12 Legal Issues to Consider in Operating an Online Business
By: Darin M. Klemchuk
Tags: Entrepreneurship, Intellectual Property, Ecommerce, Online Business, Startup

The following article provides a high-level summary of some of the key issues online business operators face in running a website or other ecommerce business. Conducting business online or maintaining a website may subject businesses to unforeseen legal liabilities. The following issues are a brief survey of key issues:

1. Internet Business & eCommerce

A good starting point is analyzing a company’s online presence and auditing their procedures to analyze how to grow their brand and online influence. As part of this, the company’s agreements and websites should comply with the myriad of laws and regulations affecting websites and online businesses, such as COPPA.

2. Domain Name Acquisition

Domains are often the key to an online business, but can present a number of problems. Domain name issues include securing a domain name initially, as well as protecting domain names from adverse parties that attempt to trade off the goodwill associated with the company’s brand. Sometimes, the company needs defense, retrieval, and protection of domain names on the Internet.

3. Digital Millennium Copyright Act (“DMCA”) Compliance

Companies operating website, particularly where third-party content may be uploaded directly, should consider adopting agreements and procedures to shield clients against claims of liability and copyright infringement. This procedure is sometimes referred to as a “copyright policy” or “DMCA takedown procedure.”

4. Online Privacy

Online privacy continues to become a bigger issue. With the spread of mobile devices, tablets, and apps, privacy issues are becoming more complex. Companies should consider composing or updating their privacy policies as well as adopting internal security protocols aim at protecting the online privacy of customers and website users.

5. Social Media Law

While a powerful vehicle to build brand strength and interact with customers, social media can create a number of legal issues for online businesses. A social media policy provided to employees as well as guidelines can be effective steps to reduce risk. Areas to consider are employment related use of social media, confidentiality, sponsorship, and branding guidelines.

6. Privacy Policies

Privacy policies should not be copied from online templates or rival companies. They should be drafted comprehensively to address unique issues of an online business and to accommodate future growth. Whether a company looks to collect analytics or more personalized information, the company should focus on its specific business needs and risk factors. Privacy policies should be updated as a business evolves.

7. Terms of Use Agreements

Terms of Use (TOU) agreements can limit liability for companies that maintain an Internet presence. These agreements should be optimized to address a company’s specific business and should not be simply cut and pasted from the Internet. What works for one company may not work for another company.

8. Ecommerce Agreements

Ecommerce agreements come in many forms such as licensing, advertising agreements, and payment processor agreements. Ecommerce agreements should be drafted to address the primary legal risks involved in a particular ecommerce contract or business transaction.

9. Online Sweepstakes & Games

Online sweepstakes, contests, and games create a number of legal pitfalls. Depending on the sweepstake, contest, or game, compliance with the laws of all 50 states as well as the federal government may be required. Registration in specific states may also be required. Online businesses may benefit from guidance as to whether a particular new initiative is considered a sweepstake, contest, or game.

10. Domain Theft

Recovering hijacked domains can often be difficult and time-consuming. Often times, avoiding domain theft in the first place is much easier than attempting to recover a stolen domain. While difficult, it is possible to recover a hijacked domain.

11. Website Agreements

Website agreements can be customized to limit legal liability and reduce risks of disputes by analyzing an online business’s intellectual property portfolio, business processes, and brand objectives. Website agreements can be used for mobile applications in addition to websites.

12. Impersonation and Username Squatting

Impersonation and username squatting can occur when a third party registers a social media account using someone else’s identity. This can result in harmful posts and information being published in social media. Username squatting can also prevent a trademark or brand owner from controlling their trademark. Often times, registering usernames in advance is the best strategy to avoid impersonation or username squatting.

While the above identifies a number of ecommerce and internet law issues affecting website and online business operators, an in-depth analysis may be required.

Read the full article for key takeaways to online business legal issues.

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Darin M. Klemchuk is founder of Klemchuk LLP, a litigation, intellectual property, and transactional law firm located in Dallas, Texas. He publishes Thriving Attorney, a blog dedicated to exploring the business of the practice of law, productivity and performance for attorneys, and other topics such as law firm leadership and management, law firm culture, and business development for attorneys.

Click to learn more about Darin M. Klemchuk’s law practice as an intellectual property lawyer.