The Internet and the Law: Putting Your Business Online

The Internet and the Law: Putting Your Business Online

The "golden" business opportunities of the Internet can seem limitless: the ability to reach new customers, build new businesses, achieve efficiency, and capitalize on the medium's global reach and immediacy. But such opportunities often come at a cost. Because businesses operating on the Internet frequently are in uncharted legal territory, you may find yourself working in a vacuum, with no legal precedent, other than your own business ethics, to guide you. Or, you may find yourself subjected to a patchwork of conflicting laws and regulations from every corner of the globe that the Internet can reach.

Ultimately, the Internet will benefit from the establishment of uniform global standards to guide businesses and consumers alike. But until that day comes, companies operating on the Internet need to keep in mind the legal implications of the business decisions they make.

The "Old Rules" Still Apply

As a starting point, a good rule of thumb is to assume that the "old rules" still apply. In other words, in the absence of new, Internet¬specific laws, the safest assumption is that the same rules that apply in the traditional "physical" business world apply to the Internet. Although it may not be possible to apply all traditional business rules to the Internet, their underlying principles generally will prevail. You should never assume that the Internet will provide your business with greater legal protection than it enjoys in the tradi¬tional marketplace.

For example, if you post something defamatory on the Internet, you may be subject to the laws that traditionally protect individuals from defamation or libel. Similarly, the long-standing laws that protect businesses from trademark violations and copyright infringements must still be respected.

In addition, government agencies such as the Federal Trade Commission (FTC), the Securities and Exchange Commission (SEC), and state attorneys general have applied traditional con¬sumer-protection laws to the Internet. All the requirements of truth-in-advertising laws are still in play; as well as laws against deceptive practices, false or misleading representations, and improper endorsements.

Trademark Law

Trademark issues on the Internet are inextricably linked with domain names, the mechanism for identifying Internet addresses. In fact, domain names may ultimately be more important to Web site operators than traditional trademarks because domain names serve a dual purpose: they help brand products and deliver potential customers to Web sites.

Browser keyword searches and easy-to-remember URLs enable Internet users to find information quickly and easily. Rather than having to track down an unfamiliar telephone number or street address, users may simply type in a topic or a company name to find what they are looking for.

Because of this, Web site operators are understandably eager to acquire recognizable and easily remembered domain names for their sites. A logical domain name may give you a significant competitive advantage by making it easier for first-time visitors to find your site, and then remember your URL for future visits. Moreover, the Internet is a great equalizer, because a mom-and-pop business can have the same presence on the World Wide Web as a multinational corporation. Thus a memorable domain name, such as Yahoo.com, can lead to phenomenal worldwide brand recognition.

At the same time, the global reach of the Internet can lead to new conflicts in the trademark arena. While trademarks are often regional in nature, traditional regions don't exist on the Internet. For instance, the Anheuser-Busch Brewing Company and the Bohemian town of Ceske Budejovice, which the Germans call Budweis, have been battling for decades because they both produce a beer called "Budweiser." Both have an arguably legitimate claim to the name. Despite years of conflict with no clear result, the two brewers at least operated in distinct physical markets. But now if you look for "Budweiser" using an Internet search engine, you'll turn up both companies' home pages, one at budweiser.com and the other at budweiser.cz.

A further complication is that owners of domain names tend to try to keep them as short and simple as possible. For example, the domain name "acme.com" could belong to any company ranging from ACME Aerospace to ACME Zippers. Additional confusion may occur when acme.org. acme.net. and acme.corn can exist side by side as legitimate domain names and Internet addresses.

The Internet is more prone to this kind of confusion because so much of its navigation is text based, with limited cues and no room for spelling errors. In a traditional trademark-registration process, two businesses in different industries may be permitted to use similar names because there is little chance that the public will be confused. (The Lexus automobile and the Lexis-Nexis database of news stories provide one example.) But such differentiation may not be possible when the brand names are merely words on a computer screen, without additional clues as to their meaning.

If you already have a valuable brand name in the traditional world, you may need to be careful that someone else doesn't steal it for use on the Internet. These so-called "cybersquatters" make their living by anticipating which domain names will be valuable and then registering those names for themselves. Later they try to sell the names to businesses that want them-sometimes at a substantial profit.

McDonald's Corp. and MTV Networks are among the companies that have faced this problem. In addition, in April, 2014, a federal court of appeals in California ruled that these practices violate trademark law and are tantamount to extortion in a case involving a cybersquatter who had registered the domain name "panavision.com" and then tried to sell it to Panavision. (Many companies are now choosing to sue cybersquatters for trademark infringement rather than settle.)

Similarly, a company may register a domain name to block a competitor from using it. In an early battle over a domain name, the Princeton Review registered a domain name that closely resembled the name of Stanley Kaplan, the name then used by one of its main competitors in the test preparation industry.

As with "real world" trademarks, the easiest way to avoid problems with trademarks on the World Wide Web is to register your brand name or trademark as a domain name as soon as you can, put ~t to legitimate use, and be on the lookout for infringement by others.

Web sites that use "framing" may also run into problems with trademark infringement. Framing occurs when a Web site becomes part of a larger "meta site" that aggregates links and information from other sites. Metasites function as large, centralized information repositories that make it easier and faster to use the Internet. Framing allows you to see the contents of a Web site within a smaller area of the meta site without leaving the metasite. The metasite's logo and third-party advertising messages may surround or "frame" the site whose contents you are viewing. Because the content and trademarks of the framed site may suggest that the material has been licensed when it hasn't, or an association between two companies that does not exist, this may amount to both illegal trademark dilution and copyright infringement.

Some Web site operators may also be guilty of trademark infringement when they use invisible trademarks to lure users to their sites. Also known as "word stuffing," this involves embedding another company's popular brand name into a Web site. For example, the operator of two adult-oriented Web sites reportedly coded Playboy ™ and Playmate ™ into the sites so that they would turn up when users were searching for the popular magazines by those names.

Domain registration is undergoing change

Domain-name registration historically was handled by the National Science Foundation (NSF), and then contracted to a private com¬pany, Network Solutions, Inc., and its registration facility, InterNIC. However, the contract with the U. S. government has expired and an International Ad Hoc Committee (IAHC) has called for expanding the kinds of addresses that are available, adding suffixes such as ".store" to those that businesses can use. The U.S. Department of Commerce, through its National Telecommunications and Information Administration (NTIA), has proposed its own system of additional suffixes and domain-name registries.

It is likely that the regulation of domain names will evolve into a system with a centralized arbitration mechanism, but with competing name registries and a greater reliance on fees from users. It may be years before all the issues surrounding the use of trade¬marks on the Internet are resolved. In the meantime, you should always consider the potential for trademark infringement when you use a name on the Internet. You can try to avoid potential conflicts through the good-faith use of domain names, and negotiation and compromise if you discover that you share a legitimate claim to a domain name with another party.

Author Bio : Manmeet Singh a Senior Blogger and SEO Analyst associated with Yoginet Web Solutions, a leading website designing company in India.