Legal Download 2.0 - Website risks

Understanding the legal implications of having a company presence on the web

Tags: DLA Piper Middle EastUnited Arab Emirates
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By  Tsung Wei Wong Published  October 30, 2007

As a result of the exponential expansion of the world wide web, it has become a virtual necessity for any company to have a website in some form or other. Such websites may range from a single static webpage to those containing downloadable multimedia, online chat rooms or even online sales capabilities. Naturally, the type of website will determine the amount and level of legal risk the owner of the website is likely to face. In this article, we focus on the top ten legal risks (in no particular order) faced by commercial websites on the internet today.

1. Ownership of your website content

When engaging a professional web page developer to conceptualise, design, and host your website, it is important to be aware of the terms of your agreement with the developer, and specifically, what it says about who owns the design and/or content on the website. It may be important to you to retain ownership of the design and your content you place online.

2. Ensure proper terms of use for your website

It is important for your website to clearly set out complete and proper terms of use. Failing to do so would be akin to giving a blank cheque to users of your website. In particular, websites which have chat rooms or other forms of online community should ensure that proper rules are in place for its members.

3. Bringing the terms of use to the notice of the user

Commercial transactions are always subject to the terms agreed between the parties, and commercial transactions performed online are no different - they are subject to the terms and conditions of the website. This puts a greater obligation on ensuring that the website terms are brought to the user's attention and accepted by the user. At the same time, it is important to ensure that the terms of use do not ‘clutter up' the website with legal detail. The effectiveness of your website is a balance between its legal protection, its user-friendliness and its aesthetic appeal.

4. Types of goods or services being advertised or sold online

When offering for sale goods or services online, it is important to ensure that your website complies with the laws and regulations of the country you sell in and/or the jurisdiction you choose (please see point 10 below). This would include ensuring that the goods, services or even the type of advertising offered are permitted and lawful in the country in which they are being or may potentially be offered for sale. In this regard, you may choose to, for example, set out warning notices to users from certain countries.

5. Privacy and data protection issues

If your website collects user information, whether through cookie technology or user registration, then appropriate privacy policies may be necessary. A privacy policy addresses issues such as what you will or will not do with the user's personal information, with whom it will be shared, under what circumstances, and how it will be kept private. Needless to say, what is appropriate depends on factors such as the country in which the website is likely to operate and where your users will come from. It is worthwhile pointing out that some companies or users may refuse to do business with you if you do not have an appropriate privacy policy.

6. Third party Intellectual Property

It is common for websites to incorporate content or media taken from other third parties, such as reports generated by news agencies, pictures or photos taken by third parties. Such content may be protected by copyright. Accordingly, it is important to ensure that any third party content you use is either not protected by copyright, or the third party has consented to you using his/her content and material.

Caution is also needed when using metatags or metadata. Wrongful use of metatags, even if inadvertent, may result in your website being liable for intellectual property right infringement.

7. Your own Intellectual Property

It also follows from point 6 above that where the content on your website is your own work or creation, it is essential to have intellectual property statements or policies clearly displayed on your website. This will ensure that users cannot claim that they were unaware your content was a protected work.

8. Hyperlinks

If your website carries hyperlinks to other third party websites, you may need to insert disclaimers in your website's terms of use to ensure you are not seen to be endorsing those websites, and to prevent any liability on your part for that website's acts or failures. Similarly, third party websites may link to your website. While this may mean a greater volume of traffic for your website, it may also cause users to bypass your terms of use or your advertising, or may mislead users as to the origin of the content or information on your website.

9. Security

In the operation of a website, two aspects of online security must be considered. The first is security of your users' personal information, which needs to be safeguarded using proper security policies and measures. The second is the security of your own website from viruses, worms, hacking, or other online risks, since website downtime would have adverse consequences not only to your website's performance, but also to your wider business and reputation.

10. Jurisdiction

The global nature of the internet means that once your website is on the world wide web, it can reach the entire world, even jurisdictions you did not intend to operate in. This may in turn subject your website to differing laws and regulations, depending on factors such as the country in which the website is registered or the country in which the server is located. Proper legal risk management would require that your website's terms of use specify your preferred choice of law.

From the ten points set out above, we hope we have given you a broad picture of the importance an effective and comprehensive set of terms of use carries for your website, as well as a flavour of the types of legal risks you must consider when operating your website. Naturally, some areas may be more important than others, depending on the specific nature and needs of your website, and you should approach your legal advisor to prepare website terms of use that appropriately reflect the legal risks your website is likely to face.

The author, Tsung Wei Wong, is a Legal Consultant with DLA Piper's Technology, Media and Commercial Group in Dubai.

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