Online Reseller Keyword Advertising Liability 101

Online Reseller Keyword Advertising Liability 101Online reseller advertising trademark liability arises when advertisers or resellers either resell or facilitate the resale of a trademark owner's branded products or when advertisers compare their products to their competitor's products by referencing a protected trademark in their online ads. But, under the first sale doctrine, a trademark's owners' rights do not extend past the first sale of goods bearing its mark. Any distributor who resells trademarked goods is not liable for trademark infringement as long as the trademarked goods it sells are genuine (Polymer Technology Corp. v. Mimran (1992)). In essence, the first sale doctrine protects the secondary resale markets.

Trademark owners can assert several trademark claims in advertising, including claims for infringement, contributory infringement and dilution. Trademark infringement occurs when a person uses another's mark or a similar mark in a way that is likely to confuse consumers. Dilution occurs when a person uses a trademark that is identical, or nearly identical, to a famous mark in a way likely to tarnish the mark or blur its distinctiveness.

In Mark Kay Inc. v. Weber, 2008, which I summarize below, the defendant's sold Mary Kay goods on the secondary market as resellers. The Court noted that the first sale doctrine did not protect those who sell trademarked goods that are materially different then those sold by the trademark owner. (Mary Kay argued that the goods sold by the defendants were not genuine since they were past their expiration dates). The Court relied on a previous ruling in Warner-Lambert Co. v. Northside Development Corp. (1996), where the trademark holder only had to show: a) that it had established legitimate quality control procedures; b) that it abided those procedures; and c) that non-conforming re-sales diminish the value of the mark.

While the courts have applied the first sale doctrine inconsistently, a framework has at least begun to develop that provides guidance to Internet retailers. Recent court decisions have helped clarify what activities, or lack thereof, are considered to be infringement (or contributory infringement) for Internet resellers of goods, in comparative advertising and even for third party service providers.

The Nominative Fair Use Defense

The nominative fair use defense basically applies when you use so much of a protected trademark as necessary only to identify another good or business. In terms of Internet resellers, the nominative fair use doctrine permits a reseller of branded goods to use the brand name in its advertising (Pebble Beach Co. v. Tour 18 I Limited (1998)). However, the right of fair use is not unlimited, and any nominative fair use cannot suggest “affiliation, sponsorship, or endorsement by the mark holder.” Fair use will only apply when you use so much of the owner's mark as necessary to identify the products and nothing more. The cases that are summarized below will illustrate how this defense has been applied recently in the context of keyword advertising.

Keyword Advertising Trademark Infringement

If you use keywords that are registered trademarks of some third party in any Internet advertising, or when optimizing your website, you can potentially be liable for keyword trademark infringement. The problem, as with many other areas of Internet law, is that this issue and any potential liability for keyword trademark infringement is far from clear. Trademark laws are interpreted and applied inconsistently by the courts. Specifically, the Courts have been inconsistent with how they have analyzed the two key elements of trademark infringement: (1) whether the sale of a trademarked term as a keyword is a “use in commerce” as defined under the Lanham Act and (2) whether the use of a trademark as a keyword is likely to cause consumer confusion.

Using Keywords in Commerce

Both types of trademark claims stemming from keyword advertising require “use in commerce.” This means that a person must use the allegedly infringing or diluting mark as a keyword in connection with the sale, distribution, or advertising of goods or services. Most courts hold that sale of a keyword that is also a trademark qualifies as a trademark “use in commerce.” The decision involving Google (2009) has been the pivotal case regarding this issue. The federal district court (2nd Circuit) held that a computer program generating pop-up advertising based on the terms typed into a browser was not a use in commerce. The appellate court reversed this decision and found that the display, offer and sale of a trademark by Google's AdWords and other Keyword advertisers are in fact a “use in commerce.”

Lesson: Many other courts following the decision in the Google lawsuit will now probably find that your purchase of a keyword which happens to be a protected trademark does qualify as a “use in commerce.” This means you're not automatically liable for trademark infringement by purchasing and using a keyword that is a trademark. What it does mean is that the use in commerce element of trademark infringement is probably satisfied and any claim won't just be left to die for failure to satisfy that single element.

Keywords Causing Consumer Confusion-The Initial Interest Confusion Doctrine

It remains unsettled whether the use of a registered trademark in keyword advertising creates a likelihood of confusion. Many plaintiffs in trademark infringement actions involving keyword advertising often attempt to meet the likelihood of confusion element by relying on the Initial Interest Confusion doctrine. Under this doctrine, although the consumer is not ultimately confused, a plaintiff may suffer harm because the consumer was initially confused and was therefore led to the plaintiff's competitor's website as a result of that initial confusion.

For example, suppose another business has purchased a competitor's trademark as a keyword and then used it in a pay-per-click advertising campaign. The consumer actually clicks on the link in the ad and is directed to that company's website, not the website of the trademark owner. While browsing that company's website, the customer buys a product that competes directly with the company who has trademarked the keyword being used to sell competing products. The customer is likely not confused when the purchase is ultimately made. But, the initial confusion led the consumer to the competitor's website because the competitor used the trademark of the original company. The result is a lost sale for the trademark holder because it did not have control over its trademark.

Some courts hold that the Initial Interest Confusion Doctrine may not be appropriate in e-commerce. They have reasoned that Internet users are very aware of the nature of pay per click keyword advertising and are free to hit the back button on their browsers. However, other courts have actually held that Initial Interest Confusion Doctrine can form the basis of a trademark infringement claim. Hearts on Fire Company, LLC v. Blue Nile, Inc. is one example. A federal district court in Massachusetts found that Blue Nile's purchase of the “Hearts on Fire” trademark as a keyword which triggered Blue Nile's advertisement, together with the search engine's organic results, amounted to trademark infringement. The infringement was based on Initial Interest Confusion.

Case Summaries

The following case summaries examine three important cases involving keyword advertising. They each have helped form guidelines for Internet retailers, including resellers, and service providers regarding keyword advertising. The main points to take away from each case are included in the “Lessons” paragraph after each summary.

Lesson #1: No Trademark Infringement for Internet Service Providers!

Tiffany (NJ) Inc. & Tiffany and Company vs. eBay, Inc. (2004). This case serves as an example of an analysis of direct and contributory trademark infringement with Internet service providers, such as auction sites. Tiffany sued eBay in 2004 in a New York federal district court claiming that trademark law required eBay to monitor the goods sold on its site for counterfeits. Specifically, Tiffany argued eBay was liable for contributory trademark infringement due to eBay's lack of quality control in policing counterfeit Tiffany items sold through eBay's site. Tiffany also claimed that eBay's purchase of internet advertisements that included the Tiffany trademark constituted direct trademark infringement. Finally, Tiffany claimed that the sale of counterfeit goods on the site amounted to false advertising. The district court ruled in July of 2008 that eBay's use of the Tiffany trademark in its product listings was a protected fair use and that eBay had no such duty to monitor each single good for potential counterfeiting.

Main Points:

  • A third party provider, such as an auction site, is not liable for contributory infringement unless the service provider continues to provide its services to a specific individual or business whom it knows, or has reason to know, is engaging in infringement;
  • The court left open the issue of whether eBay's ads amounted to false advertising. So, this may be an avenue future plaintiffs use to attack service providers. Of course, a different court of law may not follow this decision, or may not follow certain decided issues. But, we can at least take the key points from this case and use them as solid guides, as future courts will;
  • This court was one of the first, if not the first court, to apply the normative use defense to keyword advertising. This court's reasoning behind their decision suggests that retailers and affiliates asserting a fair use defense might be able to turn to this decision as authority;
  • The court's decision extended the nominative fair use defense to keyword triggers. Of significant note is that one of eBay's ads in question was triggered by the keyword “tiffany” and included “tiffany” in the ad copy. (The ruling does not address what happens if the trademark acts as a trigger but does not show in the ad copy).
  • In the end, the main lesson is probably found in the following direct quote made by the court: “contributory liability may arise where a defendant is (as was eBay here) made aware that there was infringement on its site but (unlike eBay here) ignored that fact.” Tiffany did sent cease and desist letters to eBay and eBay did then respond promptly and started filtering the content.

In November of 2010, the U.S. Supreme Court rejected Tiffany's appeal. Thus, the decision by the 2nd Circuit appellate court will stand and will be authoritative law to the lower district courts within that Circuit and will provide guidance to other district courts.

Lesson #2: No Trademark Infringement for Comparative Advertising

Nautilus Group Inc. vs. Icon Health & Fitness, Inc. In a comparative-advertising case, Icon Health's used Nautilus's Bowflex trademark in a sponsored ad titled “Compare CrossBow to Bowflex.” Nautilus sold the Bowflex exercise equipment and defendant sold Crossbow equipment. Nautilus filed suit in 2002 alleging patent infringement and trademark infringement, false designation of origin, and federal and state dilution, among other claims. The court determined that use of the mark by Icon Health did not infringe or dilute Nautilus' mark.

The description that followed the Icon Health's ad title was viewed by the court as only an invitation to compare the two products, and to summarize the benefits of Icon Health's product versus Nautilus's Bowflex. The court granted defendant's motion for summary judgment (dismissal) on plaintiff's federal and state dilution claims relating to defendant's CROSSBOW mark and to defendant's purchase of the keyword “BOWFLEX INFORMATION.” Basically, the court rejected Nautilus's argument that defendant “actually used the Bowflex trademark.”

In terms of the keyword advertising, the court initially stated that it was clear that defendant purchased the keyword “Bowflex” only in the context of comparative advertising. Specifically, searches for this keyword returned sponsored links titled “Compare CrossBow to Bowflex.” The text following this title “asked users to compare the two machines, and summarized what the CrossBow machine had to offer.” The court also noted that the URL was listed as “http://www.crossbow.com.” The court, which cited the Ninth Circuit's decision in Playboy v. Welles to reach its decision, “explaining that such uses do not create an improper association between a mark and a new product, but merely identify the trademark holder's products.”

Main Point: Comparative advertising using protected trademarks as keywords is permitted so long as it is done fairly and without creating any type of consumer confusion.

Lesson #3: Trademark Infringement Possible by Internet Resellers

Mary Kay, Inc. v. Weber (2008). Probably the most informative of these cases has been a recent case where the beauty supplier Mary Kay sued an Internet reseller of Mary Kay's products for trademark infringement. In this case, the fair use defense did not apply and the Internet reseller was found liable for trademark infringement. The Mary Kay case is very illustrative to resellers because the reseller here was actually found liable for infringement even though it did not intend to mislead or confuse its customers. The defendant's website carried the following heading: “This Company has been established by former Mary Kay Consultants who are assisting consultants to liquidate their inventory. We offer Mary Kay products at a great discount. Most of our items are discontinued, past shelf life or expired, which is why we can offer you such great prices.”

Defendants began selling inventory on eBay through the website “marykay1stop.” Mary Kay demanded that the defendants cease using its Mary Kay trademark as part of the store name and remove all copyrighted Mary Kay photographs. Defendants removed the copyrighted materials and changed the name of the eBay store to “Touch of Pink.” They also created a website at “http://www.touchofpinkcosmetics.com” through where they continued to sell Mary Kay products. They also still used the Mary Kay name on these sites to identify the products that were being sold. Mary Kay ultimately sued the operators of the website for trademark infringement, among other claims.

Keyword Triggered Ads-The court examined whether the text of defendant's keyword-triggered sponsored ads improperly suggested an affiliation or sponsorship with Mary Kay. The subject ads read: “Mary Kay Sale 50% Off: Free Shipping on Orders over $100 Get up to 50% Off-Fast Shipping… ” The court initially commented that the wording “Mary Kay Sale 50% Off” does “imply that May Kay is hosting the sale.” The court then compared the text to other ads that had been found not to suggest any affiliation or sponsorship by previous courts. One of these courts, Brookfield Communications v. West Coast Entertainment (9th Circuit) described a hypothetical banner ad that would be considered permissible. The banner ad contained the following text: “Why pay for Moviebuff when you can get the same thing here for FREE?”

The Mary Kay court stated that if the ad only stated “Moviebuff 50% Off,” the line between the advertised service and the mark “would be far less clear.” In evaluating defendant's ad, the court found that “[o]ne could easily conclude from this ad that the entity offering the sale either is Mary Kay, or has Mary Kay's approval.” The court decided that the issue of whether fair use protected the use of the Mary Kay trade mark in the text of the sponsored ads presented a genuine issued to be determined by the court.

Use Directly on Website-The court did not apply the fair use defense regarding Weber's use of the Mary Kay mark on her website, the court declined to decide whether such uses constituted nominative fair use. The court instead applied the traditional likelihood-of-confusion factors to determine whether the website created a likelihood of confusion as to affiliation or sponsorship with Mary Kay. The court found that six of the seven factors favored Mary Kay. These factors included that the marks used and products sold by Weber were identical to Mary Kay's marks and products; the identities of potential purchasers were “likely identical or at least very similar”; the parties used the same advertising media; and there was some evidence of actual confusion in the form of emails with one individual and “legally relevant” confusion from an otherwise flawed survey.

IntentThe final factor the court considered was the defendant's intent, which was “neutral” according to the court. Defendant had placed a disclaimer on their website stating that the website was not endorsed by or affiliated with Mary Kay. But, the court noted that it was not prominent and did not even appear unless a user clicked on an “About Us” link.

Conclusion

The court denied defendant's nominative fair-use defense regarding direct use of the mark on the website and the case proceeded to trial. Ultimately, a jury found for Mary Kay on its trademark infringement and unfair competition claims. The court clarified that the defendants could only use so much of the protected trademark as was necessary to identify the genuine, non-expired products defendant was selling. However, the court refused to prohibit defendants from purchasing Mary Kay's trademarks as search-engine keywords. It did not specifically comment on use of the Mary Kay trademark in the keyword-triggered sponsored ads. But, the court decided before the trial to allow the fair use defense to be analyzed in this context (instead of outright rejection of the defense). Also, direct comments by the court during the trial specifically suggest that keyword advertisers could use trademarks in keyword-triggered ads if not used in a way to suggest affiliation with the trademark owner.

Main Points:

  • The Court concluded that purchasing keywords which are trademarks does not by itself bar the fair use defense (the Court believed that users of a search engine would not assume that sponsored link advertisers were affiliated with a trademark entered as a search term);
  • The Court examined the text of the Sponsored Ads to determine whether it suggested affiliation with or endorsement by Mary Kay;
  • There is no absolute right to use a trademark owner's marks to resell its ed products as such sales may be limited by exceptions like the “materially different” standard for expired products;
  • Text of keyword-triggered ads should be more of a comparative advertisement in order to be able to assert the nominative fair use defense, at least according to the court in the Mary Kay case;
  • Inconspicuous use of a disclaimer on a reseller's website, including a disclaimer accessible only from a link on the site's main page, is not sufficient to avoid a likelihood of confusion.

Infringement from Metatags

Meta elements provide information about the content contained on a given webpage. Usually, they are included to help search engines index the pages properly. A meta tag is a coding statement in the HTML that describes some aspect of the contents of a webpage. The information that you provide in a meta tag is used by search engines to index your webpage. Keyword meta tags list the keywords or keyword phrases that describe the contents of the webpage. These tags are placed near the top of the web page as part of the heading.

As any SEO guru would tell you, proper meta tags can help your website obtain higher search engine rankings. But, if you use any protected trademarks of any of your competitors as metatags, you might be liable for trademark infringement. Infringement can occur in this situation because your website was listed in the search engine results by using someone else's protected mark. There are different kinds of meta tags, but the most important tags used for search engine indexing are keyword meta tags and the description meta tags. The description meta tag includes a brief description of the webpage. Potential customers of your competitor will naturally use the brand name or trademark as a keyword when they use search engines to find that competitors' products. So, if you try to achieve rankings by essentially diverting your competitor's customer stream, you could do so at your own peril.

Bottom Line Legal Guidelines

There really is no uniform standard regarding infringement for comparative or trademark keyword advertising. One court might view some factors as more important than another court will. However, the following general principles have seemed to emerge from each of these cases (and others) and should therefore be followed by your business:

  • The courts have generally applied the fair use defense in evaluating claims of trademark infringement with keyword advertising and comparative advertising is generally permitted;
  • The first sale doctrine does not absolutely apply, as in cases where the material nature of the good may not be the same as the original-i.e. expired goods;
  • The courts have looked predominantly at the sponsored links and the wording of the relevant ad to find any suggestion of affiliation or sponsorship;
  • Using Disclaimers may help prevent liability, but they must be prominent and used properly (we discuss using website disclaimers in detail later);
  • Determination of any trademark infringement by providers, like auction sites, has typically relied heavily on whether these providers have received notice and then subsequently taken down the infringing materials;
  • The courts have favored service providers who do more than is legally required in dealing with trademark infringement claims. (The court in the eBay case noted eBay's efforts at combatting counterfeiting and how it worked in good faith with third party owners to prevent infringement). This means if you're a provider, you should have a comprehensive mechanism in place to combat counterfeit goods and infringing uses of another's trademark on your website or platform;
  • Using a someone else's trademark as a meta tag may result in trademark infringement;
  • Do not use the trademark as a source identifier on the packaging of any goods your business actually provides unless you're an authorized reseller of those goods;
  • Do not display the trademark (keyword) on your website or any other promotional materials used by your business.

Ultimately, the lack of appellate court decisions on this issue and the inconsistent analysis of the district courts who have decided this issue make it difficult to develop an effective strategy for reducing the risk of trademark liability. This means that all businesses employing trademark keyword advertising methods should proceed at their own risk. Accordingly, you should probably avoid using keywords that are known trademarks of someone else entirely to be completely safe.

You should stick with keywords natural to your own business or related to the goods/services your business offers or is reselling. Content relating to your business should always be used over obvious trademarks in any keyword advertising campaign.

This article was written by Philip A. Nicolosi, J.D. Mr. Nicolosi provides legal services through his law firm, Phil Nicolosi Law, P.C., focusing on startup and small business law, Internet & technology law and commercial transactions.

Mr. Nicolosi serves as a trusted advisor to numerous startups and small to medium sized businesses. This includes representation for a wide range of business law matters including business organization, corporate/LLC governance, regulatory law, contracts and transactions and most other matters outside of litigation. Mr. Nicolosi provides guidance with e-commerce, Internet marketing and technology-related legal matters. He also assists startup technology companies with seed financing, venture capital and exit transactions.

Mr. Nicolosi is also the founder of InternetLegalArmor (www.internetlegalarmor.com), an automated custom website legal document solution.

Visit Phil Nicolosi Law now, or contact Mr. Nicolosi directly by sending an email to info@philnicolosilaw.com

Article Source: http://EzineArticles.com/8602539

Who Owns My Website?

Who Owns My Website?Imagine one day, after you have successfully launched your Internet business, you sit down to surf the web and do a little research on your competitors. Suddenly, you discover a website that is in direct competition with your business and the site looks similar to the website you paid hundreds of dollars to have created. Now you're pretty angry and your first instinct is to pick up the phone and threaten the website operators with legal action. But, hold on, you or your business may not actually “own” the copyrights to your website or separate site elements!

Who Owns Your Website Under Copyright Laws?

Even though you may own the domain name or content on your website, the ownership rights to the website design and separate website elements may reside with the creator. If that is the case, you are merely left with an implied, non-exclusive license to use your website and the separate website elements created for you or your business.

If you hired a designer or other third-party to design and create your site, he or she may legally hold the copyright to your website. Under United States copyright law, creators are presumed to own the copyright in the works they create. This means that whoever creates the various aspects of your website will be presumed to have ownership of the copyright in those specific elements (the concept of separate website elements is discussed more below). Unless you are the actual designer of your website and each separate element, then the only way you can legally acquire the exclusive ownership rights to your website is by having a signed writing with the creator transferring all of those rights exclusively to you. Under the provisions of the United States Copyright law, a transfer of exclusive rights in a copyrighted work must be in writing and signed by the owner of the rights. Thus, if you engage the services of an independent website designer, you do not own exclusive rights to the website or certain separate elements of your site unless you have a written website development agreement stating this. There are also other important reasons why you should always use a website development agreement.

Separate Website Elements Ownership

If multiple people contribute to the design of your website and these contributions are distinguishable, there may be separate copyright owners of each separate element. In other words, the different aspects of your website may be owned by whoever created those aspects. For instance, there is a copyright in the design or website template (the overall “look and feel” of the site), and there are separate copyrights in the content contained on a website such as the text, images, graphics, videos. Images and other elements such as the header are all separate website elements that contribute to the overall website design. If the website designer created each separate element and not just the website template, he or she would likely hold the copyright to each element.

Collectively, the overall look and feel of your website design may be protected “trade dress” if the design is distinctive enough. This is yet another evolving area of Internet law where no established and consistent guidelines are yet in place. On the other hand, any elements downloaded from the internet are already in the public domain, assuming that such elements do not contain copyright restrictions. If any of these elements have been created by you, such as your logo, your photo, animations, etc. then you own the rights to those specific and separate elements of your website.

However, you should keep in mind that any actual photographs you provide may actually be owned by the photographer that took those photos. The photographer would be considered the author of that particular “work”. Unless you have ownership rights through some contractual arrangement when any photos or images were created for you, the photographer would likely own those images.

Another distinct element is the text contained on your website. Obviously, if that has been created by you, you own the copyright to the text. But, it is not simply the text that appears visually on the screen. The way in which text is formatted and presented in the form of HTML, or even VRML coding is also protected. If your website designer created that coding, then the coding, as distinguished from the text itself, may be owned by the designer. Similarly, the manner in which the website designer has set up the hyper linking on your site may be owned by the designer.

The bottom line is that you may own the text, but the designer may own the way the text is configured and coded on your website. Again, the key is to obtain a written website development agreement transferring all of these rights to you or your business. Otherwise, it may not be clear who owns your website!

This article was written by Philip A. Nicolosi, J.D. Mr. Nicolosi provides legal services through his law firm, Phil Nicolosi Law, P.C., focusing on startup and small business law, Internet & technology law and commercial transactions.

Mr. Nicolosi serves as a trusted advisor to numerous startups and small to medium sized businesses. This includes representation for a wide range of business law matters including business organization, corporate/LLC governance, regulatory law, contracts and transactions and most other matters outside of litigation. Mr. Nicolosi provides guidance with e-commerce, Internet marketing and technology-related legal matters. He also assists startup technology companies with seed financing, venture capital and exit transactions.

Mr. Nicolosi is also the founder of InternetLegalArmor (www.internetlegalarmor.com), an automated custom website legal document solution.

Visit Phil Nicolosi Law now, or contact Mr. Nicolosi directly by sending an email to info@philnicolosilaw.com

Article Source: http://EzineArticles.com/8591418

Is Your Website or Social Media Contest or Promotion Legal?

Is Your Website or Social Media Contest or Promotion Legal?You may decide to offer some type of prize promotion, such as a sweepstakes or contest to promote your website or business. While sweepstakes and contests are generally permitted in most states, lotteries are not. The following summary of website and social media lottery, sweepstakes and contest laws should help your business stay within the boundaries of the law.

Online Lotteries

Lotteries are generally prohibited in each of the fifty states unless legislatively exempted (i.e., state run lotteries). The element of “chance” is one of the elements generally required to be present in order for some promotion or activity to violate a state anti-gambling statute. Most states have concluded that where the elements of skill, whatever they may be, predominate over the elements of chance in determining outcome then the game involved does not violate that state's anti-gambling law.

A lottery consists of a prize, chance, and consideration. Therefore, sweepstakes, contests and similar promotions must omit one of the three elements of a lottery to avoid being deemed as an illegal lottery. They both only combine two of the three “lottery elements.” A contest combines the elements of prize and consideration, but the prize is awarded to on the basis of skill rather than chance. A sweepstakes combines the elements of prize and chance, but lacks the element of consideration.

Thus, a prize promotion that conditions the chance to win on subscribing for a service, purchasing a product or, in some states, visiting a physical store, may be deemed an illegal lottery.

Federal statutes prohibit, among other things, the mailing or transportation in interstate or foreign commerce of promotions for lotteries or the sending of lottery tickets themselves. (Pic-A-State Pa., Inc. v. Reno, 76 F.3d 1294 (C.A.3 (Pa.), 1996). State laws vary, but “chance” is one of the elements generally required to be present in order for a game to violate a state anti-gambling statute.

States restrict illegal lotteries through criminal anti-gambling laws. For example, the Illinois anti-gambling statute defines an illegal lottery as “any scheme or procedure whereby one or more prizes are distributed by chance among persons who have paid or promised consideration for a chance to win such prizes, whether such scheme or procedure is called a lottery, raffle, gift, sale or some other name.”

Most states have concluded that where the elements of skill, whatever they may be, predominate over the elements of chance, whatever they may be, in determining outcome, then the “chance” element is lacking and the game involved does not violate that state's anti-gambling law. Most states apply this “dominant factor,” or predominance, test.

Are there express state Internet prohibitions?

The fact that a state has not passed a specific law does not make participation in or offering of gambling over the Internet legal under the laws of that state. The question is a complex one and is addressed in several of the articles included on this site.

Online Sweepstakes & Contests

Sweepstakes and contest or prize promotions are regulated by numerous federal and state laws. Federal agencies with jurisdiction to regulate sweepstakes promotions include the Federal Trade Commission (“FTC”), the Federal Communications Commission (“FCC”), the United States Postal Service, and the United States Department of Justice (“DOJ”). Sweepstakes promotions may also be regulated by state attorney generals and, in some states, district attorneys. In some states, this could require registration and obtaining a bond depending on the amount of the prize, among other requirements.

If you engage in this type of practice, talk to your Internet attorney to fill you in on the FTC and state requirements. You'll also want to include sold terms and conditions of the contest or prize promotion to protect your business.

The key for conducting a sweepstakes is avoiding consideration. That definition varies and will depend on various factors, such as: (1) how easy or difficult it is to participate in the sweepstakes; and (2) whether an alternative method of entry (e.g., entry by mail or fax) is available. Examples of consideration include conditioning entry on the participants purchase a product, a monetary payment, visiting a store, or even providing detailed consumer information in some cases.

Social Media Contest Liability

The FTC's 2009 revised guidelines confirmed that the rules continue to apply to endorsements and testimonials made directly through “new media” platforms including social media.The FTC has stated that a consumer endorsement made in an effort to win a prize is not different from a consumer endorsement in exchange for the payment of cash or free goods! If the chance to win a prize requires participants to post content featuring your business's products or services, the participants must disclose that their posts are pursuant to a contest. (This includes “pinning” photos of your business's products on Pinterest). Your business is expected to tell the participants to make clear that their posts are being made as part of a contest.

Don't Forget To Disclose “Material Connections”!

In a nutshell, your business and any individual endorsers must disclose any material connection. According to the FTC, “When there exists a connection between the endorser and the seller of the advertised product that might materially affect the weight or credibility of the endorsement (i.e., the connection is not reasonably expected by the audience), such connection must be fully disclosed.”

For direct endorsements made on social media, the FTC guidelines state that receiving a payment, a free product or some other benefit from your business in exchange for posting a product review or other endorsement is a “material connection” which must be disclosed. The individual endorser is the party expected to clearly and conspicuously disclose that connection. However, your business is expected to advise the endorser up front that this connection should be disclosed and have procedures in place to try to monitor postings by such individuals to confirm the connections are being disclosed.

In March, the FTC sent a letter to the shoemaker Cole Haan indicating that the pins required to enter its contest on Pinterest for a chance to win the $1000 prize were endorsements subject to the disclosure requirements! In that letter, the FTC has essentially clarified that asking consumers to post, pin or otherwise publish content on a social media platform regarding the company's products or services in order to enter a sweepstakes, contest or other prize promotion requires that the post be clearly labeled as being part of the contest!

How Should Social Media Contest Entry Disclosures Be Made?

It is not entirely clear how a chance to win a prize must be disclosed as a material connection with the contest posts or pins. What is clear is that a disclosure which makes no reference to a contest or to the company's brand fails the FTC's standards for disclosing the material connection. The FTC did not explain in its letter to Cole Haan exactly how such disclosures should read. But, according to the FTC's.Com Disclosures guide, “disclosures must be communicated effectively so that consumers are likely to notice and understand them in connection with the representations that the disclosures modify.” This is required even though space-constrained limitations of mobile devices and social media platforms causes obvious problems.

So, potentially, using a hashtag that names the sweepstakes or contest with each post will be sufficient. But, to play it safe, businesses should use a longer disclosure indicating that the post is being made as part of entering a particular contest, when the platform allows for longer disclosures to be made.

This article was written by Philip A. Nicolosi, J.D. Mr. Nicolosi provides legal services through his law firm, Phil Nicolosi Law, P.C., focusing on startup and small business law, Internet & technology law and commercial transactions.

Mr. Nicolosi serves as a trusted advisor to numerous startups and small to medium sized businesses. This includes representation for a wide range of business law matters including business organization, corporate/LLC governance, regulatory law, contracts and transactions and most other matters outside of litigation. Mr. Nicolosi provides guidance with e-commerce, Internet marketing and technology-related legal matters. He also assists startup technology companies with seed financing, venture capital and exit transactions.

Mr. Nicolosi is also the founder of InternetLegalArmor (www.internetlegalarmor.com), an automated custom website legal document solution.

Visit Phil Nicolosi Law now, or contact Mr. Nicolosi directly by sending an email to info@philnicolosilaw.com

Article Source: http://EzineArticles.com/8604012

Website External Links and Framing Legal Guide

Website External Links and Framing Legal GuideIf you operate a website, are you aware of the ways in which website operators can become liable for use of external links? Traditionally, website operators have not been held liable for merely placing an external text link on their website. But, doing more than simply placing a text link on your site and your website content may in many instances result in liability. The following legal guide will introduce you to basic liability resulting from misuse of external links and for framing.

Types of Links & Framing

Before I discuss external links and framing liability, you should understand the basic types of website links if you don't already. There are two basic types of external links. Text links (embedded links in text) are called hypertext reference (“HyperREFerence”) links. These links can lead to a different point on the same page, or to a different page in the same site. Of course, hypertext links can link to third party webpages also. A graphic may serve as a hypertext link, but usually these links commonly appear as underlined, capitalized or otherwise prominent text.

The second type of link is an Image (“IMaGe”) link. An IMG link directs the web browser to retrieve an image from a separate image file. This type of link can reference a file from within a website, or from a third party web site. For example, using an IMG link, a web page could direct the visiting browser to retrieve a protected image, video or other content contained on another website and show it on the original website. This presents a seamless integration of web content even though they are not from different websites.

This process, linking and incorporating the content (text, video, audio file, etc.) of another website is also known as “in-line liking.” For instance, a video link embedded on your website is simply an in-line link. An in-line link displays, or “frames” the third party file on the original web page. When the user visits the original page, the HTML code on the original page direct the user's browser to the file located on the third party webpage.

“Framing” is a practice where one website uses frames to incorporate the content of another websites into a browser window along with the content from the original website. The website doing the framing may post navigation tools, text, trademarks and/or advertising along with the framed webpages. The more the framed website is integrated into the original website users may become confused over affiliation, endorsement or sponsorship. Unauthorized framing has been challenged under a variety of legal theories, including copyright and trademark infringement, unfair or deceptive trade practices, passing off, false light and false advertising among others.

Meta tags and keywords are considered “de facto” links as well. (Use of meta tags and keywords can lead to claims of trademark infringement).

Possible Liability For Using External Links

A. Copyright Infringement

Most external links are lawful. Generally, permission is not needed for a regular hypertext link to the home page of another website. There is substantial case authority that provides that traditional hyperlinking is not direct copyright infringement because there is no copying or display involved.

For example, in a key decision that has helped shape the law, the court in Ticketmaster Corp. v. Tickets.com, Inc. (2003) stated:

“… hyperlinking does not itself involve a violation of the Copyright Act (whatever it may do for other claims) since no copyright is involved. The customer is automatically transferred to the particular, genuine Web page of the original author. There is no deception in what is happening. This is analogous to using a library's card index to get reference to particular items, albeit faster and more efficiently.”

However, using external links on your website may create legal liability in some cases. External links can be unlawful when they i) cause consumer confusion; ii) encourage or facilitate illegal copyright infringement by others; or iii) violate other laws. In particular, copyright infringement (direct, contributory and vicarious infringement), trademark infringement and dilution, passing off and misappropriation are the main areas of liability. Defamation may also come into play.

1. Contributory Copyright Infringement

Contributory copyright infringement can occur by providing links to websites that display infringing material and actively encourage or facilitate the use of those links in various ways.

Instructions on following links and encouraging visitors to use them or including software that facilitates downloading infringing copies of content (such as peer-to-peer software) or including software that assists the downloading of material from remote sources, are all considered material contribution to copyright infringement.

In the cases that have decided this issue, the common elements have been that a middle party makes available a list of links to third parties who willingly make copyrighted works available for viewing or downloading. Websites don't directly host or re-transmit the protected content, but they do provide links to materials made available by others.

Contributory infringement occurs when an individual or business knowingly induces, causes, or materially contributes to the infringing conduct of others. The essential elements of this claim are knowledge of and participation in the infringement. In establishing a claim of contributory infringement, a copyright owner must establish the website had requisite knowledge and participation. The knowledge aspect can be established if the website has been put on notice, such as by receiving a cease and desist letter from the copyright holder, or even by allegations made in a pending lawsuit against the website. The participation aspect can be established by placing a link which facilitates the user going to another website containing the infringing items.

-EXAMPLE: Intellectual Reserve, Inc. v. Utah Lighthouse Ministry, Inc. (1999): A website (Intellectual Reserve) posted copies of a church's copyrighted handbook and provided links to other sites that contained infringing copies of the handbook. In this example, the defendant knew and encouraged the use of the links to obtain the unauthorized copies. This was held by the court to constitute contributory copyright infringement. The court issued a preliminary injunction directing the defendants to remove statements identifying the domain names of websites containing the handbook. This was held by the court to constitute contributory copyright infringement. The court reached this result despite the fact that the defendants' website did not contain any direct links to the infringing websites.

Intent and context matter.

Case law has shown that defendants have been found liable because they did more than just post links. The intentional encouragement of copying or downloading of protected materials is a liability trigger. Context can make it clear that a link is posted merely for its informational (indexing, referencing) content. Without active encouragement of use of illegal content, then “aggravating” factors are missing and courts have not imposed liability. In cases involving informational (“pure speech”) links, the elements of material furtherance of infringement (contributory infringement) and financial gain from infringement (vicarious liability) likely don't exist.

But, contributory infringement is subject to reasonable limits.

-EXAMPLE: Bernstein v. J.C. Penney, Inc.: A photographer sued the retailer J. C. Penny for a link on its site to a movie database. This link in turn linked to a site in Sweden that allegedly infringed the photographer's copyright in a couple of photographs.The court denied the plaintiff's motion for a preliminary injunction, and the plaintiff dismissed his case. Although a final resolution was not reached, this case suggests that claims of contributory infringement cannot be remote. There must be some reasonable limits in terms of third party linking to infringing materials.

2. Deep Links

Deep links direct the user to an image or webpage other than the homepage of a third party website. Many websites post introductory materials including third-party paid banner advertisements and special promotions or teasers relating to their own site on the home page. Businesses expect that most website visitors will find those advertisements before going further into the website's other pages. Deep linking and bypassing the home page of some other website has caused lost revenues. Of course, this has led to lawsuits. But, deep linking to interior pages of a website by itself is not copyright infringement when the copyrighted materials are not shown or displayed on the original website.

Deep linking by itself without confusion of source is not unfair competition. (Ticketmaster Corp. v. Tickets.com, Inc.). If deep linking is somehow done in a way that would confuse viewers as to affiliation, sponsorship or endorsement by the other website (i.e. trademark infringement), this could trigger a claim. For example, a deep link that says “Click Here For More Information,” which then leads viewers to a page on a competitor's website containing information about a similar product.

3. In-line Links & Framing

Can I embed links to videos and use “In-line” Image links?

Case law has held that In-line linking and framing by itself is not direct copyright infringement. The content is not a display or distribution in violation of copyright law.

In-line linking and framing may cause some users to believe they are viewing a single webpage (seamless content). But, the Copyright laws do not protect a copyright holder against acts that cause consumer confusion. Without causing consumer confusion, in-line linking and framing is within the law (although it's considered bad web etiquette).

In order to prove direct copyright infringement, a plaintiff must first prove that the defendant copied the protected work. A plaintiff must first establish: (1) ownership of the allegedly infringed material and (2) violation by the alleged infringer of at least one of the exclusive rights granted to copyright holders. Many of the claims for direct copyright infringement for “unauthorized” use of in-line linking and framing have gone nowhere. This is because there was no actual copying and display of the infringing content.

-EXAMPLE: Perfect 10, Inc. v. Amazon.com, Inc., et al.(2007): In what was the first court to provide an actual decision regarding the use of framing, the Ninth Circuit Appellate Court held that framing infringing images found on third party websites via in-line linking is not direct copyright infringement. Google presents a framed page in its search results where the bottom half comes directly from the third party web site where the image is actually found. The court used the “server” test and decided that a website that “frames” content by providing an in-line link to the copyright holder's site is not a public display or public distribution. The framed content is not being stored on the framer's server. The court also found that Google did not commit direct copyright infringement by providing “in-line links” to third party websites that contained infringing images. The Court stated that providing a link to a third party website that displays infringing images, by itself, does not make the original website liable for copyright infringement.

The Court also laid out a new test for secondary liability on the Internet. A computer system operator must have “actual knowledge that specific infringing material is available using its system” and “continue to provide access to infringing works.” This is true despite the fact the provider could take simple measures to prevent further damage to the copyright holder. The court struck down the vicarious liability infringement claim due to Google's use of in-line links because Google had no ability to control the third party websites or compel them to remove infringing images found on those sites.

Framing and Inline linking of third-party content into another web page can potentially raise the following issues: trademark infringement, passing off, defamation and possibly copyright infringement for creating a derivative work.

Framing and in-line links pose the same trademark and derivative work concerns. Framing might be viewed as more problematic when it comes to trademark infringement. A viewer could easily conclude that all the material on the framing website belongs to that site. But, you cannot in-line link or frame third party web-content and always escape liability. Even though you are not directly copying the content, your framed page along with the content from an external framed page could be viewed as an unauthorized modification of the content. In terms of potentially creating a derivative work, this really is a grey area and depends on the context and nature of the framing. So far, the issue hasn't been directly decided, but many intellectual property attorneys feel this practice could result in a derivative work.

-EXAMPLE: In Futuredontics Inc. v. Applied Anagramic Inc. (1997): Applied Anagramic (Defendant) operated a web site and divided its pages into frames. Defendant's website contained an unauthorized link to the Futuredontics website that caused copyrighted materials on plaintiff's site to appear within one of the frames of Defendant's website. The problem was that the rest of the page was filled with content supplied by Defendant, including its logo and information about its business operations. The court found that Futuredontics had failed to show that it was or would be injured by defendant's conduct. Absent the requisite showing of injury, plaintiff was not entitled to injunctive relief. However, the court left the door open for the creation of a derivative work. The district court would not dismiss the claim holding that the defendants conduct may create an unauthorized derivative work.

B. Trademark Infringement & Dilution

Any link (in-lining or framing) that falsely leads the viewer to conclude that the web page (owner) is affiliated, endorsed or sponsored by the trademark owner could lead to a claim of trademark infringement.

Trademark infringement basically occurs when someone uses a mark of another in such a way that creates a likelihood of confusion. Using an image link or framing that places another party's trademark or logo on your web page may cause confusion.For example, the use of a company logo to link to the company's website could be trademark infringement. If the consumer is likely to believe that the third party business or website is associated with your website, it is infringement. As a general rule, a link that simply uses a text reference rather than a logo or trademark does not make any implication about affiliation.

The use of logos and trademarks as direct links presents an obvious problem. Using a trademark or logo can expose you to liability if a court finds that the reasonable consumer would likely be confused, given the facts. In addition, The Federal Trademark Dilution Revision Act (FTDRA) of 2006 provides owners of famous marks with protection against dilution by blurring and dilution due to tarnishment. Under the revised FTDA, the plaintiff only needs to show the defendant's mark is likely to cause dilution. Improperly framing content of another website may result in consumer confusion (direct infringement) and/or claims of dilution.

-EXAMPLE: Washington Post Co. et al vs. Total News, Inc. (1997): The website Total News was sued by the Washington Post and CNN. The plaintiffs claimed trademark dilution for the framing of the news pages of plaintiffs' sites in a frameset that contained TotalNews advertising. Plaintiffs believed viewers of Total News would be confused since the viewer would see the plaintiff's news pages within a Total News frame, but without plaintiff's banner advertisements. This case was settled without a decision, but Total News agreed to stop framing and to use text-only links.

-EXAMPLE: Hard Rock Cafe, Int'l, Inc. v. Morton (1999): Defendant installed a link on their website which contained the words “record store.” Clicking on this link took the user to the “Tunes” web page which appeared in frames on the defendant's website. Frames appeared above and to the left of the webpage content containing the Hard Rock Hotel logo. The court found that a likelihood of confusion arose from framing the website because the distinction between the two sources of material appearing on the screen was not clear. “Through framing, the Hard Rock Hotel Mark and the [infringing site] were combined together into a single visual presentation.” However, the court did state that framing is a flexible device that in some instances might provide a clear distinction between different sources of the content.

A direct link contained on an offensive or disparaging website (i.e. a pornographic site) could potentially trigger a claim for trademark tarnishment?

Rule: If no “reasonably prudent Internet user” would associate a trademark with the linked site, then this claim would likely fail.

-EXAMPLE: Ford Motor Company v. 2600 Enterprises (2001): Defendant's website contained a text link to Ford's homepage from the website fuckgeneralmotors.com. Ford sued for trademark dilution, trademark infringement, and unfair competition. The district court stated that linking by using a trademarked domain name in a programming code is not a violation of the Ford trademark nor is it dilution of the mark.

-EXAMPLE: Voice-Tel Enters., Inc. v. Joba Inc. (2003): A claim for tarnishment cannot arise from the use of a trade mark on a website containing a link to a potentially offensive site.

C. Passing Off

Using external links improperly may be “passing off” if a website uses links to suggest that its products are those of a more highly regarded competitor.

There are additional common law claims under state unfair competition laws, namely passing off, contributory passing off, reverse passing off, and misappropriation. Passing off occurs when someone or some business tries to pass off its product or services as a third party product or services (or as having some association or connection with a third party when this is untrue). So, for example, framing webpages of a competitor's website in a way that suggests your products are affiliated or made by the competitor.

1. Contributory passing off occurs when the defendant assists or induces another (typically a retailer) to pass of its product as the plaintiff's product.

2. Reverse passing off occurs when someone tries to pass off someone else's product as their own. If you pass off images or logos via in-line links or by framing within your website in a way that suggests affiliation, this could amount to reverse passing-off. This is basically where the work of someone else is passed off as your own. For instance, you could tell your viewers to click here to see some product examples of what you sell, but which are taken from a competitor's webpage, and then claim they are your products. This type of reverse passing off by using a link to pass-off another's work violates state unfair competition and/or unfair business practices laws.

D. Misappropriation

is unauthorized use of another party's property of funds for personal gain. This is yet another potential concern if your using an external link(s) in a manner that allows you to gain something of value.

E. Negligence

Linking to a source which turns out to contain misleading or which contains harmful information may cause liability for negligence. Even simple informational links posted with no particular commercial purpose could create risks under the theory of “negligent publication.” Carefully drafted disclaimers in an External Links Policy, as discussed below, can help advise your website viewers that you are not responsible for third party website content.

F. Defamation

A link to another's webpage or image could be defamatory. For example, “This mortgage broker ripped me off and lied to me.” The statement itself does not identify the party. The link (assuming it actually linked to someone's website or webpage) provides the context that turns the statement into defamation, however.

TIP #1: Use External Links Policy/Disclaimers!

Using a properly drafter External Links Policy, which is really just a set of disclaimers, can serve as a defense to liability for external links. The disclaimers can help protect your business against a claim that could be made by any users of your site. Posting disclaimers is not an absolute shield from liability. But, it does put users on notice that the business does not control or have any affiliation with the content of third party websites. It can also set forth a policy for placing links on your website. Properly drafted external links disclaimers can prevent claims by your website users.

Some websites post no specific disclaimers, but instead display a notice stating something like “by clicking on this link, you will be leaving this web site and will be directed to a third party site, which we have no control over the content.” This operates as a disclaimer. You could also choose to use a link prominently located on your website leading to a separate page with the policy. Using a link labeled External Links Policy” is customarily how this should be handled. But, any link should be prominently located on your website and not hidden.

The best practice is to stick any external links disclaimers on a separate disclaimers page and in the website terms of use. You can then make your website visitors register and click to agree to the website terms before accessing any meaningful portion of your website.

TIP #2: Post a Hyperlink Policy On Your Site!

Your website should contain internal policies concerning who may link to your website and the manner in which it must be done (i.e. a “Hyperlink Policy”). You should also use a link exchange or hyperlink agreement whenever another website wants to do a link exchange with your site. This type of agreement should be used regardless of whether your business is being compensated for placing the link. The most important item to address in such an agreement is indemnification. I talk more about Indemnification later, but it basically is a way to get compensated by the owner of another website for liability your business incurs.

If there is infringing material on the site, the linked-owner is required to indemnify (reimburse all financial damages and costs incurred due to the link on your site) and defend your business against any claims. Indemnification should cover any claims of libel, violation of right of privacy, plagiarism, copyright or trademark infringement and any other claims or suits based on the content contained on the third party website.

Any website requesting a link should also provide a warranty and representation that the website operator(s) has the right to display all materials contained on the website. None of the content on the third party site should infringe on the rights of others including but not limited to rights in trademarks, copyrights, and patents. Further, the operators should warrant and represent that the third party website does not contain any obscene, vulgar, defamatory or any other illegal material.

Summary: External Links & Framing Guidelines

    • Avoid using links that suggest affiliation or sponsorship with some third party. Any link that falsely leads the viewer to conclude that the web page author is affiliated, approved, or sponsored by another website could lead to a claim of trademark infringement. This means avoid using links which are trademarks or logos. As a general rule, a text link that simply references a third party name (or product) rather than a logo does not suggest affiliation, endorsement or sponsorship;
    • Avoid using deep links that cause confusion as to source or affiliation with a third party website;
    • Avoid framing when doing so will cause consumer confusion. Including protected content or a third party trademark in the frame may cause confusion. If the frames are used to either make your website content look like it belongs to the linked site, or to make the linked site content look like it belongs to you, this could trigger a claim. You should clearly indicate third party ownership of any content you display from a framed third party website;
    • Framing content from other webpages in such a way that omits their banner advertisements and other ads;
    • Avoid using links (in-lining or framing) that pass off the goods or services of another company or website as your own;
    • Avoid using links that pass off your goods or services off as that of one of your competitor's;
    • Avoid websites that are “linking” sites. These websites provide access or unauthorized links to other websites where pirated sporting and pay-per-view events are hosted, where movies (or trailers) can be downloaded, or that contain illegal content such as pornography;
    • Avoid Defamatory links (i.e. “This guy ripped me off” where the link leads to a website operated by or involving the person referred to as “guy”);
    • Check the websites your links lead to regularly. Website owners change and website content may change over time;
    • Use an External Links Policy on your website and use a Hyperlink Agreement for link requests;
  • Obtain Permission to link to another website.The simplest and most direct way to prevent claims for infringement is to obtain permission. Some websites solicit or encourage links, and even make symbols and other graphics available that you can download and use as the linking symbol. Some web sites perform some type of limited screening and approval process before granting permission. Otherwise, you can contact the website administrator directly via email and request linking to the website or a link exchange ideally.

This article was written by Philip A. Nicolosi, J.D. Mr. Nicolosi provides legal services through his law firm, Phil Nicolosi Law, P.C., focusing on startup and small business law, Internet & technology law and commercial transactions.

Mr. Nicolosi serves as a trusted advisor to numerous startups and small to medium sized businesses. This includes representation for a wide range of business law matters including business organization, corporate/LLC governance, regulatory law, contracts and transactions and most other matters outside of litigation. Mr. Nicolosi provides guidance with e-commerce, Internet marketing and technology-related legal matters. He also assists startup technology companies with seed financing, venture capital and exit transactions.

Mr. Nicolosi is also the founder of InternetLegalArmor (www.internetlegalarmor.com), an automated custom website legal document solution.

Visit Phil Nicolosi Law now, or contact Mr. Nicolosi directly by sending an email to info@philnicolosilaw.com

Article Source: http://EzineArticles.com/8604105

The Golden Rule of Domain Name Use!

The Golden Rule of Domain Name Use

The most basic and the “golden” rule of using a domain name (and website) is that you should maintain control as the registrant of your domain at all times! Your domain name is the life-blood of your online presence. You or your business should always be listed as the registrant of the domain name on the WHOIS database as the registrant is the legal owner of the domain. This means when you purchase the domain name, do it yourself. Do not allow someone else to purchase the domain on your behalf and list themselves as the registrant. Most problems involving your website, host account, contractors, etc. can be fixed. But losing control over your domain can be catastrophic!

For example, if you rely on a web site designer to apply for and register your website domain name, the registrant information could be incorrect. The individuals that purchase the domain name on behalf of you or your business often list themselves as the registrant, purposely or otherwise. If there is ever a problem with the domain, the domain hosting needs to be changed or the domain needs to be redirected, sold etc., you or your business will not have authority to do so unless you or your business is listed as the registrant of the domain!

Host providers such as GoDaddy or Network Solutions do not list themselves as the registrant of your domain or website (like all other reputable ISP's). However, I strongly recommend you always carefully read the terms and conditions of your Host or ISP agreement to be certain if you are dealing with an unknown or new registrar.

You can share limited administrative functions with your designer or other third-party. But, you should maintain complete control over the actual domain account administrative functions (user name and password) at all times. In other words, make sure you or some trusted employee is named as the administrative, billing and/or technical contacts of the domain registrant. Any person or entity named as a contact on the WHOIS database has the power to affect your domain name. At a minimum, the billing contact should be someone who you can at least trust will ensure the domain name is renewed before it expires.

Controlling your domain name is also extremely important since you should have the ability at all times to transfer the domain to another host provider at your will. If you use an unreliable hosting service, you will want to be able to redirect the domain name server (DNS) to another host provider. If you decide to hire a website developer to create your website and/or handle the domain name purchase and registration, you MUST read your web site development agreement carefully. You must make sure that the agreement does not contain any language that says that the web site designer owns the domain name or allow your designer to list anyone other than you or your business as the registrant!

I recommend that you set up the hosting account yourself through the host provider and then provide the FTP (file transfer protocol) user name and password information only to the designer. Ideally, you should simply designate the web developer as an account executive without providing any FTP account information (Go Daddy allows you to do this). DO NOT provide your main domain account user information (user i.d. and password) to your designers or any other third-parties. Otherwise they will have administration information to the domain account and could potentially exercise control over the domain(s).

This article was written by Philip A. Nicolosi, J.D. Mr. Nicolosi provides legal services through his law firm, Phil Nicolosi Law, P.C., focusing on startup and small business law, Internet & technology law and commercial transactions.

Mr. Nicolosi serves as a trusted advisor to numerous startups and small to medium sized businesses. This includes representation for a wide range of business law matters including business organization, corporate/LLC governance, regulatory law, contracts and transactions and most other matters outside of litigation. Mr. Nicolosi provides guidance with e-commerce, Internet marketing and technology-related legal matters. He also assists startup technology companies with seed financing, venture capital and exit transactions.

Mr. Nicolosi is also the founder of InternetLegalArmor (www.internetlegalarmor.com), an automated custom website legal document solution.

Visit Phil Nicolosi Law now, or contact Mr. Nicolosi directly by sending an email to info@philnicolosilaw.com

Article Source: http://EzineArticles.com/8604438

What Should Your Website Privacy Policy Say?

What Should Your Website Privacy Policy Say

Think of your privacy policy as a disclosure statement for your website visitors. In order not to be misleading or deceptive, you need to disclose each specific practice or policy regarding the collection, use and dissemination or disclosure of all personal information. So, you need to know how and what information your website will collect.

In the most basic sense, you need to understand exactly how your business collects data, how it uses that information and how it shares or distributes it so your privacy policy can be accurate and not misleading. If you don't understand how your business discloses or uses information, you obviously won't inform your website visitors. This, in turn, could be considered deceptive. Unfortunately, most websites copy privacy policies they find on other sites. Copying another privacy policy may describe the practices of some other website, but may not describe your policies. This may be deceptive in of itself since it misleads your visitors.

Website operators should always post a privacy and/or communications policy on their website if the website gathers any type of personal contact or identifying information from website visitors and/or customers. This applies to websites that collect only email addresses. Personal information generally includes contact information such as a visitor's physical address, phone number or email address and identifying information such as first and last names, social security number, etc. If your website conducts sales of goods, you will almost undoubtedly be collecting this type of information.

Additionally, registration with your website and/or the information your website collects to process a transaction or interact with some feature will result in collecting personal information. Collecting passive use information about how website visitors use and interact with a website should also be disclosed, especially if this information is then bundled with personally identifying information.

Simply because you do not plan on disseminating this information to third parties does NOT mean you should ignore having a privacy policy on your website.

Many websites use California's Online Privacy Protection Act (“OPPA”) requirements as guidelines in drafting their privacy policies. You should use these basic requirements as the framework for your website's privacy policy since they are well defined. Disclosing exactly how and when you collect personal information and when you distribute or disclose it will determine how to fill in the remainder of the policy avoid liability under the FTC Act and any other applicable state law.

When drafting your privacy policy, you should always disclose the following:

    • When your website collects information. Your website may collect information upon registration with your website, or when any of your visitors order a product. But, how else will it collect information? Other collection of data may occur through collection of website traffic and aggregate usage data. For instance, the date and time a user visits your site, the (IP) address from which your website was accessed, the webpages visited, duration on each page, the type of browser and operating system used to access your site, etc. Information may also be collected through correspondences such as through emails, faxes or phone calls with your business. Collection of information also occurs through credit card processing or other third party applications accessed through your website;
    • The information your website actually collects. What personal information will your website collect? You should use OPPA as your guide in defining and determining this information;
    • How your business will use the personal information. You need to disclose exactly how your business intends to use any data or information it collects. Don't leave anything out. If you don't distribute any information, but will store it in some customer contact database, disclose this. Similarly, facilitation of product purchases or collection for future promotions should be disclosed in your policy;
    • The information that is disclosed or provided to third parties. You must determine all the possible ways you will disclose your visitors personal information you collect. These will include information provided during the shipping process, to credit card merchants and banks, your host or ISP through operation of the website, etc. You should disclose all of this even if you don't intend on distributing information to third parties;
  • Will you use cookies or any type of tracking device? This should be clearly disclosed to website visitors and agreed to beforehand. Also, if you use “third-party cookies” (i.e. using a third party such as Google Analytics that passes cookies directly to your website visitors' browsers) this should now also be disclosed.

FTC Rulings Establish Guidelines

You should use the lessons learned from previous FTC enforcement actions to complete the rest of your privacy policy. Here is a quick summary of those lessons:

-Always Follow Your Privacy Policy. If you make statements that you won't distribute your visitors personal information or that “all information you provide will remain anonymous” you better follow those statements. If you don't do what you say, your business will be in violation of the FTC Act. Pretty simple concept-if you lie, you are in violation of the FTC Act and potentially OPPA and maybe other state laws;

-Disclose Exactly How Your Website Treats Personal Information. I touched upon this earlier. You must disclose all the ways you intend or will disclose personal information you collect. This is really a key lesson to be taken away from the FTC's existing enforcement actions. If your object is only to provide information to one party, but you disclose it to third party marketers also, you must absolutely disclose this. If you collect information by accessing the personal information of third party sites through some service arrangement or software application you provide, this is also deceptive;

-Have Security Measures in Place. In a nutshell, you need to protect your customers and visitors personal information. The FTC has also stated that misleading express or implied statements about website security is prohibited. According to the FTC in one of their administrative decisions, your website must implement and document procedures that are reasonable and appropriate to: (1) prevent possible unauthorized access to your system (2) detect possible unauthorized access to the system; (3) monitor the system for potential vulnerabilities; and (4) record and retain system information sufficient to perform security audits and investigations.

In subsequent cases, the FTC added to its definition of what constitutes “reasonable and appropriate security” measures. The FTC added requirements that (i) companies should not store sensitive information for unnecessarily long periods of time or in a vulnerable (i.e., non-encrypted) format, (ii) must use strong passwords to prevent a hacker from gaining control over computers and access to personal information stored on a network, (iii) must use readily available security measures to limit access between computers on its network and with the internet; and (iv) must employ sufficient measures to detect unauthorized access to personal information or to conduct security investigations.”

-Proper Training and Oversight is Required. Inadequate training and oversight of the personnel who will implement your privacy policy is a reasonable step your business must take, according to the FTC.

-Don't Change Your Policy After the Fact. You cannot retroactively change your privacy policies to the detriment of consumers. If you began to disclose or sell personal information provided by your visitors without seeking or receiving their consent, your business will be violating the law. Your business must take additional steps to alert customers that it has changed its policy to permit third-party sharing of personal information without explicit consent. The FTC has complained that the retroactive application of privacy policy changes “caused or is likely to cause substantial injury to consumers.” The FTC says you should provide additional notice when your privacy policy has materially changed and what aspects of the policy have changed. Any time you do, you must obtain the consent of your customers who have previously provided personal information.

-Notify Visitors about Privacy Policy Changes. As stated, each time you change your privacy policy, the best practices include notifying visitors of the changes and requiring them to accept the changes after clicking through the amended policy. Any personal information you obtain from previous website visitors should not be used in a manner different than the original privacy policy unless you obtain their consent somehow.

If the FTC ever does file a complaint against your business, it could lead to very stiff civil penalties and consumer redress damages. Better to play it safe then risk shelling out thousands of dollars to the FTC. In conclusion, the best route to take is to draft a privacy/communications policy based upon OPPA and the guidelines set forth by the FTC.

Posting Your Privacy Policy

The basic principles set forth by state and federal laws provide that you should post your privacy policy in a conspicuous manner. A privacy policy is really just a disclosure to prevent your information collection practices from being deceptive.

You should follow the guidelines below on how and where to place your privacy policies, which are meant to comply with FTC laws and the requirements set forth under OPPA.

    • Post the privacy policy directly on the homepage of your website or first significant page after entering your website; or
    • Place a link that contains the word(s) “privacy” or “privacy policy” on the homepage of your website, or on the first significant page after entering the site. The link should lead to a separate page containing the privacy policy. The text link should be written in capital letters equal to or greater in size than the surrounding text or in contrasting type, font, or color to the surrounding text, or set off from the surrounding text somehow with symbols or other marks that call attention to the language” (i.e. “PRIVACY POLICY); and
  • Any privacy policy page links should not be hidden or innocuous where your visitors have to scroll down to the bottom of the page to find it. In other words, the link should be placed on the immediately visible portion of the page.

Federal laws

There is no specific federal law regulating or requiring a website to have or post privacy policies. However, Section 5 of the Federal Trade Commission (“FTC”) Act prohibits unfair or deceptive marketing practices. While the FTC does not regulate privacy issues, any deceptive act or practice in commerce will lead to liability under the FTC Act. If your business gathers and unlawfully disseminates or discloses information from your visitors, this will generally be categorized as a deceptive or fraudulent business practice under the FTC Act.

The bottom line is that use and/or dissemination of information collected from website visitors is deceptive when the visitor is not properly made aware of the potential for this use and sharing before he or she provides any information to the website. The FTC basically requires that website operators/owners clearly inform visitors about all the ways the website collects any of their personal information (“personally identifiable information”) and then how this information will or may potentially be used or shared with third-parties. There is no specific obligation imposed upon website operators to actually post a privacy policy on their website under the FTC Act. However, if you don't post a privacy policy on your website informing your visitors about all the ways your website collects and then discloses their personally identifying information, this is a deceptive practice.

If you post a privacy policy on your website and you or your business does not follow the stated policy, this will also be considered as a deceptive practice. For example, if you state on your website that the operators/owners do not sell or provide any collected email addresses to third-party marketers, but then you do anyways, this is obviously a deceptive practice. In other words, the website privacy policy cannot mislead your website visitors. According to the FTC, a violation of a former written agreement such as a privacy policy is clearly a deceptive act or practice.

Other then the FTC Act, some federal laws govern privacy policies in specific circumstances. This includes the Children's Online Privacy Protection Act (COPPA), the Gramm-Leach-Bliley Act, which governs “Financial Institutions” and the Health Insurance Portability and Accountability Act (HIPAA).

State Website Privacy & Security Laws

A handful of states have separate online privacy protection statutes or have some express law dealing with gathering information from a website. A few states have laws placing security requirements on websites that collect personal information.

The following states have implemented more specific laws governing website privacy policies and security requirements:

California has adopted the California Online Privacy Protection Act of 2003 (California Business and Professions Code Sections 22575-22579). The law requires “any commercial web sites or online services that collect personal information on California residents through a web site to conspicuously post a privacy policy on the site”. It also requires the policy to identify the category of personal information that the website collects and the third parties whom the information may be shared with by the website. This statute applies to any website that collects personal information from a California resident.

Connecticut requires any person who collects Social Security numbers in the course of conducting business to create a privacy policy. The policy must be “publicly displayed” by posting it on a web page and the policy must: (1) protect the confidentiality of Social Security numbers; (2) prohibit unlawful disclosure of Social Security numbers; and (3) limit access to Social Security numbers. Connecticut laws now also require that businesses must “safeguard the data, computer files and documents containing the [personal] information from misuse by third parties” and “destroy, erase or make unreadable such data, computer files and documents prior to disposal.” Conn. Pub. Act 08-16, § 1.

Nebraska prohibits knowingly making a false or misleading statement in a privacy policy, published on the Internet or otherwise distributed or published, regarding the use of personal information submitted by members of the public.

-Pennsylvania includes false and misleading statements in privacy policies published on websites or otherwise distributed in its deceptive and fraudulent business practices statute.

-Nevada requires that “[a] business in this State shall not transfer any personal information of a customer through an electronic transmission other than a facsimile to a person outside of the secure system of the business unless the business uses encryption to ensure the security of electronic transmission.” This includes all e-mail, and websites, and other forms of Internet-based communications containing personal information. It is also important to note that the Nevada Law applies only to businesses “in this State.” However, for many businesses which are not located in Nevada, but that do business with customers in the state, they could be “doing business” in Nevada If you plan on doing a significant amount of business in Nevada, it is safe to assume that the law will apply.

-Massachusetts, like the Nevada laws, requires businesses to encrypt all personal information that is transmitted across public networks or by wireless transmission. It applies to all persons that own, license, store or maintain personal information about a resident of Massachusetts. This law also requires businesses to encrypt all personal information that is stored on laptops and other portable devices. Similar to the Nevada law, “personal information” is defined as a combination of a person's name plus one of the following sensitive data elements related to that person: Social Security number, driver's license or state-issued identification card number, or financial, credit or debit card account numbers.

This article was written by Philip A. Nicolosi, J.D. Mr. Nicolosi provides legal services through his law firm, Phil Nicolosi Law, P.C., focusing on startup and small business law, Internet & technology law and commercial transactions.

Mr. Nicolosi serves as a trusted advisor to numerous startups and small to medium sized businesses. This includes representation for a wide range of business law matters including business organization, corporate/LLC governance, regulatory law, contracts and transactions and most other matters outside of litigation. Mr. Nicolosi provides guidance with e-commerce, Internet marketing and technology-related legal matters. He also assists startup technology companies with seed financing, venture capital and exit transactions.

Mr. Nicolosi is also the founder of InternetLegalArmor (www.internetlegalarmor.com), an automated custom website legal document solution.

Visit Phil Nicolosi Law now, or contact Mr. Nicolosi directly by sending an email to info@philnicolosilaw.com

Article Source: http://EzineArticles.com/8577413

Intellectual Property – Why “Borrowing” Web Content is a Really Bad Idea

Intellectual PropertyWe've all been there before.

There's some graphics or content (or even website legal documents) on the web that you like… there's no copyright notice associated with it.

You'd like to take it and incorporate it into your site, right?

It's so tempting, but DON'T do it!

Copyright Infringement Issues

Under the US Copyright Act, there is a principle some refer to as the “rule of automatic copyright”. This rule provides that once an author or artist:

* creates a work of authorship (text, graphics, content),

* that is fixed in a tangible medium of expression (can be perceived by a person even if a machine or device is required to do so),

* copyright automatically vests in the author or artist (regardless of whether the work has a copyright notice or whether it is registered with the Copyright Office).

So, you need to secure the appropriate permissions before using the graphics or content. Failure to do so, can cost you dearly.

An illustrative case is the case of Photo Resource Hawaii, Inc. v. American Hawaii Travel, Inc., No. 07-00134 DAE-LAK (Dist. Hawaii Dec. 12, 2007). In this case, the defendant never had rights to the content, and he was ordered to pay $48,000 in statutory damages, $5,145.55 in attorney's fees, and $386 in court costs.

The same result is true if you had permission to use the material, but the permission expires or terminates. Even if use was originally with permission, use after expiration or termination will get you sued. In the case of Chase Jarvis v. K2 Inc., No. CO3-1265Z (W. Dist. Washington Dec. 12, 2003), the defendant was nailed for infringement because his content license had expired.

Ditto For “Borrowing” Someone Else's Website Documents

You realize that it's past time for you to add the website disclaimers and documents to make your site legally compliant.

So, what to do? You consider “borrowing” legal agreements from another website. After all, it's there for the taking. Right?

Wrong! For starters, it may be copyright infringement to copy the other guy's documents without permission. That's reason enough not to do it.

The other reason is that just as with most things… one size does not fit all. You should realize that each ecommerce business is unique. The other guy's policies regarding the collection, use, sharing, storing, and security of customer data most certainly will not match yours.

Additionally… the other guy's assumptions may be different.

For example, the other guy's site may not incorporate blogs, forums, or chat rooms. If your site does incorporate a blog, then his documents will not have the DMCA notice (and you will not qualify for the “safe harbor” from copyright liability; you'll be liable without even knowing it). Even if his site incorporates a blog, do you want to bet that it has the DMCA notice in proper form?

Another example… I recommend that you assume that you will need broad rights to collect and use passive information from site visitors, so I recommend that you reserve broad rights to collect passive information from them – even if you do not actually utilize all the methods you reserve rights for at the outset, you probably will later – if the other guy's privacy statement does not make the same assumption, and only reserves rights for a relatively narrow range of collection methods, you may be in breach of your Privacy Policy and not even know it.

Finally, your website disclaimers and documents and the other elements of website compliance must work together as a system, so documents are not interchangeable. For example:

* your Terms of Use and Customer Agreement relate to your DMCA Registration Form and to your disclaimers,

* disclaimers that are merely notices in your Terms of Use carry over to your customer agreement where they become a part of a binding contract,

* notices in your Terms of Use regarding the location of your site's servers become critical in terms of your Privacy Policy, especially for personal information transferred from users located in the European Union,

* and so on.

Conclusion

In summary, do it right. Don't cut corners with something so important as your website content and website documents. Use your own content, documents, policies, and rules for your website.

Only then will you have the confidence and peace of mind that you will not be faced with a demand letter, or worse — a lawsuit — from the content owner.

Chip Cooper is a leading intellectual property, software, and Internet attorney who advises software and ecommerce businesses nationwide. Chip's 25+ years of experience include 20 years as Adjunct Professor of Computer Law at Wake Forest University School of Law. Visit Chip's digicontracts.com site, sign up for his FREE newsletter, Website Law Alert, and Special Report; also learn about his “Do-It-Myself” and “Do-It-For-Me” service options.

Article Source: http://EzineArticles.com/1258060

Website External Links and Framing Legal Guide!

legal guide

If you operate a website, are you aware of the ways in which website operators can become liable for use of external links? Traditionally, website operators have not been held liable for merely placing an external text link on their website. But, doing more than simply placing a text link on your site and your website content may in many instances result in liability. The following legal guide will introduce you to basic liability resulting from misuse of external links and for framing.

Types of Links & Framing

Before I discuss external links and framing liability, you should understand the basic types of website links if you don't already. There are two basic types of external links. Text links (embedded links in text) are called hypertext reference (“HyperREFerence”) links. These links can lead to a different point on the same page, or to a different page in the same site. Of course, hypertext links can link to third party webpages also. A graphic may serve as a hypertext link, but usually these links commonly appear as underlined, capitalized or otherwise prominent text.

The second type of link is an Image (“IMaGe”) link. An IMG link directs the web browser to retrieve an image from a separate image file. This type of link can reference a file from within a website, or from a third party web site. For example, using an IMG link, a web page could direct the visiting browser to retrieve a protected image, video or other content contained on another website and show it on the original website. This presents a seamless integration of web content even though they are not from different websites.

This process, linking and incorporating the content (text, video, audio file, etc.) of another website is also known as “in-line liking.” For instance, a video link embedded on your website is simply an in-line link. An in-line link displays, or “frames” the third party file on the original web page. When the user visits the original page, the HTML code on the original page direct the user's browser to the file located on the third party webpage.

“Framing” is a practice where one website uses frames to incorporate the content of another websites into a browser window along with the content from the original website. The website doing the framing may post navigation tools, text, trademarks and/or advertising along with the framed webpages. The more the framed website is integrated into the original website users may become confused over affiliation, endorsement or sponsorship. Unauthorized framing has been challenged under a variety of legal theories, including copyright and trademark infringement, unfair or deceptive trade practices, passing off, false light and false advertising among others.

Meta tags and keywords are considered “de facto” links as well. (Use of meta tags and keywords can lead to claims of trademark infringement).

Possible Liability For Using External Links

A. Copyright Infringement

Most external links are lawful. Generally, permission is not needed for a regular hypertext link to the home page of another website. There is substantial case authority that provides that traditional hyperlinking is not direct copyright infringement because there is no copying or display involved.

For example, in a key decision that has helped shape the law, the court in Ticketmaster Corp. v. Tickets.com, Inc. (2003) stated:

“… hyperlinking does not itself involve a violation of the Copyright Act (whatever it may do for other claims) since no copyright is involved. The customer is automatically transferred to the particular, genuine Web page of the original author. There is no deception in what is happening. This is analogous to using a library's card index to get reference to particular items, albeit faster and more efficiently.”

However, using external links on your website may create legal liability in some cases. External links can be unlawful when they i) cause consumer confusion; ii) encourage or facilitate illegal copyright infringement by others; or iii) violate other laws. In particular, copyright infringement (direct, contributory and vicarious infringement), trademark infringement and dilution, passing off and misappropriation are the main areas of liability. Defamation may also come into play.

1. Contributory Copyright Infringement

Contributory copyright infringement can occur by providing links to websites that display infringing material and actively encourage or facilitate the use of those links in various ways.

Instructions on following links and encouraging visitors to use them or including software that facilitates downloading infringing copies of content (such as peer-to-peer software) or including software that assists the downloading of material from remote sources, are all considered material contribution to copyright infringement.

In the cases that have decided this issue, the common elements have been that a middle party makes available a list of links to third parties who willingly make copyrighted works available for viewing or downloading. Websites don't directly host or re-transmit the protected content, but they do provide links to materials made available by others.

Contributory infringement occurs when an individual or business knowingly induces, causes, or materially contributes to the infringing conduct of others. The essential elements of this claim are knowledge of and participation in the infringement. In establishing a claim of contributory infringement, a copyright owner must establish the website had requisite knowledge and participation. The knowledge aspect can be established if the website has been put on notice, such as by receiving a cease and desist letter from the copyright holder, or even by allegations made in a pending lawsuit against the website. The participation aspect can be established by placing a link which facilitates the user going to another website containing the infringing items.

-EXAMPLE: Intellectual Reserve, Inc. v. Utah Lighthouse Ministry, Inc. (1999): A website (Intellectual Reserve) posted copies of a church's copyrighted handbook and provided links to other sites that contained infringing copies of the handbook. In this example, the defendant knew and encouraged the use of the links to obtain the unauthorized copies. This was held by the court to constitute contributory copyright infringement. The court issued a preliminary injunction directing the defendants to remove statements identifying the domain names of websites containing the handbook. This was held by the court to constitute contributory copyright infringement. The court reached this result despite the fact that the defendants' website did not contain any direct links to the infringing websites.

Intent and context matter.

Case law has shown that defendants have been found liable because they did more than just post links. The intentional encouragement of copying or downloading of protected materials is a liability trigger. Context can make it clear that a link is posted merely for its informational (indexing, referencing) content. Without active encouragement of use of illegal content, then “aggravating” factors are missing and courts have not imposed liability. In cases involving informational (“pure speech”) links, the elements of material furtherance of infringement (contributory infringement) and financial gain from infringement (vicarious liability) likely don't exist.

But, contributory infringement is subject to reasonable limits.

-EXAMPLE: Bernstein v. J.C. Penney, Inc.: A photographer sued the retailer J. C. Penny for a link on its site to a movie database. This link in turn linked to a site in Sweden that allegedly infringed the photographer's copyright in a couple of photographs.The court denied the plaintiff's motion for a preliminary injunction, and the plaintiff dismissed his case. Although a final resolution was not reached, this case suggests that claims of contributory infringement cannot be remote. There must be some reasonable limits in terms of third party linking to infringing materials.

2. Deep Links

Deep links direct the user to an image or webpage other than the homepage of a third party website. Many websites post introductory materials including third-party paid banner advertisements and special promotions or teasers relating to their own site on the home page. Businesses expect that most website visitors will find those advertisements before going further into the website's other pages. Deep linking and bypassing the home page of some other website has caused lost revenues. Of course, this has led to lawsuits. But, deep linking to interior pages of a website by itself is not copyright infringement when the copyrighted materials are not shown or displayed on the original website.

Deep linking by itself without confusion of source is not unfair competition. (Ticketmaster Corp. v. Tickets.com, Inc.). If deep linking is somehow done in a way that would confuse viewers as to affiliation, sponsorship or endorsement by the other website (i.e. trademark infringement), this could trigger a claim. For example, a deep link that says “Click Here For More Information,” which then leads viewers to a page on a competitor's website containing information about a similar product.

3. In-line Links & Framing

Can I embed links to videos and use “In-line” Image links?

Case law has held that In-line linking and framing by itself is not direct copyright infringement. The content is not a display or distribution in violation of copyright law.

In-line linking and framing may cause some users to believe they are viewing a single webpage (seamless content). But, the Copyright laws do not protect a copyright holder against acts that cause consumer confusion. Without causing consumer confusion, in-line linking and framing is within the law (although it's considered bad web etiquette).

In order to prove direct copyright infringement, a plaintiff must first prove that the defendant copied the protected work. A plaintiff must first establish: (1) ownership of the allegedly infringed material and (2) violation by the alleged infringer of at least one of the exclusive rights granted to copyright holders. Many of the claims for direct copyright infringement for “unauthorized” use of in-line linking and framing have gone nowhere. This is because there was no actual copying and display of the infringing content.

-EXAMPLE: Perfect 10, Inc. v. Amazon.com, Inc., et al.(2007): In what was the first court to provide an actual decision regarding the use of framing, the Ninth Circuit Appellate Court held that framing infringing images found on third party websites via in-line linking is not direct copyright infringement. Google presents a framed page in its search results where the bottom half comes directly from the third party web site where the image is actually found. The court used the “server” test and decided that a website that “frames” content by providing an in-line link to the copyright holder's site is not a public display or public distribution. The framed content is not being stored on the framer's server. The court also found that Google did not commit direct copyright infringement by providing “in-line links” to third party websites that contained infringing images. The Court stated that providing a link to a third party website that displays infringing images, by itself, does not make the original website liable for copyright infringement.

The Court also laid out a new test for secondary liability on the Internet. A computer system operator must have “actual knowledge that specific infringing material is available using its system” and “continue to provide access to infringing works.” This is true despite the fact the provider could take simple measures to prevent further damage to the copyright holder. The court struck down the vicarious liability infringement claim due to Google's use of in-line links because Google had no ability to control the third party websites or compel them to remove infringing images found on those sites.

Framing and Inline linking of third-party content into another web page can potentially raise the following issues: trademark infringement, passing off, defamation and possibly copyright infringement for creating a derivative work.

Framing and in-line links pose the same trademark and derivative work concerns. Framing might be viewed as more problematic when it comes to trademark infringement. A viewer could easily conclude that all the material on the framing website belongs to that site. But, you cannot in-line link or frame third party web-content and always escape liability. Even though you are not directly copying the content, your framed page along with the content from an external framed page could be viewed as an unauthorized modification of the content. In terms of potentially creating a derivative work, this really is a grey area and depends on the context and nature of the framing. So far, the issue hasn't been directly decided, but many intellectual property attorneys feel this practice could result in a derivative work.

-EXAMPLE: In Futuredontics Inc. v. Applied Anagramic Inc. (1997): Applied Anagramic (Defendant) operated a web site and divided its pages into frames. Defendant's website contained an unauthorized link to the Futuredontics website that caused copyrighted materials on plaintiff's site to appear within one of the frames of Defendant's website. The problem was that the rest of the page was filled with content supplied by Defendant, including its logo and information about its business operations. The court found that Futuredontics had failed to show that it was or would be injured by defendant's conduct. Absent the requisite showing of injury, plaintiff was not entitled to injunctive relief. However, the court left the door open for the creation of a derivative work. The district court would not dismiss the claim holding that the defendants conduct may create an unauthorized derivative work.

B. Trademark Infringement & Dilution

Any link (in-lining or framing) that falsely leads the viewer to conclude that the web page (owner) is affiliated, endorsed or sponsored by the trademark owner could lead to a claim of trademark infringement.

Trademark infringement basically occurs when someone uses a mark of another in such a way that creates a likelihood of confusion. Using an image link or framing that places another party's trademark or logo on your web page may cause confusion.For example, the use of a company logo to link to the company's website could be trademark infringement. If the consumer is likely to believe that the third party business or website is associated with your website, it is infringement. As a general rule, a link that simply uses a text reference rather than a logo or trademark does not make any implication about affiliation.

The use of logos and trademarks as direct links presents an obvious problem. Using a trademark or logo can expose you to liability if a court finds that the reasonable consumer would likely be confused, given the facts. In addition, The Federal Trademark Dilution Revision Act (FTDRA) of 2006 provides owners of famous marks with protection against dilution by blurring and dilution due to tarnishment. Under the revised FTDA, the plaintiff only needs to show the defendant's mark is likely to cause dilution. Improperly framing content of another website may result in consumer confusion (direct infringement) and/or claims of dilution.

-EXAMPLE: Washington Post Co. et al vs. Total News, Inc. (1997): The website Total News was sued by the Washington Post and CNN. The plaintiffs claimed trademark dilution for the framing of the news pages of plaintiffs' sites in a frameset that contained TotalNews advertising. Plaintiffs believed viewers of Total News would be confused since the viewer would see the plaintiff's news pages within a Total News frame, but without plaintiff's banner advertisements. This case was settled without a decision, but Total News agreed to stop framing and to use text-only links.

-EXAMPLE: Hard Rock Cafe, Int'l, Inc. v. Morton (1999): Defendant installed a link on their website which contained the words “record store.” Clicking on this link took the user to the “Tunes” web page which appeared in frames on the defendant's website. Frames appeared above and to the left of the webpage content containing the Hard Rock Hotel logo. The court found that a likelihood of confusion arose from framing the website because the distinction between the two sources of material appearing on the screen was not clear. “Through framing, the Hard Rock Hotel Mark and the [infringing site] were combined together into a single visual presentation.” However, the court did state that framing is a flexible device that in some instances might provide a clear distinction between different sources of the content.

A direct link contained on an offensive or disparaging website (i.e. a pornographic site) could potentially trigger a claim for trademark tarnishment?

Rule: If no “reasonably prudent Internet user” would associate a trademark with the linked site, then this claim would likely fail.

-EXAMPLE: Ford Motor Company v. 2600 Enterprises (2001): Defendant's website contained a text link to Ford's homepage from the website fuckgeneralmotors.com. Ford sued for trademark dilution, trademark infringement, and unfair competition. The district court stated that linking by using a trademarked domain name in a programming code is not a violation of the Ford trademark nor is it dilution of the mark.

-EXAMPLE: Voice-Tel Enters., Inc. v. Joba Inc. (2003): A claim for tarnishment cannot arise from the use of a trade mark on a website containing a link to a potentially offensive site.

C. Passing Off

Using external links improperly may be “passing off” if a website uses links to suggest that its products are those of a more highly regarded competitor.

There are additional common law claims under state unfair competition laws, namely passing off, contributory passing off, reverse passing off, and misappropriation. Passing off occurs when someone or some business tries to pass off its product or services as a third party product or services (or as having some association or connection with a third party when this is untrue). So, for example, framing webpages of a competitor's website in a way that suggests your products are affiliated or made by the competitor.

1. Contributory passing off occurs when the defendant assists or induces another (typically a retailer) to pass of its product as the plaintiff's product.

2. Reverse passing off occurs when someone tries to pass off someone else's product as their own. If you pass off images or logos via in-line links or by framing within your website in a way that suggests affiliation, this could amount to reverse passing-off. This is basically where the work of someone else is passed off as your own. For instance, you could tell your viewers to click here to see some product examples of what you sell, but which are taken from a competitor's webpage, and then claim they are your products. This type of reverse passing off by using a link to pass-off another's work violates state unfair competition and/or unfair business practices laws.

D. Misappropriation

is unauthorized use of another party's property of funds for personal gain. This is yet another potential concern if your using an external link(s) in a manner that allows you to gain something of value.

E. Negligence

Linking to a source which turns out to contain misleading or which contains harmful information may cause liability for negligence. Even simple informational links posted with no particular commercial purpose could create risks under the theory of “negligent publication.” Carefully drafted disclaimers in an External Links Policy, as discussed below, can help advise your website viewers that you are not responsible for third party website content.

F. Defamation

A link to another's webpage or image could be defamatory. For example, “This mortgage broker ripped me off and lied to me.” The statement itself does not identify the party. The link (assuming it actually linked to someone's website or webpage) provides the context that turns the statement into defamation, however.

TIP #1: Use External Links Policy/Disclaimers!

Using a properly drafter External Links Policy, which is really just a set of disclaimers, can serve as a defense to liability for external links. The disclaimers can help protect your business against a claim that could be made by any users of your site. Posting disclaimers is not an absolute shield from liability. But, it does put users on notice that the business does not control or have any affiliation with the content of third party websites. It can also set forth a policy for placing links on your website. Properly drafted external links disclaimers can prevent claims by your website users.

Some websites post no specific disclaimers, but instead display a notice stating something like “by clicking on this link, you will be leaving this web site and will be directed to a third party site, which we have no control over the content.” This operates as a disclaimer. You could also choose to use a link prominently located on your website leading to a separate page with the policy. Using a link labeled External Links Policy” is customarily how this should be handled. But, any link should be prominently located on your website and not hidden.

The best practice is to stick any external links disclaimers on a separate disclaimers page and in the website terms of use. You can then make your website visitors register and click to agree to the website terms before accessing any meaningful portion of your website.

TIP #2: Post a Hyperlink Policy On Your Site!

Your website should contain internal policies concerning who may link to your website and the manner in which it must be done (i.e. a “Hyperlink Policy”). You should also use a link exchange or hyperlink agreement whenever another website wants to do a link exchange with your site. This type of agreement should be used regardless of whether your business is being compensated for placing the link. The most important item to address in such an agreement is indemnification. I talk more about Indemnification later, but it basically is a way to get compensated by the owner of another website for liability your business incurs.

If there is infringing material on the site, the linked-owner is required to indemnify (reimburse all financial damages and costs incurred due to the link on your site) and defend your business against any claims. Indemnification should cover any claims of libel, violation of right of privacy, plagiarism, copyright or trademark infringement and any other claims or suits based on the content contained on the third party website.

Any website requesting a link should also provide a warranty and representation that the website operator(s) has the right to display all materials contained on the website. None of the content on the third party site should infringe on the rights of others including but not limited to rights in trademarks, copyrights, and patents. Further, the operators should warrant and represent that the third party website does not contain any obscene, vulgar, defamatory or any other illegal material.

Summary: External Links & Framing Guidelines

    • Avoid using links that suggest affiliation or sponsorship with some third party. Any link that falsely leads the viewer to conclude that the web page author is affiliated, approved, or sponsored by another website could lead to a claim of trademark infringement. This means avoid using links which are trademarks or logos. As a general rule, a text link that simply references a third party name (or product) rather than a logo does not suggest affiliation, endorsement or sponsorship;
    • Avoid using deep links that cause confusion as to source or affiliation with a third party website;
    • Avoid framing when doing so will cause consumer confusion. Including protected content or a third party trademark in the frame may cause confusion. If the frames are used to either make your website content look like it belongs to the linked site, or to make the linked site content look like it belongs to you, this could trigger a claim. You should clearly indicate third party ownership of any content you display from a framed third party website;
    • Framing content from other webpages in such a way that omits their banner advertisements and other ads;
    • Avoid using links (in-lining or framing) that pass off the goods or services of another company or website as your own;
    • Avoid using links that pass off your goods or services off as that of one of your competitor's;
    • Avoid websites that are “linking” sites. These websites provide access or unauthorized links to other websites where pirated sporting and pay-per-view events are hosted, where movies (or trailers) can be downloaded, or that contain illegal content such as pornography;
    • Avoid Defamatory links (i.e. “This guy ripped me off” where the link leads to a website operated by or involving the person referred to as “guy”);
    • Check the websites your links lead to regularly. Website owners change and website content may change over time;
    • Use an External Links Policy on your website and use a Hyperlink Agreement for link requests;
  • Obtain Permission to link to another website.The simplest and most direct way to prevent claims for infringement is to obtain permission. Some websites solicit or encourage links, and even make symbols and other graphics available that you can download and use as the linking symbol. Some web sites perform some type of limited screening and approval process before granting permission. Otherwise, you can contact the website administrator directly via email and request linking to the website or a link exchange ideally.

This article was written by Philip A. Nicolosi, J.D. Mr. Nicolosi provides legal services through his law firm, Phil Nicolosi Law, P.C., focusing on startup and small business law, Internet & technology law and commercial transactions.

Mr. Nicolosi serves as a trusted advisor to numerous startups and small to medium sized businesses. This includes representation for a wide range of business law matters including business organization, corporate/LLC governance, regulatory law, contracts and transactions and most other matters outside of litigation. Mr. Nicolosi provides guidance with e-commerce, Internet marketing and technology-related legal matters. He also assists startup technology companies with seed financing, venture capital and exit transactions.

Mr. Nicolosi is also the founder of InternetLegalArmor (www.internetlegalarmor.com), an automated custom website legal document solution.

Visit Phil Nicolosi Law now, or contact Mr. Nicolosi directly by sending an email to info@philnicolosilaw.com

Article Source: http://EzineArticles.com/8604105

Website Advertising – 2 Legal Traps to Avoid When Writing Your Own Copy

legal traps

If you're like most small ecommerce businesses, you're likely to write your own marketing copy. Be aware that this is a highly regulated area that could result in substantial liability. I've boiled most of the regulations into 2 basic traps you must avoid.

What is Marketing Copy?

Wikipedia defines “copy” as written material, in contrast to photographs or other elements of layout, in a large number of contexts, including magazines, advertising, and book publishing. In advertising, web marketing and similar fields, copy refers to the output of copyrighters, who are employed to write material which encourages consumers to buy goods or services.

Web copy has one major advantage over offline copy – it is interactive. Hyperlinks provide you with powerful tools to lead a potential customer through a pathway designed by you which ultimately leads to a conversion to your call to action.

Trap No. 1: Failure To Substantiate Claims Before Publication

When you write your own marketing copy, you necessarily make certain “claims” – statements upon which a consumer may reasonably rely in making a purchase decision. In so doing, you're facing another legal pitfall.

Legally, claims are extremely important. The Federal Trade Commission (FTC) Act, 15 USC Sec. 41-58 and accompanying regulations prohibit “unfair or deceptive acts or practices”. Unfair or deceptive acts or practices include claims that are not substantiated before the claim is publicly disseminated.

So review your ads carefully, and be sure that you can substantiate and back up your ad claims.

Here are some examples of claims and the related challenges regarding substantiation and back-up:

* If you claim “best value”, understand that it's a promise that is very broad in scope – essentially, you're promising that your offer is worth more than the asking price – if you're going to make this claim, you'd better provide the proof on your site.

* If you claim “we're no. 1”, you need to be very specific regarding how you determine no. 1 – no. 1 at what? – in gross sales, in sales growth for a specific period, in the number of widgets sold?

* If you claim the “latest and greatest”, “next generation” or words to that effect, you should substantiate how the claim is true – explain specifically how you justify the claim in relation to other competitive products on the market.

* If you claim “user friendly” or “easy-to-use”, you need to be specific regarding substantiation of specifically how much time a certain task routinely takes, exactly which steps are automated.

* If you offer a “risk-free guarantee”, understand that even a free evaluation is not completely risk-free because the evaluation takes time for the customer to evaluate – time is money, so-to-speak, so a better approach is to promise an unconditional refund, no questions asked.

Trap No. 2: Avoid Untrue And Deceptive Claims

In addition to substantiating claims before making them, be careful not to make untrue or deceptive claims. Certain types of claims should be avoided altogether, including:

* never claim that you have a cure for anything – not even large drug companies with products that have been the subject of years of testing will make such a claim, so you shouldn't either;

* never specify a level of revenue or profits that a user will achieve, even if you or another purchaser has achieved a specific level of revenue or profits – remember the old cliche, “your mileage may vary”;

* never promise specific results – again “your mileage may vary”.

The FTC has special rules governing any use of the term “FREE” (or similar words to that effect), which the FTC believes is frequently used in an untrue or deceptive way.

Similar words to “free” include:

* Buy 1-Get 1 Free; * 2 for 1 Sale; and * 50% off with the purchase of 2.

According to the FTC: “[t]he public understands that, except in the case of introductory offers in connection with the sale of a product or service, an offer of ‘Free' merchandise or service is based upon a regular price for the merchandise or service which must be purchased by consumers in order to avail themselves of that which is represented to be ‘Free'. In other words, when the purchaser is told that an article is ‘Free' to him if another article is purchased, the word ‘Free' indicates that he is paying nothing for that article and no more than the regular price for the other. Thus, a purchaser has a right to believe that the merchant will not directly and immediately recover, in whole or in part, the cost of the free merchandise or service by marking up the price of the article which must be purchased, by the substitution of inferior merchandise or service, or otherwise.”

Conclusion

In summary, be aware that what you say in your marketing copy is heavily regulated. You need to be careful not only to substantiate ad claims before you post them to your site, but also use certain key terms with great care so as not to mislead or deceive consumers.

Chip Cooper is a leading intellectual property, software, and Internet attorney who advises software and ecommerce businesses nationwide. Chip's 25+ years of experience include 20 years as Adjunct Professor of Computer Law at Wake Forest University School of Law. Visit Chip's digicontracts.com site and download his FREE newsletter, Website Law Alert, and also learn about his “Do-It-Myself” and “Do-It-For-Me” service options.

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Do Trademarks Always Trump Domain Names? Not Always

trademarks

Online start-ups are faced with the daunting task of selecting a domain name that will withstand legal challenges.

There's a general belief among online start-ups that a trademark owner will always trump a domain name registrant with the same or confusingly similar domain name. That's not always the result… as two recent 2010 UDRP decisions point out.

The UDRP

What is the UDRP, and why is it important?

The UDRP acronym stands for the Uniform Domain Name Dispute Resolution Policy. The UDRP is a set of procedures and rules that are supposed to help determine who should prevail in a dispute over domain name ownership.

The UDRP is important because it provides a faster and cheaper way to resolve a domain name dispute than a full-blown lawsuit in a court of law. Instead of litigation, it's an administrative proceeding where the contestants present written arguments to a panelist-arbitrator who issues a binding decision. In-person hearings (including hearings by teleconference, videoconference, and web conference) are permitted only in exceptional cases, and are therefore rare.

The UDRP has not been without its critics. Most of the criticism centers on the fact that the UDRP was established to benefit trademark owners in taking non-trademark owners to task in domain name disputes. And UDRP critics often point out the fact the UDRP decisions seem to come out overwhelmingly in favor of trademark owners.

There are three requirements for a trademark owner-complainant to prevail over a domain name-respondent in a UDRP proceeding:

1 – the domain name registered by the respondent is identical or confusingly similar to a trademark or service mark in which the complainant has rights;

2 – the respondent has no rights or legitimate interests in respect of the domain name; and

3 – the domain name has been registered and is being used in bad faith by the respondent.

The Arizona State Trailer Sales Case

This case involved requirement no. 1 above.

The complainant, Arizona State Trailer Sales, argued that the respondent's littledealerrv.com domain name was confusingly similar to the complainant's registered mark, LITTLE DEALER LITTLE PRICES and the complainant's common law marks, LITTLE DEALER LITTLE PRICES RV and LITTLE DEALER.

The respondent argued that it should prevail because its registration of its littledealerrv.com domain name occurred prior to the complainant's registration of its trademark.

The respondent won. The UDRP panelist noted that a complainant has to show that the respondent's domain name is identical or confusingly similar to complainant's mark. “This provision necessarily implies that Complainant's rights must predate the registration of Registrant's domain name”, the panelist concluded.

The take-away – the respondent won because it registered its domain name before the complainant registered its trademark.

The University of Texas Case

The University of Texas at Austin (UT) case involved requirement no. 3 above.

UT showed that it owned the texassports.com domain name, as well as the following registered trademarks: TEXAS, UNIVERSITY OF TEXAS, TEXAS LONGHORNS, and LONGHORNS. UT also showed that its TEXAS mark is registered for “Entertainment services, namely, providing college athletic and sporting events.”

UT argued among other things that the use of respondent's texassports.org domain was in bad faith because it was used as a “parking” website for information related to University of Texas sports and sporting events.

The respondent won. The panel found that UT did not prove “bad faith”. The panel reasoned that because the term “Texas Sports” is geographically descriptive, the respondent was free to register its domain name using the term on a “first-come, first-served basis”.

The panel also found that UT did not have a registration for the term “Texas Sports”, and therefore there was no likelihood of consumer confusion.

Conclusion

Selecting a domain name that will withstand legal challenges is a strategic undertaking for any online start-up.

The important lesson is that although the UDRP may help in deciding in favor of a respondent in a domain name dispute with a trademark owner, the recommended approach is to avoid the dispute altogether by undertaking a thorough search of pre-existing trademarks before selecting a domain name.

Copyright 2010 Chip Cooper

Leading Internet, IP and software lawyer Chip Cooper has automated the process of drafting Website Legal Forms for website legal compliance. Use his free online tool — Website Documents Determinator — to determine which documents your website really needs for website legal compliance. Discover how quick, easy, and cost-effective it is to draft your website legal forms at DigiContracts.com.

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Website Legal Compliance Alert – Why It’s Risky To Copy Stuff Off The Web

legal

It's tempting and so easy to use your right click to download stuff off the Web – to copy or save images, text, even videos. And this content is often great material for your website copy, squeeze page, sales page or banner ad.

Fair warning – in most cases this content will be protected by copyright even if there is no copyright notice, and you will need a license or a valid claim of fair use to use it, or face a possible copyright infringement claim that could result in liability of up to $150,000 in damages.

The Rule of Automatic Copyright

The key to understanding why most content on the Web is copyright protected, even if it doesn't have a copyright notice, is sometimes referred to as “The Rule of Automatic Copyright”.

How copyrights are created is really simple, and that's why it's so often misunderstood. The Copyright Act says that a work is created when it is “fixed in a tangible medium of expression”. This means that a copyrightable work of authorship is created when pen hits paper, or keystrokes are recorded into the RAM of a computer, or video is recorded.

So, the fundamental rule is that copyrights are created automatically when an original work of authorship is fixed; no registration, copyright notice, or other act is required. And the copyrights vest in the author of the work. The copyright owner then controls to what extent another person can exercise the exclusive rights of a copyright owner – the rights to copy, modify (create derivative works), distribute, display, and perform the work.

And very important, if you exercise of any of these exclusive right without permission (a license) or a valid claim of fair use, you're a copyright infringer subjecting you to claims for damages, in addition to other remedies.

What Is Fair Use?

Fair use is a basic principle of copyright law that says that the general public may use certain portions of a copyrighted work without a license from the copyright owner, provided the use is for purposes such as commentary, criticism, search engines, news reporting, research, teaching, library archiving or scholarship.

The catch is that if the copyright owner disagrees with the validity of your fair use claim, you may have a copyright infringement lawsuit on your hands.

To determine whether you have valid claim of fair use, four factors must be considered:

* the purpose and character of the use, including whether the use is a commercial use or for non-profit educational purposes, including the “transformative” nature of the use;

* the nature of copyrighted work;

* the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and

* the effect of the use upon the potential market for or value of the copyrighted work.

The process of weighing and applying the four factors is fact intensive, and there is no bright line test. For example, with the first factor, a key question that weighs in favor of fair use is whether you have transformed the portion of the original work by adding new expression or meaning, such as with a parody, or by adding independently created images to quotes taken from a copyrighted article or speech.

Probably the most significant of the four factors in the context of use in connection with promotional material for your website copy, squeeze page, sales page or banner ad is the fourth factor – the effect on the potential market for the copyrighted work.

One final tip – don't fall into the trap of believing that if you acknowledge the copyright owner of the source material, your use is a fair use. On the one hand, acknowledgement may be a point to consider in weighing the four factors, but in and of itself it won't protect against an infringement claim. And what's even worse, it may even create additional legal claims involving infringement of privacy rights.

Conclusion

Bottom line, it's very risky to freely use your right click to download stuff off the Web. Copyrights to Images, text, and videos are almost always vested in someone. And the fair use defense to copyright infringement is very limited in scope, and generally poorly adapted for use with your website copy, squeeze page, sales page or banner ad.

It's always best to get a license. That's the only way to be sure that you'll not be facing a copyright infringement claim and a possible claim of up to $150,000 per work.

This article is provided for educational and informative purposes only. This information does not constitute legal advice, and should not be construed as such.

Is your website legal? Do you comply with new FTC regs? Do you have a real solution for website legal compliance you can really have confidence in? Unleash incredibly simple and easy intelligent online virtual legal assistant for 29 minutes and protect your business, products, and profits. Website legal compliance made simple by leading Internet attorney Chip Cooper.

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Social Media Sweepstakes and Contests: Legal Perspectives

sweepstakes

With the explosion in social media activity by users of the internet, its value as a marketing tool has also been recognized. At this point, any business which doesn't have a presence in social media is at risk of being left behind. One strategy that lends itself nicely to the interactive nature of social media is the running of contests and sweepstakes promotions. But they should never be entered into without ensuring that all your legal bases are covered.

Contests, such as those which ask participants to upload photographs, from which the winner will be selected by votes from the community, are fairly common. This sort of thing is legally classified as a contest, as distinguished from a sweepstakes, which requires no other action from entrants than completion of a form. The official rules for each type are, therefore, somewhat different in the regulations guiding them and the language used.

A contest and sweepstakes lawyer is a resource that you need whenever you are planning to run a promotion of this kind, whether it's through social media, on your own website, or through partnerships with bloggers. The complexity of drafting official rules which are fully compliant with current regulations, federal and state, is too much for you to realistically consider doing it yourself.

The liability you could face for rules that aren't compliant is significant. Don't be fooled into thinking that no one will notice. It's just not worth the risk. Having a lawyer who is experienced with online games of chance and contests, you won't have to worry.

Many people access the internet using mobile computing. In fact, within three years, it's projected that more people will do so than using a laptop or desktop computer. This may create new legal issues which need to be addressed; for example, if a person is a resident of one state, but enters a sweepstakes via mobile in a different state with different relevant laws.

As a marketing strategy, contests and sweepstakes became commonly used in the middle of the Twentieth century. Back then, direct mail and radio advertising were used. As legal questions arose, they were addressed and formalized. The process is ongoing. For this reason, you should never consider templating the language of your rules on someone else's – at least not without a full review by a contest lawyer.

There are both federal and state laws which govern the allowable features, qualifications for entry, and disbursement of prizes for both sweepstakes and contests. Each country has its own laws, as well, which complicates things for international competitions. Social media sites have their own terms of service, which include language relating to the running of promotions. All of these different requirements must be understood and incorporated into your official rules.

Engaging a sweepstakes and contest lawyer gives you the peace of mind that all your promotional games are fully legal. They'll also work with you in the event that issues should arise with competitors. This is an area of your business in which you just can't take chances with liability.

Lior Leser, Esq. can help you build and run legally compliant online sweepstakes. Regardless of how you deploy the online promotion, an Internet Sweepstakes Lawyer can help you navigate through the state and federal legal requirements of establishing, registering, bonding, running and fulfilling internet and mobile Sweepstakes. http://web20lawyer.com/Promotions_Lawyer.htm

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How to Write Website Terms of Service (AKA Terms of Use or Terms and Conditions)

terms of service

Terms: The Background

Why do we care about a web site's Terms and Conditions? Everyone knows that a site needs to have legal Terms. Few people think about the obvious question: Why?

While our statutes, regulations and past cases are full of laws and their applications when it comes to everyday interactions, few laws and cases exists with respect to online interactions. Why? Our cyber universe, as a mature legal arena, has existed for only some ten or fifteen years. When compared to the hundreds of years of “real world” interactions, its easy to see why many legal “holes” exists in our system.

Under US law, these legal “holes” are filled up with with either judge-made interpretations or privately drafted contract law. Given that on any single day, a judge reviewing an online case may have come from family, criminal or juvenile courts, we would rather leave as little for judges to decide on their on as possible. We achieve this through proper negotiation, drafting and implementation of site Terms.

Luckily for us, the US, as opposed to many civil code jurisdictions, respects privately negotiated contracts. Web site Terms are nothing more than privately negotiated contracts. Unless you realize this important point, you will end up leaving too much for judges to decide.

Three Common Mistakes

Failing to realize that web Terms are privately negotiated agreements, most web site operators make three common mistakes.

They Copy Other Sites' Terms: The most common way for site administrators to “draft” site Terms is by copying it from other sites. Worse, they copy it from some site touting its Terms as a standard that once edited can be used by anyone. Why? because, few administrators understand how important these Terms are. Fewer still understand the impact Terms have on each and every future online dispute.

They fail to Negotiate the Terms: The most common mistakes made by site administrators is believing that if they post Terms on the internet, they will bind visitors. That is equivalent to posting mortgage papers on the wall of a bank and believing that everyone who enters will be bound by those documents. Web site Terms must be negotiated to be valid. This is a critical component of online compliance; few, however, understand how online negotiations take place.

They Don't Change with the Times: Internet laws “develop” or “mature” through case law on a daily basis. Since so few cyber laws are codified through statutes, compliance can only be reached through Terms amendments reflecting these latest rulings. Many site Terms, however, were drafted 6 months to 3 years ago. Administrators must start thinking about making key changes to Terms on a regular basis.

The Risk of Non-Compliant Terms

In our representation of online companies, we see four main areas of risks faced by clients. These risks are easily avoidable; however, due to a lack of understanding risks often mature into costly if not destructive forces for a young company.

Many online companies unknowingly make promises to online users that they never intend. I've seen clients with subscription based pricing models having copied Terms relevant only to one time charge sites. As a result, they were liable for wrongful charges. Some clients with upstart e-tail sites, ended up making consumer support promises which only the like of Amazon or Buy.com could make.

Important contract provisions get struck down. When online companies fail to understand that Terms must be “negotiated” with users, they end up surprised when judges strike down provisions that are employed by countless other sites. The typical response is, “How could a judge do this? It is Standard industry practice.”

The Company assumes unnecessary levels of liability. When Terms are not properly drafted and negotiated, incorrect provisions can result in substantial corporate liability. There are countless class-action websites run by attorneys soliciting clients for class action law suits against online companies. Having the wrong Terms can be devastating.

Administrators facing personal liability. Hard to believe, but when Terms are drafted improperly the owners and operators of sites can face liability personally, not just as a corporation.

Step 1: Define Your Goals

It may sound strange, but before you can start drafting any Terms you need to figure out what your goals are. The Terms must reflect your goals. More importantly, they need to avoid saddling you with unnecessary obligations.

If you are building an affiliate marketing campaign and deploying squeeze pages, what are your goals? You want to build a mailing list, that's obvious. But what are the Terms of the transaction? You may want to give them a free gift or service in exchange for information. Alternatively, you may want them to read product descriptions. Either way, what do you want you customers to do?

If you are building a forum or soliciting product reviews, what do you want users to do? You want them to post comments but you want them to behave in accordance with the law. What does that mean? How can their behavior make you liable to third parties?

If you are building an e-tail site, what do you want to accomplish? You obviously want to make sales, but you also don't want to be liable for faulty products, lost shipments or false advertising.

What if you are designing software that runs on the internet? You want to make sure it is deployed in accordance with legal allowances. You also want to make sure that its not distributed without your consent. What about a dating site? Here you want to make sure that members are truthful and that people interact safely.

Every online product or service is unique. Start by defining your goals. There can never be too many. The mistake is to just ignore this stage.

Step 2: Where is Your Liability?

Once you figure out what your goals are, you need to think about where potential liability can come from.

If you're developing an affiliate marketing campaign, you face liability from potential false advertising and product liability.

If you you built a widget that runs off of tweeter, you face potential trademark and copyright violations in redisplaying tweets.

If you run a forum, you face publisher liability for comments made by users.

If you developed software that automates posting to Craigslist, you face liability for enabling your users' unintentional violation of that site's terms of service.

If you develop a squeeze page you may face privacy concerns due to follow up advertising.

If you develop a digital entertainment download site, you may face liability due to copyright infringement for ringtones and games.

If you build a social network site, you face liability for intellectual property infringements for users' posting.

There is unlimited forms of liability faced by online companies. The trick is to give some thought to all potential issues that can arise in the future, however remote. Always ask, what can someone end up being unhappy about? Even a $2.99 download product can result in millions of dollars in liability.

Step 3: Define Your Customer's View

It's one thing to figure out what you want. It's quite another thing to figure out what your customer wants to achieve. Don't forget what we said earlier on: A web site's Terms is a negotiated agreement. It can never be one sided or it risks being thrown out by a judge. So what do your customer want?

A customer who clicked on an advertisement to an affiliate marketing site, wants truth in advertising regarding the product.

A visitor to a squeeze page wants an exchange of his information for value. The e-product must be delivered as promised.

A subscriber to a newsletter wants his information kept confidential from 3rd party marketers.

A member to a dating site wants his personal information kept confidential from other members unless he wishes them revealed.

A customer of a digital entertainment site wants his digital game to operate properly.

A customer downloading a ringtone wants to make sure that he is paying for one download and not paying for a subscription.

A buyer from an e-tail site wants to know who to return the product to in the event of a complaint.

A client posting a review wants to make sure you keep his identity confidential.

If you haven't given thought to what your customers want, a judge will. The negotiation starts by you thinking about your customers needs.

Step 4: Enable through Negotiation

So how do we put everything together? How do we enable our goals, while minimizing potential liability and allowing for customer wishes? We negotiate with the customer. I know this sounds strange. How can you ever negotiate with a visitor to a splash page?

Terms of service are worth little if a court is likely to later dismiss many of the key provisions. Courts over the past few years have struck down many important sections of leading sites' Terms as being too one sided. How do you avoid it?

Focus on the best form of “consent”. Most web sites at best offer a link at the bottom of a page to the site's Terms. Others go a little further by requiring the users to check a box as having “agreed” to the site's Terms. However, if you have a provision that you “must” make sure that a court will uphold you can do better. There are countless options available to make sure that a client reads and consents to important terms (e.g. displaying summarized terms of service).

For some key issues, like dispute resolution, afford the user options. Most attorneys, inexperienced in online law, draft straight forward terms. As they try to bind users, they fail to understand that unless they build options into the Terms (like how to best resolve disputes) judges are likely to strike the provisions down.

Don't fail this step. Negotiate fair Terms with your customers by giving them ample chance to consent to important provisions and providing them with options on how to best implement the Terms.

Step 5: How to Make Changes?

You can be assured of one thing. You'll have to make ongoing changes to your Terms. Not only are your business practices likely to change over time, online laws change on a regular basis. As online legal cases make it through the court system, we must incorporate into existing Terms any new legal interpretations and findings. Failing to do so, assures us of stale and irrelevant Terms. Basically, absent amendments to our Terms, the goals we set up earlier while minimizing liability will be ineffective.

But how do we make changes? If we look at the typical terms of service agreement, we are likely to see a statement such as this: “XYZ reserves the right to amend these terms of service at any time, with or without notice to the users. It is the user's obligation to check this page from time to time to see if any changes to the terms were made.”

Does this provision seem strange? How often have you heard of a contract that can be amended unilaterally by one side without notice or the option to back out? Not often! That's because, in our normal daily lives we would never agree to such a contract. So why should such a contract apply online?

Courts have, in online cases, consistently rejected contract provisions which were deemed too onerous when one side did not have the opportunity to choose among alternatives, negotiate or withdraw. From cases concerning arbitration clauses to subscription pricing, courts have rejected provisions that are too one sided.

While this provision is widely accepted in the industry, I would not advise building an online business based on the broad application of unproven and legally weak provisions. Avoid the risk of a court rejecting your Terms. The solution: NOTICE. Go out of your way to provide your users with notifications of any changes made to your policies. Send out email and txt messages. Post notices of revisions to your site. Have members “re-accept” the new Terms.

You can never do too much when it comes to providing notice of changes.

Step 6: How to Control Liability

So by now, we negotiated compliant Terms for our online business. Is that enough to control our liability. No! To assure that any potential future liability is contained, you must follow these three steps:

Follow the Terms: This may seem so simple, but so few actually follow it. You need to know your Terms and you need to follow the Terms. If you made promises, keep them. If you provided customers with procedures they need to follow, respect them. Don't create a situation where you actually create liability for yourself by having drafted compliant Terms but having failed to follow them. Remember, since there are many “holes” in the online legal system, judges rely on privately negotiated contracts such as Terms. Your failure to follow your own Terms will be read against you. You would have effectively breached your agreement with your clients.

Teach your Clients: So you “negotiated” your Terms through proper usage of the “acceptance” procedure. But do your clients know what to do? Often you liability is tied to your clients' behavior. So go out of your way to teach them proper and lawful behavior. From support forums to seminars, from conference calls to newsletters – Build a culture of education by teaching your clients the lessons that are important to you.

AND… Build Liability Proof Domestic and Offshore Corporate Structures.

Build Liability Proof Corporate Structure

After all is said and done, don't forget that your best ally when it comes to managing potential liability is the corporate structure that you've set up.

Basic corporate structures, if properly set up and managed over the years, will provide you with some liability protection. That might be enough for some simple online businesses such as squeeze page powered affiliate marketing campaigns and e-tailers.

For other online businesses, a more sophisticated form of domestic and offshore corporate structure is needed. Believe it or not, your greatest risk will not come from government. It will come from competitors. Everyday, large tech companies compete with smaller more nimble companies using the court system. And why not? In court, the larger companies have an advantage – money.

Many entrepreneurial companies have gone out of businesses after being dragged into court by larger companies. For many online and software companies, compliant Terms will not suffice. They need to supplement those Terms with a structure that evens out the odds in court.

This is a topic too large for this eGuide. Speak with an attorney about the design of domestic and offshore networks of online compliant corporate businesses.

Where Do We Go Next?

Sit back and start designing your site's Terms. The more questions you have, the better it will end up. And remember what we said in the beginning of this eGuide: A Site's Terms is only one component of its overall online compliance.

Make sure your Terms integrate and support your business' overall online compliance strategy including:

Online Privacy Software Compliance Mobile Compliance Direct Marketing (email and txt) Intellectual Property Compliance (trademark and copyright) Online Advertising Online Promotions (contests and sweepstakes).

Once you design an overall compliance strategy, examine your business' liability exposure and the ability to incorporate an online liability management system based on both domestic and offshore corporate structures.

By: Lior Leser, Esq. – Web 2.0 Lawyer
www.web20lawyer.com

Lior Leser counsels Internet, mobile and software companies as a head of the LYL Law Group. Mr. Leser earned his J.D. at Stanford Law School (Stanford, CA). He also attended Sophia University (Japan) and the London School of Economics (London, UK) for advanced studies in Finance. He attended Brandeis University (Waltham, MA), where he earned an M.A in International Economics and Finance and a B.A. in Economics.

Article Source: http://EzineArticles.com/6808429

The Difference Between Copyrighted and Royalty-Free Images

Royalty-Free Images For Commercial Use

The Difference Between Copyrighted and Royalty-Free Images

With many thousands of new websites being created or updated each day there is a growing need for webmasters to obtain good quality royalty free images for commercial use. Images and photos are an absolute must to illustrate certain concepts, ideas or news articles, and their value is immeasurable..

Images, photos or illustrations add interest to a website, they provide a focal point. They visually create an impact that an article with no illustration does not, and can result in a website being much more popular than it might otherwise be. It has long been established that the use of images provides extra interest. Pictures break up blocks of text to make pages more visually appealing and this results in readers staying longer on a page, website or publication.

Once a webmaster or entrepreneur comes to the realisation that images are a necessary requirement, the next stage is finding images that fit the bill for any given project. Unfortunately, this is where many make their first mistake, the mistake being searching the internet for “copyright free images”, when in fact what is really required are “royalty free images.”

When a person takes a photograph they automatically own the copyright on that image and it cannot be legally used without obtaining the release of the copyright, which is usually a very expensive thing to do. Even if that image is openly published on a website or in a magazine the copyright still belongs to the person that created the image unless they release or sign over the copyright to some one else. It is not unknown for some people to “take” images that appear on other websites and use them for their own purposes. But without securing the copyright this is a very risky thing to do and should really not be done unless you can contact the owner of the image and come to some kind of arrangement.

Another way of using photos or images is by obtaining a license to use a photograph and paying a royalty every time it is used. This usually entails paying a fee or percentage on products or services sold by using the image. This can be quite expensive and contracts are usually involved which most smaller business really do not want to get involved with.

There is another option, and that is using royalty free photos. Royalty free photos are where a one off fee is paid and in return users are given a form of license to use the images for no additional recurring payment. There are different forms of royalty free agreements, many will allow only non commercial use and others will allow you to use an image only a specified number of times or on a limited number of products, so it is a good idea to check the details carefully. However, there are some royalty free photo websites that place no restrictions on royalty free images for commercial use. These sites allow more freedom to use their images and photos and should actively be sought out as this type of arrangement provides really good value for money.

Of course it is important to note, that even when using royalty free photos and images, the copyright of the image still retains with the creator; which means that you cannot resell that image. You can only create products or services using the image and sell those. The copyright in all cases remains strictly with the creator unless you negotiate otherwise.

In the event that you find a photograph, picture or image that you wish to have exclusive rights to, it is worth contacting the company or creator to enquire about this so that the image can be exclusively used by you. There will be extra fees involved, but it may be worth it as that image may best visually represent you and your company; it will also prevent others from using the same image and having your brand identity compromised.

Finally, it is important to restate that royalty free images for commercial use are not copyright free. The copyright is retained by the creator of the image. It is amazing to see how many searches are made every month for copyright free images, when in fact, what most really require are royalty free images; the problem is the people searching, just don't know what to look for!

Allison Galpin
[http://www.royaltyfreephotosstore.com]
Royalty free images for commercial use for webmasters and publishers.
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Trademark Registration: Protecting Your Logo Design

Question: Is a federal trademark registration the right way to protect a logo design?

Answer: It depends…

The answer to this question depends on how you intend to use the mark in commerce. For example, let's say you develop a logo or design that you and your friends really like and people are asking for a t-shirt that displays the logo. So you now plan on going into business selling t-shirts, sweat shirts, etc., with your logo prominently displayed. But before you do, you want to make sure and protect your logo design. Is trademark the best protection?

Remember, a trademark is an identifier. The mark identifies to the consuming public the producer of a particular product, or in the case of a service mark, the source of a particular service. With use in commerce, it becomes a recognizable logo design which identifies your product or services from those products or services of others. That's not what the logo design is doing in our t-shirt example. You are not a t-shirt, sweat shirt manufacturer. You are simply purchasing the clothing from another source in order to display your new design. The logo is simply being displayed on the t-shirt, it is artwork. According to trademark law, subject matter that is merely a decorative feature does not identify and distinguish the business owner's goods and, thus, does not function as a trademark. You are not using the logo design as a trademark, but as an identifier. I would therefore not advise pursuing trademark protection but instead, apply for copyright registration on the design.

If however, you have a product, and you intend to display the very same new logo on the product, and/or display the new logo design on the product's packaging as well as the advertising materials for the product, that's clearly using the logo as a trademark. With continued use in commerce, you are teaching the public that when they see the logo design on a product, or on packaging, or in advertising, that your business is the source of the product. In this case, trademark registration is the right way to protect the design.

Is your name, logo, design actually a trademark, or more ornamentation? The exact same design logo, however, in one example, copyright registration is the answer, and in the second example, trademark registration is the answer. It all depends on how you use the mark in commerce.

About the author:

Gary Price is an attorney registered to practice before the United States Patent and Trademark Office. His legal practice includes all areas of Intellectual Property. Mr. Price also provides federal registration services under the business name Trademark Connect. If your business wants to register its brand, then go to http://www.TrademarkConnect360.com and learn more about our registration services and our registration Guarantee.

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