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E-Commerce - Setting Up An Online Business

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author/source: Geoff Caesar

e-bizsetup

Overview

This article provides an overview of the legal issues to be aware of when setting up an online business to ensure that your business and website are compliant with relevant laws. Relevant documents available for Alinea Law Members to download are cross-referenced throughout. If you are not already an Alinea Law Member you can easily join to get all the legal documents you need for your business along with legal and business support and a host of other benefits.

An online presence is pretty much essential for any business but it opens a myriad of risks, such as the possibility of breaching a third party’s intellectual property rights or failing to comply with data protections legislation. Here we seek to highlight all such risks. Much of the information will also be relevant if your business operates primarily offline, but you wish to give it an online presence.

Once your online business is set up you may wish to read E-Commerce - Running An Online Business.

Setting up the site

Contracts

Unless your business has the necessary expertise in-house, you will need to find someone to:

Domain name

Your business will need an internet domain name (or perhaps several) that will direct users to the site.

Your business may register a new domain name for this purpose, or you may opt to buy a domain name that has been registered (and perhaps used) by someone else, possibly as part of a business acquisition. Relevant template legal documents:

Clearance checks before using a domain name for business purposes are particularly important because this use can constitute the tort of passing off or trade mark infringement.

Metatags

The designer of your site is likely to ask you to select metatags to be embedded into the site’s HTML code. These are phrases and descriptions, or single words, that help search engines to find the site, but are not visible on the site itself.

Using competitors’ product names as metatags to attract users who are searching for those products can, in some circumstances, constitute trade mark infringement.

Information that should be given to users

Mandatory information

There is certain information that websites interacting with the UK public must provide to comply with the law.

Terms and policies

Every website should prominently display links to the following documents (ideally on the home page):

  • Terms of use containing provisions for access to, and use of, the website. The website owner may rely on these terms to prevent unauthorised access to the website, disclosure by users to third parties of access security information, unauthorised reproduction of material contained on the website and unacceptable user behaviour, such as hacking, introducing viruses and uploading illegal or defamatory content. Relevant template legal documents:
  • A policy that sets out rules and standards with which visitors of a website must comply when they are using its features. The website owner may rely on these rules in preventing both the unauthorised reproduction of material contained on the website, and undesirable user behaviour, such as hacking, introducing viruses and uploading illegal or defamatory content. The terms allow the website owner to remove the offending material and to suspend, or permanently disable, a user’s right to access the site. It also creates certain contractual remedies for breach by the user of any of the standards imposed by it. Relevant template legal document:
  • A Privacy Policy. Relevant template legal documents:
  • A Cookie Policy, where personal data is processed. Relevant template legal documents:

Data protection

From a statutory viewpoint, “personal data” means, broadly speaking, all information about identified or identifiable living individuals. Any website operator who collects personal data will be classified under the General Data Protection Regulation (EU 2016/679) (GDPR) and Data Protection Act 2018 (DPA 2018) as a controller. All controllers must provide data subjects (in this context, internet users) with fair processing information, usually by way of a privacy notice. This includes information about who collects the data, the type of data they collect, and the way in which, and the purpose for which, they process that data (including whether any profiling is taking place).

Website operators should also be aware of their obligations under the Privacy and Electronic Communications (EC Directive) Regulations 2003 (SI 2003: 2426)(PECR), which govern cookies and electronic direct marketing (such as email and text marketing). The Information Commissioner’s Office has confirmed that PECR applies with the GDPR standard of consent.

If your site is going to be collecting any personal data from users, it will need to comply with data protection rules, as follows:

  • If it is collecting personal data such as name, contact and credit card details, or information about users’ online behaviour, such as IP addresses and web log data or special category personal data (such as health-related data), it should publish a privacy policy that informs site users of how it may collect, store and use that data. Relevant template legal document:

Alternatively, a layered approach can be adopted whereby some key information is imparted in a short privacy notice, which is supported by a privacy policy. If this is your preferred approach use:

It is important to put in place robust security procedures if your business intends to collect personal data.

Protection of intellectual property

There will be intellectual property rights in the content displayed on the site, most likely copyright, trademarks and possibly database rights. To put users on notice that these rights are exclusive to the person who owns them (whether this is the business or third parties), the website owner should place a notice on each page stating that they are proprietary. This is often placed in a footer. Please refer to our article titled Intellectual Property Notices.

If your site is going to carry user-generated content, the terms of use need to deal with ownership of copyright in that content. For example, some social media sites (such as Facebook) require from their users a licence of all intellectual property rights in content that is being carried on the site.

Linking and framing

Links from other sites

Other websites might want to link to the site. This might not be of great concern to your business, in which case you can publish a one-size-fits-all set of terms on the site, which give your business the right, for example, to require that other website operators remove links to inappropriate or undesirable material (although in practice it can be difficult to control this, as many sites will create links without permission and it can often be hard to identify the person responsible). Use the short-form Website Linking Permission if you wish to take a more straight-forward approach. If you would prefer to monitor links more closely than this (perhaps because a pristine reputation is one of the central assets), you may prefer to issue a contract for each permitted link, in which case use:

Links to other sites and framing of third-party content

Copyright issues will arise if your business frames third-party content on its site, or even if it just includes links to the home pages or other pages of third-party sites.


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