This month we welcome a guest contributor, Chip Cooper, a leading information technology, software, and Internet attorney with over 25+ years in practice. Chip operates http://digicontracts.com, a cost-effective, online contract drafting service for drafting website legal compliance contracts featuring “do-it-myself” and “do-it-for-me” options.
It’s extremely important for website businesses to stay on top of new legal risks, as well as new opportunities, as they develop. So, I highly recommend that you sign up for Chip’s FREE newsletter, Website Law Alert — I read it regularly (it’s a quick and easy read), and I wouldn’t recommend it if it weren’t the best I’ve seen. You’ll also get Chip’s FREE downloadable Special Report as a bonus. Click here to signup.
If you haven’t been following the legal developments on the Web in the last couple of years, you may not be aware of the significant upswing in litigation aimed at interactive and ecommerce websites — both large and small.
To help you stay on top of these developments, I’ve boiled down the 5 factors that are driving this wave of litigation.
No. 1: heightened concerns regarding privacy and data security.
You probably know what’s behind this — it’s everyone’s concern over identity theft. This overriding concern has government regulators hypersensitive regarding how you collect, use, share, store, and secure your customer data online.
No. 2: consumer (and consumer watchdog) concerns regarding online fraud and scams.
Online fraud and scams perpetuated on consumers is a growing problem. Consumers and their consumer watchdog organizations are on the lookout for perceived violators. State government regulators operating in the offices of state attorneys general are becoming very active with legal actions against out-of-state interactive and ecommerce businesses that sell into their states.
Example: Florida has recently created a new task force to deal with Internet-related fraud called the CyberFraud Task Force. The group is part of the Florida Attorney General’s Economic Crimes Division. The first case filed by the Task Force was against AzoogleAds US Inc., an online media buying company.
No. 3: the overly litigious society we live in.
Daily, we see examples of ridiculous suits brought for spite or possible financial windfall.
Here’s a good example — in 2007, Leroy Greer, a married man, sued 1-800-Flowers.com for $1 million for revealing that he was cheating on this wife. Greer bought flowers for his girlfriend through the 1-800-Flowers site. Greer stated that he was careful to review the site’s privacy policy, which indicated that customers could request that personal information not be shared with “third parties”. But 1-800-Flowers sent a receipt to his house, and his wife read it. She requested a copy of the receipt, and 1-800-Flowers faxed her a receipt that revealed that Greer had sent his girlfriend a dozen long-stemmed roses with a note that read: “Just wanted to say that I love you and you mean the world to me”. By Greer’s way of thinking, he wasn’t responsible for his troubles at all — 1-800-Flowers was. So, he sued.
No. 4: high visibility on the Web.
Think about it… your site is highly visible and accessible from anywhere in the world. It’s there for all to see! This means that government regulators, disgruntled customers, overzealous competitors, and content suppliers have easy access to your site… and with it, an open invitation to examine your site and content for legal violations.
No. 5: expansive legal interpretation regarding jurisdiction.
This is the least obvious to non-lawyers. Due to the worldwide reach of the Web… combined with expansive legal decisions extending the scope of jurisdiction, you are now subject to civil suits — even criminal prosecution — by out-of-state plaintiffs and government regulators.
Example: in a recent case, a U.S. District Court in New York ruled that a Missouri-based website operator, who sold 19 books to New York residents, was subject to personal jurisdiction in New York. This means that the case that was filed in New York by New York residents, will remain in New York, and that the Missouri-based website operator must travel to New York, hire New York attorneys, and defend the suit in the courts in New York.
What’s The Solution
Don’t ever forget this simple truth (and I’m speaking from over 25 years’ experience representing software, information technology, and Internet companies)… even if you win one of these suits, YOU LOSE. So, your overriding objective is to stay out of court.
The best way to begin protecting your website business is to get a legal check-up. Your basic protection begins with a well-drafted and coordinated package of website legal documents consisting of one or more of the following:
- Terms of Use;
- Privacy Policy;
- Customer Agreement (usually referred to as a subscription agreement, account agreement, terms of sale, or SaaS Agreement; and
- DMCA Registration Form.
You also need a way to stay on top of new legal developments as they arise. My FREE newsletter, Website Law Alert, is designed to provide this timely, “need to know” information to you. You can sign up at my digicontracts.com site.
Copyright 2008 Chip Cooper
This article is provided for educational and informative purposes only. This information does not constitute legal advice, and should not be construed as such.
Chip Cooper is a leading information technology, software, and Internet attorney who helps small ecommerce and interactive website businesses nationwide stay out of court with affordable website legal compliance. To sign up for Chip’s FREE newsletter, Website Law Alert, and his FREE Special Report, “12 Sure-Fire Ways Your Website Can Get You Sued”, visit Chip’s digicontracts.com site, and also learn about his “Do-It-Myself” and “Do-It-For-Me” service options.