Top 10 Issues for the E-Commerce Practitioner

Courts will also tend to find jurisdiction by reviewing the Web site's commercial purpose and the Web site owner's proximity to the court's forum. Problems will always arise when the defendant is anonymous and cannot be located or determined. The choice of law a court will use in an e-commerce-related suit is generally determined by the principles of the proper forum state, unless the Web site's terms and conditions specify what law will apply.

Contract formation and terms and conditions. How a business enters into an enforceable contract, and what terms and conditions are in the contract, is a key issue for all e-commerce business. Web site contract issues generally center on registration and creation of domain names, terms and conditions of Web site use, notices and disclaimers displayed on the site, and click-through and sign-on agreements the site user will see and use when he or she signs on to the Web site.

Also, formation of contracts by electronic means is a growing area of concern for e-commerce law. Federal and state statutes have been enacted to regulate electronic signatures. Counsel should be familiar with all aspects of these statutes and how they apply to clients' business on the Internet.

Copyrights. Businesses must protect their copyrights on the Internet and avoid infringing others' copyrights when conducting e-commerce. Rights of online users to view and copy another's work is another, very serious, area of concern for Web site owners. Counsel should always obtain an express or implied license when clients are copying another's work from the Internet. Copyright law pertaining to the Internet is also expanding as a result of the numerous cases in the music and software industries regarding Napster and other file-sharing Web sites.

Trademarks and domain names. Businesses must protect their own trademarks and domain names on the Internet and avoid infringing the marks and names of other businesses. Counsel should be well aware that any marks their clients want to use on their Web site should be registered with the U.S. Patent and Trademark Office ' or the trademark office of other nations where they do business ' to ensure clients' rights are protected.

Domain name disputes have generated a significant amount of litigation in e-commerce law. Most domain name disputes arise when a trademark holder files for an ICANN (Internet Corporation for Assigned Names and Numbers) arbitration as a result of a Web site infringing on a business' trademark.

Privacy. Counsel must ensure that their clients fully comply with all local, national and international privacy laws. Businesses must also establish effective privacy protection for their own clients, employees and customers on their Web site. Numerous federal privacy statutes have been enacted that are relevant to e-commerce law. These statutes, which include the Privacy Protection Act and the Electronic Community Privacy Act, seek to establish privacy for Internet users. Since more than 90% of all Web sites collect some information about their visitors, privacy laws must be clearly understood by all Web site owners. Businesses should also list their own privacy policy on their site.

Government regulation protection. E-commerce is subject to a vast variety of local, state, federal and international regulations.

As an example, Web sites are subject to Federal Communications Commi- ssion regulations. Basically, all commerce regulatory statutes that have been enacted in the United States and around the world can be potential hindrances to clients' e-commerce business.

Torts and insurance. Counsel must work to limit potential exposure of businesses to civil liability from tort damages and the defense costs for e-commerce Web sites. Counsel must also address how a business can insure itself against any potential lawsuits. Torts such as defamation, invasion of privacy, copyright and trademark infringement, cybersquatting, and negligence are all potential problems for clients. For example, if a client passes on a virus to millions of other computers, he or she could be potentially liable for millions of dollars in damages. Insurance for this type of problem is essential, and new forms of Internet insurance are available for businesses.

Taxation. All e-commerce attorneys must understand current local, state and federal issues concerning Internet transactions. Right now, Internet sales are not subject to taxes pursuant to the Internet Tax Freedom Act, but this issue will be addressed by state and federal legislators in coming years.

Crimes. Recent legislation that governs Internet-related crimes includes the Consumer Fraud and Abuse Act and the Electronic Communications Privacy Act. Federal wiretap, electronic communications and anti-pornography statutes, along with the Computer Fraud and Abuse Act, also apply to the Internet. It should go without saying that all computer crime statutes are potential hazards for e-commerce clients.

Business method patents. Business method patents are a relatively new form of patent. These types of patents are for a term of 25 years. Counsel should be familiar with this new patent so that it cannot be used to hinder a client's e-commerce.

While counsel can never be completely familiar with every issue that will arise regarding a client's e-commerce business, an understanding of the issues mentioned in this article will allow counsel to ensure that numerous legal problems are avoided before the client's Web site is launched.

M. KellyTillery is a senior partner at Leonard Tillery & Sciolla and chairman of the intellectual property and e-commerce department. David J. Shannon is an associate at the firm. His practice focuses on intellectual property and e-commerce law.

As use of the Internet continues to grow, more e-commerce legal issues are confronting attorneys and their business clients.

What follows are the Top 10 legal issues counsel should be prepared to address as their clients expand their business into cyberspace.

Personal jurisdiction. Counsel must determine and try to control where their clients' business can be sued and what law will apply as a result of their e-commerce. Courts will apply a variety of factors to determine whether jurisdiction can be obtained in an e-commerce matter. For example, if the Web site is actively doing business in the jurisdiction (ie, buying and selling), then personal jurisdiction is generally found. If the Web site is only an information exchange and register, then jurisdiction depends on the level of interactivity and commercial nature of the exchange of information. Finally, if the Web site only provides information to entities in the jurisdiction, then courts will generally not find jurisdiction.

Courts will also tend to find jurisdiction by reviewing the Web site's commercial purpose and the Web site owner's proximity to the court's forum. Problems will always arise when the defendant is anonymous and cannot be located or determined. The choice of law a court will use in an e-commerce-related suit is generally determined by the principles of the proper forum state, unless the Web site's terms and conditions specify what law will apply.

Contract formation and terms and conditions. How a business enters into an enforceable contract, and what terms and conditions are in the contract, is a key issue for all e-commerce business. Web site contract issues generally center on registration and creation of domain names, terms and conditions of Web site use, notices and disclaimers displayed on the site, and click-through and sign-on agreements the site user will see and use when he or she signs on to the Web site.

Also, formation of contracts by electronic means is a growing area of concern for e-commerce law. Federal and state statutes have been enacted to regulate electronic signatures. Counsel should be familiar with all aspects of these statutes and how they apply to clients' business on the Internet.

Copyrights. Businesses must protect their copyrights on the Internet and avoid infringing others' copyrights when conducting e-commerce. Rights of online users to view and copy another's work is another, very serious, area of concern for Web site owners. Counsel should always obtain an express or implied license when clients are copying another's work from the Internet. Copyright law pertaining to the Internet is also expanding as a result of the numerous cases in the music and software industries regarding Napster and other file-sharing Web sites.

Trademarks and domain names. Businesses must protect their own trademarks and domain names on the Internet and avoid infringing the marks and names of other businesses. Counsel should be well aware that any marks their clients want to use on their Web site should be registered with the U.S. Patent and Trademark Office ' or the trademark office of other nations where they do business ' to ensure clients' rights are protected.

Domain name disputes have generated a significant amount of litigation in e-commerce law. Most domain name disputes arise when a trademark holder files for an ICANN (Internet Corporation for Assigned Names and Numbers) arbitration as a result of a Web site infringing on a business' trademark.

Privacy. Counsel must ensure that their clients fully comply with all local, national and international privacy laws. Businesses must also establish effective privacy protection for their own clients, employees and customers on their Web site. Numerous federal privacy statutes have been enacted that are relevant to e-commerce law. These statutes, which include the Privacy Protection Act and the Electronic Community Privacy Act, seek to establish privacy for Internet users. Since more than 90% of all Web sites collect some information about their visitors, privacy laws must be clearly understood by all Web site owners. Businesses should also list their own privacy policy on their site.

Government regulation protection. E-commerce is subject to a vast variety of local, state, federal and international regulations.

As an example, Web sites are subject to Federal Communications Commi- ssion regulations. Basically, all commerce regulatory statutes that have been enacted in the United States and around the world can be potential hindrances to clients' e-commerce business.

Torts and insurance. Counsel must work to limit potential exposure of businesses to civil liability from tort damages and the defense costs for e-commerce Web sites. Counsel must also address how a business can insure itself against any potential lawsuits. Torts such as defamation, invasion of privacy, copyright and trademark infringement, cybersquatting, and negligence are all potential problems for clients. For example, if a client passes on a virus to millions of other computers, he or she could be potentially liable for millions of dollars in damages. Insurance for this type of problem is essential, and new forms of Internet insurance are available for businesses.

Taxation. All e-commerce attorneys must understand current local, state and federal issues concerning Internet transactions. Right now, Internet sales are not subject to taxes pursuant to the Internet Tax Freedom Act, but this issue will be addressed by state and federal legislators in coming years.

Crimes. Recent legislation that governs Internet-related crimes includes the Consumer Fraud and Abuse Act and the Electronic Communications Privacy Act. Federal wiretap, electronic communications and anti-pornography statutes, along with the Computer Fraud and Abuse Act, also apply to the Internet. It should go without saying that all computer crime statutes are potential hazards for e-commerce clients.

Business method patents. Business method patents are a relatively new form of patent. These types of patents are for a term of 25 years. Counsel should be familiar with this new patent so that it cannot be used to hinder a client's e-commerce.

While counsel can never be completely familiar with every issue that will arise regarding a client's e-commerce business, an understanding of the issues mentioned in this article will allow counsel to ensure that numerous legal problems are avoided before the client's Web site is launched.

M. KellyTillery is a senior partner at Leonard Tillery & Sciolla and chairman of the intellectual property and e-commerce department. David J. Shannon is an associate at the firm. His practice focuses on intellectual property and e-commerce law.