Internet and E-Commerce Law Update

Internet and E-Commerce Law Update Randy Whitmeyer October 2, 2009 Title hutchlaw.com 1 New Internet Business Models Social Networks Facebook, MySpace, LinkedIn, etc. Web 2.0 and User Generated Content YouTube “Software as a Service” Businesses Business Software Consumer Tools Games New Platforms iPhone, Android-based phones hutchlaw.com 2 Characteristics of Web 2.0/Social Networks Interactivity Ability to upload videos, photographs, etc. Creativity Numerous tools for creating, editing and combining content Communication Replace e-mail and other forms of communication Real-time updates to mobile devices hutchlaw.com 3 Summary of Legal Trends Growing acceptance of both “clickwrap” and “browsewrap” agreements in US, with worries about consumer protection in EU Increased scrutiny of trademark usage (but keyword ads (Google Adwords) wins recent victory in EU) (Slowly) growing international harmonization Continued concernts over privacy and personal information usage Increased efforts to tax internet activities Continued jurisdictional mess hutchlaw.com 4 E-Commerce Terms of Sale Products, services, and content all increasingly available for sale on the Internet Query: Why should E-commerce Sites have enforceable legal terms when brick and mortar stores don’t? Unable to physically see/interact with customer Use of protected technology/software Possibility of user mischief hutchlaw.com 5 Enforceability of Internet Terms and Agreements “Clickwrap” Agreements almost always held enforceable in U.S. “Link-To” Agreements, with conspicuous link to web/sales terms in order form or registration generally enforced “Browsewrap” Agreements only at bottom of web page(s) more questionable: Held not enforceable in Specht v. Netscape (2002, J. Sotomayor!) and AV v. iParadigms LLC (2008 Va.) Other cases allow enforcement if terms are readily apparent and/or party was a multiple visitor to the site (2007 Southwest Airlines v. BoardFirst) hutchlaw.com 6 Why Do Pro Se Lawyers File the Worst Cases? Burcham v. Expedia Burcham sued Expedia for $5 Million because the Hampton Inn in Missouri did not have promised swimming pools and bar! Feldman v. Google Personal injury lawyer sued Google based on alleged “click fraud” hutchlaw.com 7 Consumer Protection/Objectionable Contract Clauses US generally takes a pro-freedom contract stance and will enforce clauses unless “unconscionable” French court ruled in 2008 that 18 clauses of Amazon’s on-line general terms and conditions were abusive and required their removal Australia Update: As of 1/1/2010, new consumer protection act will challenge “unfair” or “detrimental” terms in standard form contracts, including e-commerce terms and end-user license agreements hutchlaw.com 8 EU Investigation into websites selling electronic goods European commission recently found that more than half of websites selling electronic goods failed to comply with consumer protection laws (September 2009) Guiding directives: EU Distance Selling Directive, E-commerce Directive, and Unfair Commercial Practices Directive Common problems: Consumer’s right to return product for refund Display of delivery & tax costs Full contact details Side note: surprising, the study found that only 7% of European consumers shop online across borders and only 20% of online retailers sell cross-border. hutchlaw.com 9 US v. Drew - “Cyberbullying case” Parent used MySpace to set up a false profile of 16 year old boy to flirt with 13 year old neighbor girl, who later killed herself Jury declined to find felony intent but found guilty of misdemeanor under Computer Fraud & Abuse Act In August 2009, Judge overturned verdict, holding that no criminal liability for simply failing to follow web site terms Judge noted various vague and overbroad terms in MySpace’s terms of use as part of rationale for case hutchlaw.com 10 Is Keyword Advertising Trademark Infringement? Google AdWords Can Google sell trademarks to competitors? US cases are decidedly mixed/in flux, but majority have ruled against Google Just last week (Sept. 23), EU Advocate General delivered opinion that Google’s operation of AdWords system did *NOT* amount to trademark infringement hutchlaw.com 11 Trademarks and Social Networks Popular sites such as Facebook and Twitter becoming important business tools These sites are beginning to set up policies for trademark disputes and early reservation periods for trademark owners hutchlaw.com 12 Expansion of top-level domain names ICANN has approved the expansion of the current domain name system Could result in a significant increase in the number of top level domains Examples include: .berlin, .nyc, .paris, .web, .radio or .newcompany Scheduled for release in 2010 – $185,000 fee to apply “Fast-track" implementation of IDN (Internationalized Domain Names) in conjunction with the launch of new gTLDs Many new challenges and opportunities for brand owners hutchlaw.com 13 Death and Taxes Generally, if a vendor does enough business in a state (or country), it may be subject to income taxes in that state (or country) The “Amazon Tax” – a few states (NY, NC) passed laws imposing sales tax on internet retailers with affiliate programs Canadian Revenue Agency won a court victory requiring eBay to disclose names and contact information and sales figures for “powersellers” (Nov. 2008) hutchlaw.com 14 Jurisdiction Question Customer, who is a doctor with offices in Michigan and Ohio, orders a new stereo online for her home in Ohio. She places the order from New York. Vendor, with business office in Maine but computer operations in Florida, accepts the order by e-mail, service provider in Virginia. Customer is traveling to Texas when she receives the order. Stereo ships from Jamaica. Nimmer, Law of Computer Technology Insoluble under current law unless choice of law is contained in terms! hutchlaw.com 15 Conclusion – Practical Steps Review and update client’s online terms and conditions – opportunities for LEI collaboration! Consider an employee policy for use of Twitter, Facebook and other web sites Protect trademarks and domain names hutchlaw.com 16 Hutchison Law Group Serving the Southeast’s life science and technology communities. Represent companies of all sizes, with a strong focus on emerging growth companies from inception through exit. Concentration in corporate and intellectual property matters Extraordinary depth and experience in law, technology and business. hutchlaw.com 17