Internet Law How to make sure you're following the rules in cyberspace.

Last month, we discussed online etiquette: how to conductbusiness online without overstepping the boundaries of proprietyand good manners. Companies doing business on the Internet must notonly abide by online etiquette, but also by federal regulations andthe laws of the states in which they operate. Businesses shouldalso ensure that their Web sites meet legal standards, that theyobserve international and intellectual property laws and that theyrespect the privacy of their customers. This month, we exploreInternet law--uncharted territory for most small businesses.

Sandra E. Eddy is the author of HTML in Plain English(MIS:Press, $16.95, 800-288-2131), Mastering Lotus SmartSuite 97for Windows 95 (Sybex, $39.99, 510-523-8233) and The GIFAnimator's Guide (MIS:Press, $39.95, 800-288-2131).

Establishing an Online PresenceWithin the Law

A typical business establishing a Web site to publicize itselfor to provide service or product information may not need toconsider many legal ramifications. Visitors to the site look at thepages and may have the option of sending electronic messages, butthe company doesn't actively communicate with its visitors.Some businesses, however--especially those selling goods andservices online and those that are regulated by state, federal orinternational laws--should have an attorney view their plans.Depending on the type of business, companies might have to examinecopyright law (both in protecting their own Web pages and usingothers' intellectual property appropriately), state and federalconsumer-protection laws, interstate and international commercelaws and treaties, state and federal tax laws and laws regardinginternational duties. When preparing to sell goods across statelines, a company should be able to compute the correct sales taxfor customers living in every state and be aware of lawsrestricting or forbidding the sales of certain items, such asliquor, cigarettes and fireworks. Companies doing business acrosscountry borders also must be aware of laws controlling contracts,product liability, privacy and security.

Jonathan Rosenoer owns and operates CyberLaw and CyberLex(http://www.cyberlaw.com ),pro bono educational services on law for computer users. His book,CyberLaw: The Law of the Internet (Springer-Verlage, $34.95,800-SPRINGER), provides in-depth articles about Internet legalissues and tracks major developments in computer law. "If abusiness is subject to special regulation, it should determinewhether there are any domestic or foreign state advertisingissues," Rosenoer says. "A company offering goods andservices might want to check to see if it needs to address anyconsumer-protection laws." For example, federal law restrictsthe distribution of certain types of computer software outside theUnited States, for security reasons. To get ready to exportsoftware that could have military applications, you might have togo through a number of steps to meet the regulations of the Bureauof Export Administration in the U.S. Department of Commerce.

You should also make sure your Internet service provider (ISP)is a good business partner. Before committing to a particular ISP,get recommendations from other business owners in your area andresearch candidates through the local Better Business Bureau.Finally, interview the ISP as you would any other vendor. Ask ISPsthe following questions: How do you ensure the security of e-mailmessages and credit-card payment information? Do you have liabilityinsurance to cover security breaches? Have you conducted criminalbackground checks of those with access to customer data?

Intellectual Property Rights

The U.S. Copyright Act of 1976 regulates the protection ofintellectual property in this country; its primary internationalcounterpart is the Berne Convention for the Protection of Literaryand Artistic Works. When establishing a Web site, consider thefollowing copyright information, applicable around the world:

• The creator of a work automatically has a copyright at the timehe or she creates it. Works created after March 1, 1989, are notrequired to include a copyright notice.

• To place a work in the public domain (that is, allow itto be freely published by others), the creator must explicitlystate that the work is in the public domain.

• If you link to a copyrighted work, you are not considered to becopying it, under the current interpretation of the law.

• You can copy small parts of protected works under what is knownas fair use. For example, if you are a literary critic, youcan cite parts of a work that you are reviewing. Fair use is notalways easy to determine, however, so if you want to cite a fewwords from a protected work, be sure to credit its creator.

Protect Your Domain Name

Trademarks make a particular company's goods and serviceseasy to identify. On the Internet, the most significantidentification for your company is its domain name. But notrademark laws yet apply to domain names. To protect your domainname, consider trademarking it and making sure you keep yourregistration up to date to avoid losing the name to anothercompany.

Guarding Customer Privacy

Over the years, the U.S. Supreme Court and individual stateshave established a citizen's right to privacy. But how thoserights will translate on the Internet has yet to be established."The Global Information Infrastructure's greatpromise--that it facilitates the collection, reuse andinstantaneous transmission of information--can, if not managedcarefully, diminish personal privacy," according to AFramework for Global Electronic Commerce (http://www.iitf.nist.gov/eleccomm/ecomm.htm), a paper issued and posted on the Web by President Bill Clintonand Vice President Al Gore. "Privacy concerns are being raisedin many countries around the world. For example, the European Union(EU) has adopted a directive that prohibits the transfer ofpersonal data to countries that, in its view, do not extendadequate privacy protection to EU citizens."

Timothy J. Walton, an attorney in Novato, California, runs a Website called Internet Attorney (http://www.sflegal.net/attorney/), which includes articles about the law and Internet privacy,Web-site design, computer security and other related topics."If someone publicizes personal facts for financial gain orwithout permission--or makes someone look bad, he or she can runinto problems," Walton says. "For the most part, if asite asks for information and the person visiting the site freelygives it, there is nothing illegal about selling that name andaddress to anybody who will pay for it. However, unsolicited e-mailhas resulted in court orders to stop, increased legislativeactivity and, in one case, the disbarment of an attorney."

Doing Business Across State and Country Borders

Large and small companies can reach a wide audience on theInternet; state and country borders are invisible to mostcustomers. "The borderless state of the Internet presents bothopportunities and problems for American businesses," Waltonsays. "Many pending court cases and laws involve businesses inone state selling to residents of other states. For example,California recently passed legislation that attempts to regulateout-of-state online businesses that are selling to Californiaresidents.

"The California law also states that an online businessmust specify a real-world address on the opening page, the pagewith the sales pitch or the page that requests credit-cardinformation," Walton says. It's so easy to create and posta professional-looking Web page that even fictitious companies canlook like real businesses to consumers. So the best proof of acompany's existence is a street address that a customer canverify through a personal visit or a letter.

The Bottom Line

"The best advice for a company that wants to establish anInternet presence is to conduct business with integrity,"Walton says. "It is deceptively easy for businesses to fallinto the trap of treating online consumers as nameless, facelessentities. Offer online customers the same respect you give yourother customers. Someday, a customer who has had a good experiencewith your company will decide to tell a few thousand friends aboutit."

Law and Ordering

Timothy J. Walton, an attorney in Novato, California, recommendsthese Internet law resources:

• FindLaw Internet Legal Resources (http://www.findlaw.com/ ) is a legalsearch engine and directory. To find information about a particularlegal topic, either type a term in a text box or click on acategory, such as Legal Subject Index, State Law Resources orForeign & International Resources.

• Lawguru.com (http://www.lawguru.com/ ) is the homepage of The Law Offices of Eslamboly & Barlavi, a law firm withoffices in Los Angeles and Fresno, California. Here, you canperform legal research using hundreds of legal search engines andlink to other law-related sites.

• The Business Law Site (members.aol.com/~bmethven/)sponsored by Berkeley, California, law firm Methven &Associates, allows you to research federal, state and internationalstatutes; link to other legal resources; obtain information aboutthe Internet, trademarks and copyrights; review business law; andfind other business information.

• The Law-Related Internet Project Saarbrücken (http://www.jura.uni-sb.de/english/), sponsored by the Computers and Law department at the Universityof Saarland in Saarbrücken, Germany, is an international lawcenter. From this site, you can link to English- andGerman-language legal sites in Germany and other parts ofEurope.

Worth Reading

Online Law: The Software Publishers Association's LegalGuide to Doing Business on the Internet, by Thomas J.Smedinghoff, Andrew R. Basile Jr. and Geoffrey Gilbert (AddisonWesley Longman, $36.95, 800-822-6339), is a layman's guide toInternet law.

Doing Big Business on the Internet, by Brian Hurley andPeter Birkwood (Self Counsel Press, $14.95, 800-387-3362), includesa variety of information, from legal and security basics tochoosing an Internet service provider.

Contact Sources

Jonathan Rosenoer, http://www.cyberlaw.com

Timothy J. Walton, c/o Brayton Harley Curtis, 222 RushLanding Rd., Novato, CA 94945, (415) 898-1555, ext. 275, http://www.sflegal.net/attorney