Covering Legal Bases Before Startup

When the lure of the unlimited business potential of the Internet beckons, consider covered a few legal bases to safeguard yourself from a cease and desist order, costly litigation and damages. Understanding the legal aspects of doing business on the Internet will help you steer clear of the Internet police and $600-per-hour Internet lawyers.

First off, be certain your company own the trademark for the domain name you are registering. Safeguarding intellectual property such as brand names, trademarks and domain names is an important part of doing business successfully.

As the technology advances, legal issues shift and change.

The ability to replicate digital media exactly has created an uproar in the music industry as web savvy rock and rollers trade, collect and sample copyrighted materials with widely distributed MP3 technology. The technology is still considered legal, even if its primary function may not be.

It?s been a quiet launch, but 64 character domain names are now available so the scarcity of ?dom.com?s? is temporarily over. If you have been waiting patiently to register http://www.my-company-has-the-best-selection-of-xerox-copiers.com you can technically do so. However the fine folks at Xerox may not appreciate your testament to their brand name and will certainly issue a ?cease and desist? with good legal standing.

Before you visit http://www.networksolutions.com to register a domain name, talk to TESS, the U.S. Trademark Electronic Search System database online at the U.S. Patent and Trademark Office (http://www.utpto.gov) to make sure no one owns trademarks that conflict with domain that you want.

Once a domain has been established, carefully review the terms of any contract with web site hosting and design companies. Make sure you are hiring someone to produce your company?s web site as a ?work for hire? (make sure to get that specific language) or they could end up the legal owner of the content for the web site.

Also look out for contract language that grants ?residual clauses? to the web design or hosting company. This means they could own the intellectual property that went into the creation of your web site. This could be a complex relational database or a simple design. But you want to own the work and the ideas you paid to have created.

And if your company?s technology is a bleeding edge work beckoning outrageous venture capital investment, go back to http://www.uspto.gov and apply immediately for a provisional patent. This will run you a fraction of the cost of a full patent in attorney fees and protect your intellectual property for a year—well enough time to woo potential investors.

Once the domain, intellectual property and contract hurdles have been cleared, remember that web users are concerned with privacy issues. Ironically, your best defense against violating web site visitors? right to privacy is to not make any promises that you will protect their privacy. The golden rule of steering clear of violating Internet users privacy concerns is to adhere to any policy posted on your web site, according to attorney Jonathan Bick, a partner of Greenberg Traurig (http://www.gtlaw.com) and law professor at Rutgers and Pace Universities.

If you are collecting data, state clearly and simply what that data will and won?t be used for. Then stick to your policy. If you promise not to bug, pester, contact, phone, fax, spam or show up on the doorstep of your web site users, you better stick to your written word.

Internet advertiser and marketer Double-Click (http://www.doubleclick.com ) didn?t. Consequently, they were cited for violation of consumer protection regulations and the company received bad publicity. Double-Click sold customer data after specifically promising not to do so. Unless you believe that no publicity is bad publicity, adopt a written privacy policy, post it to allay concerns and stick to it.

Collecting data from minors can also be problematic under new regulations handed down by the Federal Trade Commission (http://www.ftc.gov ). The Children?s Online Privacy Protection Act of 1998 (COPPA) mandates that web sites that collect information (including e-mail address, home address, social security number, and more) from children under the age of 13, have express written permission from their parents.

However, a loophole in COPPA leaves an open door wide enough to drive a truckload of Pokemon (http://www.pokemon.com) paraphernalia through. Members of trade associations can set standard practices for their industry. So if you?re marketing to children and want to build an e-mail list, convince industry peer companies that there?s a less restrictive manner of protecting children than receiving a signed fax from their folks.

By applying foresight to dealing with legal issues in advance, companies can save lots of time and big money later.

The evolution of the Internet as a place to do business is creating the necessity to clarify the law in areas of copyright, intellectual property ownership, patents and jurisdiction. Focus on building a good business that would be legal in the ?brick and mortar? world and it should translate into legal Internet business as well.

Nat Bender
Director, E-Business Services