Getting Your Web Site Legal

By John M. Daley, Esq.

Today, it is almost unthinkable to be in business without also being on the web.  Within the next two to five years, you can delete the word "almost."

If you are just about to jump onto the web, there are several legal issues you should consider--as they say, look before you leap.

If you've already leaped, you should review your site for the legal issues described below, then take immediate steps to remedy any shortcomings before a problem arises.

Naming Your Web Site

Whether you use your existing business name or a new name created just for the web, you should check to be sure that the name you have chosen does not infringe someone else's rights.  If you don't, you might end up having to change your name after you have put considerable time and effort into your site, thereby losing a tremendous asset.

Neither using your own name nor registering your selected name for use on the web is a guarantee of non-infringement.  For example, even if you have used the same business name for years, you might find that another company in another state uses the same name.  Depending upon various factors, it might also turn out that the other company's rights to the name are superior to yours.

Before you get on the web, you need to register a web site name.  Although there was once only one company which registered names, there are now several companies which do so.  However, the companies which register your name for use on the internet check only to determine whether another person has registered exactly the same name you have chosen, not whether the name you have chosen infringes another company's trademarked name, either because it is identical or because it is "confusingly similar."

The best guarantee that the name you have chosen is not infringing is to hire an experienced trademark search company to perform a trademark search.

If the name you want is available for use on the web and is not infringing, you should reserve the name, even if you're not ready to go on the web.  This will prevent someone else from grabbing the name while you are developing your site.

You should also consider registering your web site name, and perhaps variations of the name, as a trademark or service mark.  Among other things, a federal trademark gives you the ability to prevent others from using the same name and the right to prevent goods with infringing marks from entering the U.S.

Since web site names do not necessarily constitute a trademark, however, you should consult an attorney before trying to register your web site name.

Your Contract with the Web Developer

Most companies hire a web site developer to create their site.  Before you sign on the dotted line, however, there are several terms you should consider including in the contract between you and your web site developer.

First, you want to include provisions which make it clear that you own or have the unfettered right to use and transfer the web site the developer creates for you.  If these provisions are not included in your contract, you might be surprised to find out that your web site developer owns all or important parts of your web site, and that your right to use the web site code and content is restricted in some manner.

To protect your ownership rights, the contract should specify that the developer is creating a work for hire under the U.S. Copyright Act and that all content of the site (e.g., text, graphics, software, source code, etc.) will be owned by you or your company.

If your web site developer intends to include code or content which he or she owns or plans to use for other web sites, you should first decide which one of you is going to retain ownership of the code and content.  If you retain ownership, you can consider including a term which gives the developer a license to use the contents.  If the developer retains ownership, you should be absolutely sure that the contract grants you a worldwide, perpetual, transferable and royalty free license to use the code or content.

Second, you want to include provisions which minimize the possibility that the web site you buy does not infringe other persons' intellectual property rights.

To protect against infringement, the contract should include provisions wherein the developer warrants that (1) the web site developed for you will not infringe or violate the intellectual property rights (i.e., copyrights, trademarks, patents or trade secrets) of others and (2) appropriate licenses have been obtained for any intellectual property owned by others which is incorporated into the site.  The contract should also include a provision which says that the developer will defend and indemnify you in the event that you are sued for infringement of a third party's intellectual property rights.

If you are providing material (e.g., images) which is to be incorporated into the site, be sure that the material is original and owned by you or that you have obtained the necessary permissions and/or licenses to use the material.

Obviously, your web development contract should include several other provisions, such as a timetable for completion of the site, a budget or contract price, a description of what the web site should do, and details concerning what constitutes completion of the contract, which will differ depending upon size and nature of the site. 

If your web site is already up and running, you may not be able to get your developer to agree to all of these provisions.  However, you should at least try to obtain the developer's agreement to an addendum whereby he, she or it either acknowledges your complete ownership of the code and content included in the site or grants you a license to use the code and content of the site, or at least the portions of the code and content which the developer claims he, she or it owns.

If your developer is willing to enter into such an addendum, you would be well advised to pay some amount, no matter how small, to avoid a later claim that the addendum is unenforceable for "lack of consideration."

Content and Operation of the Web Site

Regardless of whether your web site is still in development or already up and running, you should also consider the following issues.

Protecting Your Site Under the Copyright Law

Since protection under the copyright law is available only for "original works of authorship," it might not be possible to protect some of the information on your site under the copyright law.  For example, in Feist Publications, Inc. v. Rural Telephone Service Co., 499 U.S. 340 (1991), the United States Supreme Court held that "the names, towns and telephone numbers" included in a telephone directory which was created by Rural and copied by Feist were not protected by copyright because the information copied was mere "facts," and were therefore not "original."

However, large parts of your web site site probably can be protected under the copyright law.  Accordingly, each page of your site, as well as any downloadable material, should include a copyright notice, such as the one which appears at the bottom of this page.

You should also discuss registering your web site under the copyright act with your attorney.  Copyright registration is essential if you want to sue for infringement in federal court.  Timely registration also gives you the right to recover statutory damages and attorneys' fees, rather than actual damages and profits, from an infringer.  Your attorney can advise you whether registration is worthwhile in your case.

Framing, Linking and Using Content from Other Sites

"Framing" involves inserting material from a third party's site into a "frame" which consists of material from your own site.

The practice of "framing" is dangerous, since it can lead to claims of copyright infringement, trademark infringement, and unfair competition.  Accordingly, in the absence of written permission from the owner of the other site, you should avoid "framing" content from another site.

"Linking" to the home page of another web site does not result in a legal issue in most cases.  Before you link to another person's site, however, you should read the terms and conditions of the linked site to ensure that your proposed link will not violate the terms and conditions of the linked site.  If there is a prohibition on linking, but you still want to link to the site, ask for written permission.

Whether you are framing or linking, you should also be sure to include a disclaimer which makes it clear that you are not responsible for the content or operation of the linked or framed site, that you do not endorse the linked or framed site (unless you do), that the linked or framed site does not endorse you (unless it does), and that there is no connection between your site and the linked or framed site (unless there is).

Web Site Terms and Conditions of Use

Every web site should have "terms and conditions of use" which cover the use of the information and materials on your web site.

The purpose of such "terms and conditions" is both defensive, i.e., to protect you against claims brought by users, and offensive, i.e., to provide you with a basis for asserting claims against others who infringe or misuse your web site.

Can you be certain that the "terms and conditions of use" are enforceable?  Not entirely.  However, courts have generally upheld the validity of the terms and conditions of "shrink wrap" licenses for software, which are very similar in form and effect to the terms and conditions you will want to include on your web site.

The provisions which should be included in you "terms and conditions of use" depend upon the nature of and purpose for your site.  As a general matter, however, all sites should include some variation of the following:

Limitations on the Use of Materials and Information on Your Site.  In addition to a standard or modified copyright notice, your site should include limitations and, where appropriate, permissions, concerning the use of information and material on your site.  Such limitations are particularly important when there is any doubt about whether the information on your site can be protected under the copyright law (e.g., when your site includes classified advertising).  You should consider limitations on linking (e.g., by specifying that links to public pages are permissible, whereas links to password protected or private pages are not), framing (e.g., by specifying that framing is not permissible if it obscures any information which identifies you as the owner of the site from which the information is being displayed), downloading of materials from the site (e.g., by specifying that a limited number of materials may be downloaded for personal, non-commercial use by the user), and copying or use of source code, artistic design, graphics or the arrangement of your pages.

A disclaimer or disclaimers of liability for content or information on your site.  Since your site is available virtually anywhere, anytime, you cannot possibly know who is using your site, or for what purpose.  Your site can also be infected by a virus or other agent which you overlooked, or over which you have no control (e.g., if your web site is hosted by a third party).  Accordingly, to protect yourself against claims by users, your terms and conditions should include a provision which disclaims any warranties, states that the information on the site may turn out to be erroneous, and includes an affirmation that the user is relying on information provided on the site at his own sole risk.

A disclaimer regarding links.  Although you may find it advantageous to include links to other sites, you do not want to assume liability arising from the content of or viruses which reside on other sites.  You also want to avoid any suggestion that there is a connection between your site and the other site (unless there is one).  Thus, your terms should include a provision disclaiming responsibility for the linked sites or any connection between your site and the linked site (unless, of course, there is a connection).

Remedies and Limitation of Liability.  A complete disclaimer of liability might be invalid, depending upon the circumstances involved.  Accordingly, your terms should also include provisions which limit the nature of damages for which you may be held liable (e.g., by excluding recovery of indirect, special, incidental or consequential damages).  Depending upon the nature of your web site and business, you should also consider including an absolute dollar limit of liability.

Jurisdiction and Governing Law in the Event of a Dispute.  If you are a small business in San Francisco, you do not want to get hauled into Court in New York, or even in Los Angeles, when a dispute arises over the content of your web site.  Since you presumably built your web site to conform to the law of a particular state, you also want to avoid getting sued on the basis of the law in some other state.  Accordingly, you should consider including a provision specifying a particular city or other jurisdiction in which any dispute over your web site may be resolved, as well as the law of the State which will be applied in resolving the dispute.

Integration Clause. An "integration clause" is one which says that the terms and conditions on your site are the only terms and conditions of the contract between you and the user, and that any other purported agreement is of no force or effect.  Depending upon the nature of your business, and especially if you actually sell services or products through your site, you should consider including an "integration" clause in your terms and conditions in order to eliminate any doubt over what is part of the contract between you and the user.

Privacy Policy.  Most web sites post "privacy policies" which describe how and under what circumstances they use the information which is voluntarily provided to them, or which they automatically gather from, users of their sites.  The policy may be set forth in the "terms and conditions of use" for the web site or separately, as it is on this site.  At this time, there is no law requiring the posting of a privacy policy on your web site, although you might want to include such a policy for customer relation purposes. If you do post a privacy policy, however, you should be sure to follow any policy you post, since it will almost certainly be regarded as part of your contract with the user.

Reservation of the Right to Amend Your Terms and Conditions.  The law which applies to web site usage is evolving rapidly.  Moreover, over time, you may encounter problems that you did not anticipate when you opened your web site.  Accordingly, you should be sure to reserve the right to amend or change your terms and conditions, with or without notice, at any time.  If you do change your terms and conditions in a material way, however, it would be a good idea to bring attention to the amended terms and conditions so that prior users are aware that a change has occurred.

Sales and Service Terms and Conditions

If you actually sell goods or services through your web site, and in some cases even if you do not (e.g., for companies whose standard terms and conditions are printed in small type on the reverse side of forms), you should also include a separate page of terms and conditions which govern the sale of goods or services.

The terms and conditions of your sales or service contract will vary depending upon what you are selling. If you intend users to enter into an actual contract through your web site, however, you should be sure to prominently display all or a portion of your terms and conditions on page of your web site where the user confirms the sale, then require the user to "accept" the terms by clicking on a button to confirm the sale.

If only a portion of your terms and conditions is visible on the confirmation page, your confirmation page should direct the user to a link which brings him or her to a page which sets forth all of the terms and conditions which apply to the sale.

Other Issues

There are a host of other issues which may arise in connection with particular web sites or content on a web site, including securities laws issues, sales tax issues, contract issues, jurisdictional issues, banking regulations and so forth.

For the most part, however, these issues are specific to particular businesses or types of web sites.  Before you jump on the web, and even if you're already on the web, you should discuss all of these potential issues with your legal counsel.

Conclusion

If your business isn't yet on the web, chances are it will be soon.

Once you're ready to take the plunge, be sure to review the issues discussed above before you hire your web site developer, since most of the issues can be resolved most effectively, and at the lowest possible cost, when you first enter into a contract with your developer.

If your web site is already up and running, take heart.  Some of the problems described can be resolved even after the fact, at little cost.  Although it may be expensive to resolve other issues, such as the choice of an infringing name, you will still save money by addressing the issue early, before your irrevocably lose the right to protect your investment or end up as a defendant in a lawsuit for infringement.

Revision date 10/4/99

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