Blog : Internet Law

Lean Business Start Up

The new way to start a business is to start out with a vision of making money and not spending it.  Try to create your vision with what you have and see if your customers will buy your products before going deeply in debt.  Borrowing money to try to cover all of the aspects that you believe your business could be creates more risk and uses resources that may be needed elsewhere. 

Check out this article on bootstrapping your business start-up efforts. http://www.inc.com/magazine/20110201/the-art-of-the-pivot.html

Jeffery A Jacobson

Why Should I Register A Copyright?

Copyright Protection:

What is a Copyright?

A copyright is the protection created under the United States Copyright Act which protects “an original work of authorship.” Copyrights protect music, photographs, video, films, works of art, software, buildings, and architectural drawings when they are put into a fixed form that can be copied and distributed.

What are the Advantages to Registering a Copyright?

A Copyright exists when the work is created by the author. It is created when it is in a form that can be copied and distributed to others. This “common law” copyright protects the author’s creation against unauthorized copying. However, the US Copyright Act preempts the enforcement of common law copyrights. Therefore, in order to sue to enforce the author’s copyright in his or her work, the copyright must be registered with the US Copyright Office. The following are advantages of registering your copyright:

  • You can immediately sue to enforce your copyright in your work;
  • You may be entitled to attorney fees;
  • The presumption that the registered owner’s copyright in the work is valid;
  • You can record your registration with US Customs and Boarder Protection to stop infringing products from entering the US.

Who is the Owner of the Copyright in a Work?

Generally, the author is the owner of copyright. If there are multiple authors, they may share the copyright and there may be several layers of copyrights in a work. For example, if one individual writes the text to a book and another does the illustrations, the author of the text owns that copyright in the text and the illustrator owns the copyright in the illustrations.

Ownership of a copyright right will reside in one who is not the author only:

  1. if the copyright has been assigned,
  2. if the work is a “work made for hire,” or
  3. the copyright is transferred by law, such as by will, descent, or bankruptcy.

A “work made for hire” is defined as:

  1. a work prepared by an employee within the scope of his or her employment; or
  2. a work specially ordered or commissioned in a signed writing for use as:
    • contribution to a collective work
    • a part of a motion picture or other audiovisual work
    • a translation
    • a supplementary work
    • a compilation
    • an instructional text
    • a test
    • answer material for a test
    • an atlas

Courts have ruled that this definition is narrow. Even if the parties expressly agree in a written instrument that the work shall be considered a work made for hire, it may be determined by the court that the work is not one of the defined “works made for hire” as described in the statute. Therefore, care must be taken to make sure all rights are assigned to the correct party in writing.

Protection of copyrights based on several levels of the same work can be complicated. When multiple individuals are involved in the creation of the work, various levels of ownership need to be discussed and reviewed carefully. It is important to have an experienced copyright attorney involved throughout the process of creating the work to highlight any issues early in the process. This can save you headaches and money in the long run.

Our intellectual property lawyers take the time to assess, discuss, and guide you through copyright ownership, licensing copyrights, copyright royalties, confidentiality agreements, and, when necessary, copyright litigation. An original work of authorship often represents years of hard work. Securing that work with copyright protection is essential to protect your rights.

If you have questions regarding copyrights or other intellectual property, please contact Jeffery Jacobson.

Website Privacy Policy Agreements

Many businesses now use websites to advertise and sell products and services via the Internet. Typically websites use various types of intellectual property (i.e. pictures, content, names, logos, and links) to make the website appealing to its users.

You have probably seen, or maybe your site uses, terms and conditions of use and privacy policies to govern the use of the website and the intellectual property that encompasses the website. Developing your website and selling over the Internet can create liability for your business. It is important to review the terms of your website agreements and your website content for several reasons:

  • Information, trademarks, and copyrighted material are assets of your company and should be protected from unauthorized use.
  • If items are used on the website that were not created by the owner of the website, unauthorized use can create liability. For example, if pictures are used, you should be aware of the origin of those pictures and have a license to use them. (New Internet scams are popping up that involve the use of unlicensed photos and artwork on websites and demands for large sums of money as damages for unauthorized use).
  • If you enter into transactions based on your Internet advertising, the posted terms of use should address the terms of the transactions. Differing terms may be required for transactions with individuals within your state or out of your home state or country.
  • The terms of use of the website should match your type of business and take into account the unique aspects that your business has to offer. Also, the “electronic signature” should bind the user to those terms.
  • If the website collects information about its users, there may be requirements to protect such information under federal, state, and foreign laws.
  • If you have a privacy policy, it must match your procedures for protecting such information.
  • You may want to disclaim and / or limit your liability, particularly for content posted by users or unrelated companies, which you may have limited or no control over.
  • Websites and e-mails are advertising vehicles for your goods and services, and federal and state advertising rules apply to marketing goods and services over the Internet. The statements made on your website should not be misleading in any way. This may raise claims of false advertising. If you use comparative advertising (i.e. comparing to a competing product), certain precautions need to be made and you should be aware of the risks.

The above are just some of the issues to consider when developing and operating your website. No two businesses are exactly the same. Just because a business sells the same or similar items to yours, does not mean the agreements, such as terms and conditions or a privacy policy, will work for your business. Care needs to be taken to make sure that the terms and conditions you place on your website match the way you operate your business. In addition, you may have special circumstances that a “standard form” agreement does not cover.

A privacy policy can create liability if it does not match your actual use. Therefore, the terms should be reviewed carefully. Before reviewing your website, we request very specific information through our Website Questionnaire about your business so that we can address how these items relate to your specific operations and type of business.

Our Website Questionnaire will also assist you in thinking about issues that you may not have addressed in your website development or agreements that may leave your company open to liability from your customers or government regulation. The information you provide will also allow us to make suggestions about issues that may be of particular concern to your business and that should be addressed on your website or in other agreements. We may or may not find anything on your website, but through our review you will at a minimum know that you are in compliance with the law, that you are adequately protecting yourself through your website agreements, and that you have properly documented the origin of the items on your website.

We can also create custom website agreements based on the information collected in the Website Questionnaire. The cost for such agreements depends on your type of business, which dictates how detailed the agreements need to be. If you are interested in having us review your website or need assistance with drafting website agreements and privacy policies, please Jeffery Jacobson at 231.722.5405.

Trademark Registration Protection

Choosing a Business Name and Protecting Your Brand Choosing a name to properly represent your product or service can be difficult and should be done with careful consideration. Before choosing a name, you should do a basic search to determine whether the name you have chosen will infringe on another’s trademark rights. Searching should, at a minimum, be done at the state and federal level to discover any registered marks that may be confusingly similar to the mark you have chosen. A more in-depth search may be done by searching telephone directories and county records.

Researching a name before you start using it is important not only to guard against infringement of another’s mark, but also to start your business with a name that will not be confused with your competitors. Most businesses spend thousands of dollars every year to promote their products or services and create name recognition. If someone has a similar name, a customer could mistake your advertising for promotion of your competitor’s products or services.

Once you have chosen the perfect name, how do you protect it? Unregistered names are protected by common law trademark infringement. To enforce your rights to a mark under common law, you must prove that a business competitor has adopted a name that is confusingly similar to the one already being used by you and the similarity results in a likelihood or probability of confusion among consumers who are using ordinary care. In other words, the burden is on you to prove that you used the mark first and that your customers will be confused by your competitor’s use of the mark.

Why should you register a mark if it can be protected by a common law action? There are several advantages to registering a mark with the U.S. Patent and Trademark Office (USPTO). First, registration gives notice to the world that you claim the mark in association with your product or service. Second, registration allows you to receive up to treble damages (triple the amount of damages) in a suit for infringement to protect your mark. Third, and most important, registration creates several presumptions. Registration creates a presumption that a mark is valid and that the owner of the registration owns the mark. Also, it is presumed that the owner has exclusive rights to the mark and that the mark is not confusingly similar to other registered marks. Finally, if you plan to use your mark outside the U.S. (e.g. Internet sales), a registered mark allows you to file applications for foreign registration based on your U.S. registration. Also, if you compete against foreign companies in the U.S., registration with the USPTO allows you to prevent the importation of goods bearing marks that are confusingly similar to your mark by further registration with U.S. Customs.

Protection of your mark does not end at enforcement in infringement actions. A mark must be used the correct way to protect its registration and uniqueness, as it is associated with a product or service. When using your mark, you should give notice of your claim to it as a mark. For an unregistered mark, the notation (TM) is used after the mark ((SM) for a service mark). For registered marks, the notation “®” is used to give notice of the mark’s registration. If you do not give such notice, it may be difficult to prove that infringement by a competitor was intentional, which may decrease the amount of damages that you are entitled to.

In addition, you should not allow your mark to be used as an adjective to describe your products. Such use could cause your mark to become generic and descriptive of the product or service. For example Xerox ® spends millions of dollars each year to educate the public that Xerox is a brand of copy machine (i.e. “use our Xerox ® brand copier” not “Xerox this document”). The mark should also be set out distinctively in text by either use of a logo, underlined, or italicized. Finally, if you are going to allow some to use your mark, you need to make sure you license use of the mark to such person and enforce unauthorized use outside of the license agreement.

With the advent of E-commerce it has become more important for businesses to protect their names. A business that was once just local can now be national or global. Companies selling over the Internet are now invading local markets, which may take business away from the “mom and pop” corner store. If a company is using a name similar to yours, potential customers purchasing on the Internet could be confused as to whom they are purchasing products or services from. Therefore, with careful selection of a name and proper protection, you can guard against a competitor profiting from the hard work and money you spent to create your band name associated with your products and services.

For more information, please contact Jeffery A. Jacobson

A Website’s Terms and Conditions Might NOT Be Enforceable?

According to the Eastern District of New York, it depends on the facts. A federal judge was recently asked to look at the issue of whether website Terms and Conditions could be binding on a customer who purchased from the website Overstock.com. The customer initiated a class action suit against Overstock.com because she was charged a $30 restocking fee for returning the items she had purchased from the website. The restocking fee was clearly set forth in the Terms and Conditions, which were available on the website. The Terms and Conditions also stated that “Entering this Site will constitute your acceptance of these Terms and Conditions.” In addition, the Terms and Conditions contained a “choice of law clause,” by which the parties agreed to be subject to arbitration in Utah.

The federal judge refused to dismiss the case and determined that the case could proceed in New York because Overstock.com did not demonstrate that customers had notice of the Terms and Conditions, or that a reasonable user of the website would have had notice of the Terms and Conditions.

Why wouldn’t this be a binding contract?

It is a basic tenant of contract law that in order to be binding, a contract requires a “meeting of the minds” and “a manifestation of mutual assent.” The Judge determined that because of the following factors, the customer, or any other user of the website, would not be on notice of Overstock.com’s Terms and Conditions:

  • The link to the Terms and Conditions was at the bottom of the page;
  • The user was not required to scroll past the link to complete a transaction on the website; and
  • The user was not required to take any affirmative action to agree to the Terms and Conditions (i.e. a “browsewrap” agreement was used).

Because of the way the Terms and Conditions were presented on the website, actual or constructive notice prior to using the site was necessary. Overstock.com was unable to prove to the Court that its customers received actual or constructive notice. Therefore, none of its Terms and Conditions will be binding on its customers and its request to move the case to Utah was denied.

Having Terms and Conditions on your website will give you protection if they are used properly. However, if your website does not give customers proper notice of the Terms and Conditions, you may find out that your terms are unenforceable. In Overstock.com’s case, it may end up costing the company a significant amount of money because their customers are now claiming breach of contract and fraud for being charged the restocking fee.

If you have questions regarding your website or other Internet law questions, please contact Jeffery Jacobson.

TiVo Wins Big Against Dish Network

TiVo has patents that protect their “Time Warp” process of recording live TV and playing it back. All of the major cable providers have created their own systems, but TiVo claims these systems (DVRs) infringe on their patents. The US Court of Appeals agreed with TiVo and also ruled that Dish Network failed in its attemps to design around the patents.

Click here to read more.

Google Loses Italy Lawsuit

An Italian court ruled today that Google violated privacy laws for allowing a user to post video on its site that showed an autistic child being bullied. The privacy laws in Italy are very strict but it is unprecedented for an Internet company to be held accountable for merely being the avenue to posting of material. The court went as far as to charge three executives of Google with a crime for the violation of Italian privacy laws.

This decision could have significant effects on various types of hosting platforms, including Facebook, You Tube, and all of the other thousands of retail and topic type social networking sites that are popping up each year. It also could put restraints on free speech.

More information on this here.

California Pushing Internet Tax

California has enacted new requirements on its businesses that purchase from the internet. The must register to pay “use” tax, which is a sales tax on items purchase over the Internet, from catalogs, and over the telephone. If the seller does not collect sales tax, the business must report the sale and pay use tax.

Most states already have this requirement, and so does California, but the new law requires registration and a separate return. If the businesses that are required to register under the law (i.e. businesses that gross in excess $100,000) fail to register, the State can estimate the amount of use tax for the business and charge interest and penalties for non-payment. Also, they will look back to 2007 to collect those taxes. Amazon.com and Overstock.com are currently challenging the constitutionality of the law.

Click here for more information.

If you have questions, contact Jeffery Jacobson.