Lawchek® February Bulletin - Starting a Business Online

There are a number of issues a business should be aware of before conducting business online. We have selected some of the more prominent issues for short discussion here.

Audience

As mentioned in the introduction, the numbers of Internet users are increasing every day. Overall, the Internet, since does not have geographical boundaries, is considered to fall under federal laws. However, if you conduct business with someone in a state you are not licensed to, you may become subject to state laws. This should be kept in mind if your jurisdiction is limited to certain cities or states. It is strongly recommended that you mention any limitations on your site as anyone, anywhere in the world, may access it. An easy way of doing this is placing a disclaimer on your web page. If you want to use your web site to reach more clients make sure to check any laws that may affect you in other states. A good place to start this search is the Securities and Exchange Commission (www.sec.gov).

Site Function

A business web page that only provides an advertisement about services should be mostly concerned with disclosing any limitations of such services. Also, the practice of keeping information confidential when submitted by potential clients via email is recommended.

Businesses which offer services online, such as taking Credit Cards via their site, should be concerned with providing a secure system for any sensitive data.

Offering a chat room or a bulletin board are other useful services that should have a clear policy. A site should state that postings may be removed at their discretion and that there is no guarantee that all postings are reviewed. This is important. For if any user were to post a defamatory statement on the bulletin service the business may not always know. A clear policy can help avoid any Intentional Torts online.

** A special note to attorneys: Using a site online as an advertisement is a useful tool. However, attorneys must be cautious with giving any advice online to avoid an accidental attorney-client relationship. Preferably work with e-mail or communicate in some form where you can keep records of correspondence.

Copyrights

Most government sites or others in the public domain may be used freely. However, make certain to find out what is in the public domain before hand. A safe practice is to always assume anything published online is copyrighted. This is especially important when referring to information from another site. If there is any doubt as to whether your use of the information is protected by “fair use”, then by all means get permission from the other site (“Fair use” of the Copyright Act of 1976, Section 107 allows the use of copyrighted materials for research, teaching or scholarship, news media, and criticism or comment). Linking to the site is another solution for referring your users to the information. It is polite to notify any sites you link to that they are on your web page.

Trademarks

When selecting a web address for you business (the URL), be certain to do a back ground check for other businesses with the Trademarked name. Most Domain Registrars offer a Trademark search as one of their services.

Although different businesses in separate locations may use the same business name, only one may use the name on the internet which does not recognize geographical boundaries. When two people want the same URL address, it is usually given on a first come - first served basis. However, when there is a trademark involved this is usually not the case. If the trademark is not proven to be misused by the original owner then sometimes first come - first served is the rule (for an example see Fuji Photo Film Co Limited and Fuji Photo Film USA Inc v Fuji Publishing Group LLC). However, many times the trademarked businesses have been receiving the upper hand in courts. To be safe, it is best to research a name before purchasing a URL, even if it is available!

For more information on Domain Name issues, please review our Newsletter 'Domain Name Disputes'.

E-mails

E-mail is the easiest and most commonly used communication potential clients will use on your site. E-mail is a useful tool for keeping in contact with clients and other professionals in your field. Keeping e-mails confidential and being cautious with wording are good practices. In some instances, it is possible to form a binding contract via e-mail. Also keep in mind that copyright law protects e-mails.

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