down criminals.
Linta Mathew : What are the legal implications that my business would have to face if my customers posts content to my blog that defames or invades the privacy of third parties?
David Snead says : This issue is very difficult to address generally. Some countries, notably the U.S., have legislation that provides strong protection for hosts and online providers who simply provide a space in which the defamation takes place. Most other countries have very different laws. It’s important to consult local counsel in these cases.
Kichu Mubarak: Can schemes that take place using our products and services result in any liability to us?
David Snead says : Its hard to answer this question. The basic answer is - yes. There are always situations in which you can act in such a way as to cause liability to accrue to your company. The important thing is to try to isolate those issues, know that they exist, make sure that you do things in a way to minimize the risk, and then insure against it.
Intellectual and Copyrighted property - Legal regulations
Linta Mathew : What is Intellectual Property? What all does it include?
David Snead says : Intellectual property is the theory that ideas have value. Intellectual Property includes copyright, trademark, trade dress, trade secrets, and many other concepts that capture thinking.
Kichu Mubarak: What are the most important issues related to intellectual property that may arise for an online business person?
David Snead says : All intellectual property interests are important. Since most online business is based on thought, not material, it is important to consider how your thinking will be captured, monetized and protected by law.
Linta Mathew : As a small business, how do I ensure that my intellectual property is protected?
David Snead says : The most important way is to document your intellectual property. Keep records of what your produce and think of. That way it’s easier to demonstrate that you have and interest in it.
From a practical perspective, put a copyright notice on each page of your website. While this is not required to protect your copyright, you’d be surprised at the deterrent effect that the notice has.
Kichu Mubarak: With regard to intellectual property issues, what would be your advice to people dealing with open source software, I mean from the legal aspect?
David Snead says : It’s important to remember that open source isn’t always free, and that most open source software comes with a license. Just because you can access open source software online, and it is easy to manipulate, doesn’t mean you are excused from complying with the terms and conditions of the open source license.
Kichu Mubarak: What types of copyright breaches do you often see people committing? How do I find out whether a piece of work is already available on the internet?
David Snead says : There’s no “one” type of copyright infringement I see more often than others. From a client perspective, what I see the most is one online company stealing a concept from another. This includes stealing graphics, product names, even contracts.
Linta Mathew : How about if it is a full news article which I found on a news site and if I mention the source? Do I need obtain permission to re-publish the article? If so, what is the best way to obtain permission?
David Snead says : This question is situational: it depends on the use and the source. The best way to find out how to ask permission, is on the site itself. I encourage people to ask permission. If it would have been allowed even if you didn’t ask, you’ll have permission. If it wouldn’t have been allowed, you’ll have your answer. Simply saying “well I thought this was allowed” isn’t a defense to infringement.
Pornography and child pornography – The difference and legal steps against them
Kichu Mubarak: Child pornography on the Internet is pervading now. It is horrific and needs to be stopped. There has been a move to attack this problem by working with the hosting providers to ensure they do not play host to this immoral business. What are the legal implications that we will have when our customers host pornographic sites with us?
David Snead says : There is a difference between pornography, and child pornography. Irrespective of viewpoints on pornography, whether certain types of pornography are legal depends on where you are located. Also, whether you increases your liability by searching and screening for content also depends on your location.
Linta Mathew : How about adult pornography? Are there any legal issues that one should be aware of before hosting such a site - both from the domain owner’s point of view and the webhost’s point of view.
David Snead says : Please see above.
Kichu Mubarak: If I have stated to my customers that I do not allow pornography on my server, but happen to find that they do so, are there any legal actions that I can take against them?
David Snead says : If this prohibition is in your contract, they have breached your contract.
Linta Mathew & Kichu Mubarak: Thank you, David Snead for the time you have given us from your busy schedule.
David Snead says : Thank you
Readers please feel free to visit http://www.dsnead.com/
About the Interviewer:
Kichu Mubarak, a Systems Engineer at Bobcares, has been in Poornam since the 14th of February 2007. Just within 2 months of joining Poornam, he was noticed for his innate ability to understand people and deal with different angles of vision, and was thus selected to be a reporter for Poornam Media. Kichu displays a unique confidence to tackle problems in critical situations. This mission oriented man, portrays an intense passion about anything he puts himself into. These qualities have made him the Team Manager of Poornam Media within just 1 year.
Linta Mathew, a Systems Engineer at Bobcares, has been in Poornam for one year and four months. Her very lively nature, excellent communication skills and commitment to every task she takes up, found her a place as a reporter for Poornam Media in February 2008. Today, she is the Deputy Manager of Poornam Media. Her tendency to grab all opportunities that come her way, and habit of working hard to achieve them are the keys to her success.