KEYTLaw FAQ: Web Site Legal Audits
April 30, 2001
What is a Web Site Legal Audit?
Why should a web site owner obtain a web site legal audit?
What are some of the laws and legal concerns that affect web sites?
The Children's Online Privacy Protection Act of 1998
Anticybersquatting Consumer Protection Act
Domain Name Issues
Digital Millennium Copyright Act
Affiliate & Content Provider, & License Agreements
Sweepstakes and Contests
Framing and Linking
Who Should Perform Your Web Site Legal Audit?
How Much Does a Web Site Legal Audit Cost?
Is the Web Site Legal Audit Worth the Cost?
A web site legal audit occurs when an experienced internet lawyer reviews a web site for a client and issues a written report alerting the client to actual or possible legal problems associated with the web site.
There are many laws and regulations that apply to doing business on the internet or operating a web site. Violating a law can subject a web site owner to substantial civil liability, including the risk of defending a class action lawsuit. In addition, some online activities such as offering an illegal lottery instead of a legal sweepstakes can impose criminal liability if not done properly. Web site owners should know and understand what laws or rules apply to their web sites.
The Children's Online Privacy Protection Act of 1998: If you operate a commercial web site or an online service directed to children under 13 that collects personal information from children or if you operate a general audience web site and have actual knowledge that you are collecting personal information from children, you must comply with COPPA. The Federal Trade Commission may bring enforcement actions and impose civil penalties for violations of COPPA.
Trademark Issues: Does the name of the web site or your product name infringe on any federally registered trademarks or service marks? Does the web site use any meta tags that contain registered trademarks or service marks that might create trademark infringement?
Anticybersquatting Consumer Protection Act: Does the web site's domain name infringe on any federally registered trademarks or service marks? In lieu of actual damages, the Act authorizes the court to impose statutory damages on cybersquatters of not less than $1,000 and not more than $100,000 per domain name.
Domain Name Issues: Do any existing domain names infringe on your trademark(s) or service mark(s)? Does the web site owner actually have "legal title" to the domain name or is it held by the web site developer, the internet service provider or an employee? Does the web site owner have any written evidence from a reliable source that shows who owns the domain name? We all can find the title to our car and the deed to our house, but can you find anything to show that you own your domain name? Do you know who will get the notice from your domain name registrar that the domain name renewal fee must be paid to avoid losing the domain name? What would happen if the renewal notice was sent to a person who is no longer employed by your company? When is your domain name renewal fee due? Have you paid the renewal fee for a period longer than one year?
Copyright: Does the web site owner actually own the copyright to the web site or is it owned by the web site developer or an employee? Does the web site display proper copyright notices? Did the web site owner file a copyright registration for the web site with the U.S. Copyright Office? Should the owner obtain a federal copyright registration? Does the web site owner understand copyright issues as they relate to web sites and copyright infringement?
Digital Millennium Copyright Act: Does the web site take advantage of the safe harbor provisions of the Act to eliminate or reduce the risk of copyright infringement caused by content uploaded to the web site by users? Does the web site notify its users of the name and email and mailing address of the agent authorized to accept notices of alleged copyright infringement? Has the web site filed a notice with the U.S. Copyright Office designating its copyright agent?
User Agreement: Does the web site need a user agreement? If the web site has a user agreement, is it legally binding? Does the web site user agreement have a choice of law provision that provides for exclusive jurisdiction and venue in your state and county if a dispute arises? Does the agreement limit the web site owner's liability and disclaim all warranties?
Legal Issues: Does the web site disclaim liability for the accuracy of information contained on the web site or on web sites to which the web site links? Does the web site display other necessary disclaimers?
Affiliate & Content Provider, & License Agreements: Does the web site owner have written agreements for all transactions involving third parties that provide content or data or that receive content or data? Do the agreements contain confidentiality provisions to protect the confidentiality of user data? Do content providers represent and warrant that all content will not infringe on the intellectual property rights of any third party and agree to indemnify the recipient of the content from any alleged or actual intellectual property right infringement?
Sweepstakes and Contests: If the web site offers a sweepstakes or a contest, is it legal or is it an illegal lottery? If the prize is more than $5,000, did the web site provide proper notices to the States of New York and Florida and post any necessary bonds? Does the sweepstakes have adequate rules posted on the web site?
Advertising: Does the web site comply with advertising laws and guidelines such as the Federal Trade Commission's rules applicable to bait and switch, catalogs, children's advertising, comparative ads, contests and sweepstakes, credit, disclosures and disclaimers, endorsements and testimonials, food ads, franchises and business opportunities, free claims, guarantees, internet advertising, leasing, mail order advertising, pricing, and rainchecks?
Framing and Linking: Does the web site use frames when linking to other web sites or deep linking in such a way so as to create liability?
Insurance: Do you carry the proper types of insurance for your online activities? Are you covered for intellectual property infringement on your web site or for defamation that is published on your web site by you or a user? Does your insurance cover invasion of privacy and other types of privacy liabilities? Would your insurance cover you if a hacker obtained credit card information from your database or if an employee improperly used credit card information?
Tax Issues: If the web site sells products nationally, does it collect sales taxes for sales in jurisdictions in which it has "nexus" when required by law?
International Law: Does the web site offer goods or services to citizens of countries outside the United States? If so, does the web site comply with applicable foreign law? For example, if the web site collects personally identifiable information from a citizen of a European Union country, the European Union requires that the web site not collect any information until after it first obtains the consent of the user. Note: Your U.S. attorney cannot advise you on compliance with foreign laws.
The attorney who performs a web site audit must have a broad range of experience in internet law. Ask the attorney some of the questions raised above to determine if he or she is familiar with the issues and can respond knowledgably. Do not hire anybody who cannot adequately discuss the above issues with you. Use caution when engaging the services of a lawyer who is an intellectual property lawyer and who also claims to be an internet lawyer. Intellectual property law is important to web site operations, but it is just a small piece of the big legal pie. Most intellectual property lawyers have a limited knowledge of internet law unless they have spent substantial time becoming educated as to internet law.
Is the Web Site Legal Audit Worth the Cost?
They say "an ounce of prevention is worth a pound of cure." How much is it worth for a web site to discover that it violates the Children's Online Privacy Protection Act so that it can eliminate the problem and avoid being the subject of an expensive and nationally publicized Federal Trade Commission enforcement action? How much is it worth to find out that your use of users' personally identifiable information violates privacy laws and could cause you to become the defendant in a class action lawsuit?
About the Author
Keyt is a business and contracts attorney licensed to practice law
in Arizona. Rick can be reached by
telephone at 602-906-4953, ext. 3, email
and fax at 602-297-6890.
Rick's internet, e-commerce and domain name law web site is
KEYTLaw, located at
Communicating with Richard Keyt via email, telephone or otherwise does not cause
you to become a client of Rick's or of KEYTLaw, LLC, or cause your communications to be confidential
or subject to the attorney client privilege.