Today’s Internet-based retailers can be thought of as the successors to the mail-order businesses of the past. In fact, when comparing only the order-fulfillment processes, there is little discernable difference between the two. Communication between buyers and sellers is now conducted mainly through email, rather than by telephone and postal mail, but as for the actual transport of physical goods, the technology has remained essentially the same. Predictably, many of the laws and regulations that apply to mail-order businesses now apply to Internet businesses as well. One particularly important such rule is the FTC’s so-called Mail Order Rule.

Simply put, the rule regulates how businesses may represent their shipping times to consumers. For example, if a company’s website promises that it will ship products in 10 to 14 days, the company must have a reasonable basis to believe this is true. Note that the rule doesn’t apply to the actual delivery times, which are always (to some extent) out of a company’s control. If a company chooses not to make any representation about its shipping times, the company must have a reasonable basis to believe that it can ship within 30 days (this is referred to as the “30-day Rule). Accordingly, if a company knows that shipping will take more than 30 days, it must inform its customers of this fact.

Another important provision of the mail order rule is its requirement for delay notices. If, after receiving a properly completed order, a company discovers that it will be unable to meet its promised shipping time, that company must contact the customer and request permission to delay. This notification must be made within the shipping time originally promised, or within 30 days if no time was promised. If the buyer does not want to wait, the rule requires that companies provide a full and prompt refund.

For the most part, the Mail Order Rule is easy to understand and comply with. The most complicated provisions of the rule arise in cases of repeated shipping delays, which will likely be rare for most businesses. There are, of course, potential FTC fines and other adverse legal actions that can apply to violators of the rule. The simplest and best reason to be forthright about shipping times, though, is that it is simply good business practice.

The explosive growth of the Internet during the 1990s often upended old rules or assumptions about business, technology and law. The issue of taxation was no exception – businessmen, legislators and consumers found themselves facing questions that current tax law had no answers for. Business owners who wanted to expand online wondered if they would have to collect and remit state and local sales taxes for each of the hundreds of jurisdictions in which they sold goods. Politicians worried that state and local governments would impose punitive taxes on Internet services that could hamper the growth and accessibility of the Internet.

These were the sorts of concerns that prompted Congress to pass the Internet Tax Freedom Act (ITFA) of 1998. The Act instituted a three year tax moratorium, which had several effects. First, the Act prohibited state and local governments from taxing Internet access. were As part of a political compromise, Internet access taxes were grandfathered in for twelve states (including Ohio) which already had laws of this sort. The ITFA also prohibits “multiple or discriminatory” taxes on e-commerce. Although this language is intentionally broad, this provision is generally intended to prevent states and localities from taxing Internet-based transactions differently or at different rates from their non-Internet equivalents.

The Act also relieves some of the burden on e-retailers to collect sales taxes for sales to customers in other states. Although (contrary to popular perception) the ITFA does not prohibit all sales taxes on Internet purchases, it generally supports the rule that a business must only pay sales taxes in states in which it has an actual physical presence. This follows the result of the Supreme Court’s decision in Quill corp. v. North Dakota, which had originally given a similar tax exemption to other types of “remote sellers,” such as mail-order businesses. Courts have generally held that the presence of employees or facilities is necessary to establish an entity’s tax presence in a particular state. In other words, e-businesses needn’t file state and local tax returns in every jurisdiction in which their websites are accessed.

The ITFA is still in effect, having been renewed in 2001, 2004 and most recently in 2007. The Act has been broadly popular, and many groups are pushing to make it permanent. Yet many of the issues underlying the Act remain frustratingly complex, especially that of sales tax for remote retailers. State and local governments have complained about lost revenue from untaxable e-commerce transactions, but little change is likely to occur in this area in the near future. The tax moratorium established by the ITFA is currently scheduled to expire in 2014.

The concept of “Fair Use” is a broad and well-established set of exceptions to the protections provided by copyright law. Fair use allows portions of copyrighted works to be used for “purposes such as criticism, comment, news reporting, teaching . . . scholarship, or research” without constituting copyright infringement. 17 USCS § 107. In considering whether a particular use of copyrighted material constitutes fair use, courts consider four primary factors:

1. the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;
2. the nature of the copyrighted work;
3. the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and
4. the effect of the use upon the potential market for or value of the copyrighted work.

Id. None of the four factors is dispositive, but the fourth factor is generally considered the most important. Internet Law: A Field Guide at 198.

The statutory factors are intentionally broad, and their application is spelled out in case law decisions. While the Internet and various forms of digital media haven’t changed the basis of fair use law, they have introduced significant new difficulties by making the copying and disseminating of copyrighted works much easier.

Even though information moves and changes very rapidly on the Internet, copyright holders will seldom take the time or effort necessary to monitor every use of their content online. Generally speaking, it is neither possible nor desirable to send a cease-and-desist notice in response to every blog post or tweet that quotes a copyrighted work. Problems are generally more likely when an excerpted portion is very large or substantial, when it isn’t attributed to its rightful author, or is used in a way that harms its commercial value.

Some forms of digital copyright infringement are unambiguous, such as software piracy and peer-to-peer sharing of audio or movie files. More complicated cases arise when websites borrow, share, or use content from other websites without permission. Examples include the use of small “thumbnail” previews of copyrighted images, and linking to, reproducing or framing of copyrighted news stories. Courts have come to varying conclusions on these issues, and the law in this area continues to evolve.

While the rise of the Internet did not alter the basic protections provided by copyright law, it did create considerable problems for enforcement. Better personal computers and telecommunications capabilities made it much easier to copy and distribute copyrighted material, and to do so anonymously. This created huge problems for copyright owners, as well as for Internet service providers (ISPs), who could find themselves being sued over acts of copyright infringement committed by their customers.

In response to these sorts of concerns, Congress passed the Digital Millennium Copyright Act (DMCA) in 1998. The Act addresses many issues, but most observers agree that the most significant parts of the Act are its so-called “Safe Harbor” provisions, which provide ISPs with some protection from claims of copyright infringement. Put simply, the law says that if an ISP is merely a conduit or method of transmission, it cannot be held liable for acts of copyright infringement committed by third parties on its service. For example, if a student illegally downloads an album over the Internet, the record label owning the copyright to the album would not be able to sue the company providing him with Internet access.

Important caveats apply to this protection. In order to enjoy the protection of the DMCA, ISPs must implement and inform their users of policies permitting the termination of repeat infringers. ISPs must also respond to takedown notices, which the Act provides as a remedy for copyright owners. If a copyright owner finds infringing material on an online service, the DMCA outlines a detailed process the owner can use to ask the ISP to take it down. These notice requirements are strict, however, and are a source of difficulty in DMCA lawsuits.

Although the DMCA certainly provides ISPs with some peace of mind, copyright infringement remains a persistent and widespread problem online. In a high-profile example in 2007, Viacom filed suit against online video host YouTube alleging tens of thousands of counts of copyright infringement. In its defense, YouTube claimed that as an Internet service provider, it was protected from liability by the DMCA’s safe harbor provisions. Although a U.S. District Court handed down a ruling in 2008 ordering YouTube to hand over to Viacom 12 terabytes of data regarding its users’ viewing habits, the suit remains ongoing. Although the DMCA has now been in effect for over 10 years, the Viacom/YouTube case shows that copyright infringement issues online are massive in scope and complexity, and far from settled.

These days, a website is all but a necessity for most businesses, yet few people have the time or technical skill needed to create their own.  Consequently, many businesses hire these tasks out to web design firms.  Perhaps the most important legal aspect of this process is writing and negotiating the initial contract for these services.  Not all business websites are equal, however – some are simple, no-frills adjuncts to traditional brick-and-mortar businesses, while others are major capital investments for web-based companies.  In either case, business owners who know what to ask for will be those who get the best value for their investment.

In some ways, hiring someone to build a website is like hiring any other sort of contractor. Most contracts for website development will include design specifications, a schedule for milestone delivery times, and various project controls.  A common area of negotiation is procedures for the customer to approve or disapprove deliverables.  Developers will generally try to limit such procedures, while customers will try to create leeway to make changes.  Subjective website elements such as design and layout are often conflict-prone, especially when the customer requests changes late in development.  Creating clear, mutually agreeable provisions in this area can be difficult, but it can also help to prevent conflicts later on.

Another aspect of website design contracting that must be carefully negotiated is which party will ultimately own the intellectual property created. Some customers may view the process as a simple “work for hire” transaction, wherein they will own the website in its entirety once it is created. Developers, on the other hand, may want to protect their right to reuse programming or design elements of the site for future clients. The outcome of these kinds of negotiations will depend on several factors, including the sophistication of the website, the amount of branded or customer-provided content used in the site, and the respective parties’ bargaining leverage.

Since a professionally designed website can represent a valuable investment for some businesses, it pays to be careful when setting out.  Most web design companies will have a standardized service contract, which some businesses will happily accept with few changes.  Other, more sophisticated operations may prefer to draft their own contract with the assistance of their business attorney. But as with any type of contract, it is usually wisest to review and negotiate terms carefully.

Experienced Internet users understand the value of a simple, distinctive and memorable domain name.  Web addresses such as www.kodak.com andwww.ford.com are easy to find, easy to remember, and lead where one would expect them to.  So for businesses considering an online presence, the choice of a domain name is not one to be made lightly.  There are also legal issues involved in choosing a domain name, the most important of which is trademark infringement.

Most businesspersons understand that it is both legally dubious, and generally frowned upon to create a logo, business name, or other service mark that is too similar to that of a similar business.  With the rise of e-commerce, similar principles have come to apply to web addresses as well.  In the early days of the Internet, so-called “cybersquatters” could inexpensively buy up dozens of unclaimed domain names resembling the names of celebrities or businesses, and then attempt to sell them to the original parties for a profit.  Some considered cybersquatting the online equivalent of a “land grab.”

To curb the practice, Congress passed the Anticybersquatting Consumer Protection Act (ACPA) in 1999.  15 U.S.C.A § 1125(d).  The ACPA amended existing trademark law by allowing trademark holders to sue the owners of domain names that infringed or diluted their trademarks.  The Act only applies when the domain name owner has made a “bad faith” attempt to profit from use of the trademark.  What constitutes a “bad faith” attempt is subject to interpretation, but the statute itself provides some reasonably clear guidelines, and there is a substantial body of case law on the issue as well.

Claimants under the ACPA can sue for either trademark infringement or trademark dilution.  Infringement claims are brought against domain names that are either “identical,” or “confusingly similar” to a registered trademark.  Trademark dilution claims arise from uses of a trademark that are less egregious, but the plaintiff must also prove that its trademark was famous when the domain name was registered.  For both types of suits, however, there are numerous possible defenses.

So what should businesses consider when shopping for a domain name?  At the very least, a quick bit of research is warranted to make sure that you’re not infringing on someone else’s trademark.  More complicated cases arise when a businessperson discovers a suitable domain name and discovers someone “squatting” on it, or when a site with a confusingly similar domain name begins encroaching on the trademarks of an established business.  Depending on the resources, patience and other concerns of the business owner, cases like these may call for a consultation with a competent intellectual property attorney.

A well-designed, well-maintained website can be a huge asset to a business. Yet like many other business investments, websites must be actively managed and maintained. Website hosting is one of the ongoing expenses associated with a commercial website. A finished website cannot simply be “tacked up” on the Internet like a flier on a bulletin board – it must be hosted on a server connected to the Internet, and will only appear online while the server is running. Service providers for website hosting are not hard to find, but contracting for such services can be intimidating to the uninitiated.

Website hosting agreements come in two basic forms: managed services agreements and co-location agreements. Co-location is easier to understand, although less convenient for the average user. In essence, a co-location agreement is a lease of storage space and Internet connectivity. The customer is responsible for providing and maintaining his own server equipment. Since few active services are required, co-location agreements generally deal with liability issues and guarantees. The customer will guarantee that it owns the server equipment being stored, and that it has the right to distribute the content it posts online. The provider will make guarantees relating to the server’s uptime and physical security. Also included are basic terms such as the length of the contract and termination rights.

Co-location provides site managers with substantial control over their sites and equipment, but offers few support services, and is more expensive than a managed services arrangement. It is most appropriate for technologically sophisticated companies, or companies large enough to support an independent IT department.

A managed services agreement, as its name implies, is one wherein the customer turns over some or all control of his website to the service provider. Rather than providing his own server, the customer will rent space on one owned by the service provider. In addition to the Internet connectivity and security features provided in co-location agreements, managed services agreements also include a variety of other services. These can include backup servers, software updates, email services, security patches, database services, website usage reports and more. The amount and type of services offered can vary widely between providers, so customers should shop around for a provider whose package of services best meets their individual business needs.

The trade-off in a managed services agreement is in control over content. Although customers will be able to make changes to their websites, they may need to be submit them through the service provider with some amount of lag time. For customers who want a more hands-on approach to content editing, some service providers offer so-called “back-end scripting” software, which allows the customer to update his site independently from a remote location.

Businesses will consider many factors when choosing a web hosting agreement, including website size and functionality, security concerns, cost, and desired maintenance. As with any service agreement, the better an organization understands its own needs, the better positioned it will be able to negotiate an effective contract.

Most regular Internet users have encountered a Terms and Conditions page at one time or another. Most often, they appear when initiating some sort of transaction, such as making a purchase or registering a new account at a website. A page crammed full of dense legal language appears, and one can only proceed by clicking a box or button saying something to the effect of: “I have read and understand these Terms and Conditions. By clicking here, I consent to be bound by them.” The user agrees, and the story usually ends here.

For owners and operators of Internet-based businesses, however, things are much more complicated. A Terms and Conditions page is the major legal document that defines the relationship between a website operator and a website user. When disputes and lawsuits arise over websites, it is the Terms and Conditions page that sets the terms of the debate. If a Terms and Conditions page is found unenforceable in court, then it ultimately doesn’t do a website operator much good.

A recent Texas court decision, Harris v. Blockbuster, has introduced a new wrinkle into the already complex topic of online contracts. The Harris court held that Blockbuster’s online Terms and Conditions were “illusory” because of a clause that allowed Blockbuster to unilaterally change them at any time. Many laypersons would probably be inclined to agree. After all, a deal wherein one side can change the terms at any time with little notice doesn’t seem like a very good deal at all.

For anyone who has read or written a number of Terms and Conditions pages, however, this decision is extremely surprising. An enormous number of websites use similar modification clauses, and the Harris decision seems to render them all unenforceable. Rendering companies unable to modify their websites’ Terms and Conditions pages would fundamentally alter the nature of doing business online, and create huge areas of legal liability.

In reality, however, the Harris decision is probably not so earth-shaking. In general, the law around Terms and Conditions pages is not yet fully settled. Other courts have been generally more inclined to accept so-called “click-wrap” agreements as valid. Harris is unusual in this respect. It is also important to note that Harris itself isn’t necessarily settled. Further appeals may still clarify, alter or reverse the decision.

But what does this mean for the average online business operator? Given the nature of e-business today, it’s impractical to simply forego having a website out of fear of lawsuits. Although no contract or clause is ever completely foolproof, a carefully drafted modification clause can do a good deal to protect a website operator. Many problems with Terms and Conditions pages revolve around the issue of notice, which is to say, properly informing users of changes. In general, the more notice a site operator gives, the more likely it is that his Terms and Conditions will be enforced. This is among the most important issues to consider when drafting or revising a Terms and Conditions page.

Congress created the Federal Communications Commission (FCC) in 1934 to regulate the use of radio and interstate communications such as radio. Since then, telecommunications has obviously changed a great deal, leaving courts with the task of determining the proper reach of the FCC’s powers. In a recent turf battle with telecom giant Comcast over Internet regulation, the FCC suffered a noteworthy defeat which may change the Internet permanently.

The case emerged from a 2007 incident in which Comcast downgraded the Internet service that it provided to a group of users using BitTorrent, a peer-to-peer file sharing protocol that uses a large amount of bandwidth. A coalition of public interest groups, law professors, and non-profits filed a complaint against Comcast with the FCC, asking the Commission to issue a declaratory ruling prohibiting Comcast from such activity. Essentially, the petitioners argued that a privately run business should not have the power to choose what content should and should not be permitted on the Internet. In this view, the FCC should have the power to regulate the Internet as it does telephone networks – as services of “common carriage” for the public to use with little restriction.

Comcast challenged the petition, and the case eventually found its way to the D.C. Federal Court of Appeals. In April of 2010, the Court held that neither the 1934 Communications Act nor subsequent case law give the FCC authority to regulate the Internet. Accordingly, the Commission overstepped its authority in its action against Comcast.

The Court’s decision has been hugely controversial, with some commentators claiming that the government has effectively handed regulation of the Internet over to telecom companies. Some supporters of the concept of network neutrality worry that in the absence of the FCC’s oversight, Internet service providers will begin to engage in censorship or unfair business practices.

In the bigger picture, however, the issue is far from settled. While the decision does roll back many of the FCC’s powers, there are numerous legal processes that might still lessen its impact. An act of Congress could alter the FCC’s jurisdiction or reclassify Internet services so as to bring them under the FCC’s current jurisdiction. A higher court might overturn Comcast v. FCC, or the related cases on which it relies. In any case, the average Internet user is not likely to see any noticeable changes as a result of this decision. Even Comcast, as a result of increased public scrutiny, has changed the policies that initially gave rise to the case. Nevertheless, Comcast v. FCC demonstrates on a huge scale the ongoing tug-of-war between business, government, and the public over the regulation of information technology.