E-Commerce Best Business Practices

The following is a list of business practices that online business owners should follow to help protect their business from liability and minimize legal claims:

1. Maintain Clear and Accurate Communication with Customers. Clear communication will solve many customer complaint problems, but may also protect you from claims of false advertising and investigation by the FTC. Disclosing basic information in required by law, but must be done accurately. Therefore, you should monitor the information you are placing on your website to make sure it accurately depicts your business practices, prices, products, or whatever else you are describing to potential customers to entice them to buy your products or services. Clear communication includes "adequate" communication. Leaving out key details about what your describing on your website is also considered misleading. The FTC provides guidelines on their website regarding advertising and marketing on the Internet and gives good examples of what types of statements might be misleading to customers.

More information can be found at: http://www.ftc.gov/bcp/edu/pubs/business/ecommerce/bus28.shtm

2. Maintain Information Security. There is probably no quicker way to lose customers than to allow their personal information to be unsecured. Laws and customers are placing more and more emphasis on personal security and protection of their financial information is required. Accurate and adequate disclosure of security practices to consumers is a vital aspect of good on-line business practices. State and Federal laws require protection of financial information and social security numbers. Also, several State laws require notification to consumers if there is a security breach that puts their personal information at risk for identity theft or other fraud. Constraint monitoring of your security practices is essential. More information can be found at: http://www.ftc.gov/privacy/

3. Special Group Protection. There must be special protection afforded for child consumers, who are protected by State and Federal laws. Your website must adopt certain procedures when dealing with these special consumers. If any information about children under 13 years old is collected by a website, the website must obtain parental permission before collecting such information. Under the Children’s Online Privacy Protection Act (COPPA), sites have to post privacy policies that give details about what kind of information they collect from children, and what they might do with it. If a site plans to share a child's information with another company, the privacy policy must say what the other company will do with such information. Also, links to the policies should be in places where they're easy to spot. More information is available at: http://www.onguardonline.gov/topics/kids-privacy.aspx

4. Comply with Industry Standards and Practices. Industry standards can be used to argue that a business should have acted in a certain way. Where terms and conditions or other contract terms do not spell out how your business treats certain transactions differently, your business may be held to such industry standards. Therefore, you should be aware of what the industry standards are for your business and follow such standards where you do not give notice to the customer. Guidance for e-commerce standards can be found through resources such as the Better Business Bureau-Online Code of Online Business Practices and other online resources.

5. Insurance. Insurance is becoming increasingly available for online businesses. E-commerce businesses should investigate what types of insurance are available and whether the cost of such insurance is worth the protection that such insurance might afford. It is important to carefully review provisions that cover the types of litigation defense covered under the insurance. Because of uncertainty in selling items across many jurisdictions, insurance may help reduce some of the risks of doing business online, and therefore, all online businesses should at least check into what insurance may be available for their business.

Google Loses in Italy

An Italian court ruled that Google violated privacy laws for allowing a user to post video on its site that showed an autistic child being bullied. The privacy laws in Italy are very strict but it is unprecedented for an Internet company to be held accountable for merely being the avenue to posting of material. The court went as far as to charge three executives of Google with a crime for the violation of Italian privacy laws.

This decision could have significant effects on various types of hosting platforms, including Facebook, You Tube, and all of the other thousands of retail and topic type social networking sites that are popping up each year. It also could put restraints on free speech.

More information on this here.

Copyright Protection

What is a Copyright?

A copyright is the protection created under the United States Copyright Act which protects “an original work of authorship.” Copyrights protect music, photographs, video, films, works of art, software, buildings, and architectural drawings when they are put into a fixed form that can be copied and distributed.

What are the Advantages to Registering a Copyright?

A Copyright exists when the work is created by the author. It is created when it is in a form that can be copied and distributed to others. This “common law” copyright protects the author’s creation against unauthorized copying. However, the US Copyright Act preempts the enforcement of common law copyrights. Therefore, in order to sue to enforce the author’s copyright in his or her work, the copyright must be registered with the US Copyright Office. The following are advantages of registering your copyright:

• You can immediately sue to enforce your copyright in your work;
• You may be entitled to attorney fees;
• The presumption that the registered owner’s copyright in the work is valid;
• You can record your registration with US Customs and Boarder Protection to stop infringing products from entering the US.

Who is the Owner of the Copyright in a Work?

Generally, the author is the owner of copyright. If there are multiple authors, they may share the copyright and there may be several layers of copyrights in a work. For example, if one individual writes the text to a book and another does the illustrations, the author of the text owns that copyright in the text and the illustrator owns the copyright in the illustrations.

Ownership of a copyright right will reside in one who is not the author only:

1. if the copyright has been assigned,

2. if the work is a “work made for hire,” or

3. the copyright is transferred by law, such as by will, descent, or bankruptcy.

A “work made for hire” is defined as:

1. a work prepared by an employee within the scope of his or her employment; or

2. a work specially ordered or commissioned in a signed writing for use as:

• contribution to a collective work
• a part of a motion picture or other audiovisual work
• a translation
• a supplementary work
• a compilation
• an instructional text
• a test
• answer material for a test
• an atlas

Courts have ruled that this definition is narrow. Even if the parties expressly agree in a written instrument that the work shall be considered a work made for hire, it may be determined by the court that the work is not one of the defined “works made for hire” as described in the statute. Therefore, care must be taken to make sure all rights are assigned to the correct party in writing.

Protection of copyrights based on several levels of the same work can be complicated. When multiple individuals are involved in the creation of the work, various levels of ownership need to be discussed and reviewed carefully. It is important to have an experienced copyright attorney involved throughout the process of creating the work to highlight any issues early in the process. This can save you headaches and money in the long run.

Our intellectual property lawyers take the time to assess, discuss, and guide you through copyright ownership, licensing copyrights, copyright royalties, confidentiality agreements, and, when necessary, copyright litigation. An original work of authorship often represents years of hard work. Securing that work with copyright protection is essential to protect your rights.

If you have questions regarding copyrights or other intellectual property, please contact Jeffery Jacobson.