E-Commerce--- E-Trouble

$$. Lots and lots of $$. This is the driving force of E-Commerce. Experts forecast that Internet sales will be over $200 billion by the year 2002. No clerks, no salespeople, no display merchandise, no store, no electricity, no liability insurance, no taxes..... how can retail stores compete on price - they can't. E-commerce is here to stay.

As the Internet has grown, the commercial potential of accessibility to over 100million “customers” has made commerce on the Internet come alive. In the blink of an eye, what was once a theoretical marketplace turned into a thriving reality, and some e-commerce vendors are even selling goods at wholesale prices, making their money from advertising.

As more and more businesses flock to the Internet to sell their goods and services,conflicts and troubles are increasing, especially with trademark law, copyright law, contract law, and regulatory law.

Far too many people are jumping aboard the e-commerce train hoping to be the next Amazon.com, without proper planning or counseling. Virtual malls and store-fronts are popping up all over the World Wide Web, with visions of grandeur - only to be derailed by reality. Here are a few topics to consider.

Website

It seems you can’t throw a snowball without hitting a web designer. Just about everyone has a brother or sister developing websites. But, some of these folks should stick with their day jobs. A good website needs aesthetic appeal and a good content layout to make the experience memorable. The site should have the right features and have a good ranking when searching. Most importantly, you should have a website plan that shows why you are on the web in the first place.

Trademarks

There are a variety of e-commerce problems relating to trademark law particularly domain name disputes, dilution, and trademark infringement. The domain name conflicts arise when one party registers and uses a domain name, where the domain name is a trademark of another. Dilution refers to the ‘watering down’ of one party’s trademark byothers using the same mark.

The Internet has also spawned a new set of cyberspace trademark infringements, namely framing, linking, and metatag misuse. Framing refers to the placing of some portion of one sites web page within a frame of another site. The border of the frame can have the name of another party. The reader of the web page may falsely attribute the framed portion tothe party on the border or frame. This has been litigated and found to be a violation of trademark law.

A link is the inclusion of someone else’s web page address or URL on your web page. Generally this is allowed, but there have been several cases that suggest that if the linking establishes an improper association it is trademark infringement.

Metatags are words that are used by search engines to find a web page. The metatags are included in the source code of the web page, and are invisible to the person browsing the page. Placing the trademarks of others in the metatags that leads to consumer confusion is another infringing act.

Copyright

In the past few years, the Copyright laws have been revamped to provide more protection to copyright owners and greater array of penalties for infringers. Specific protection was added for Internet Service Providers under the Digital Millennium Copyright Act, and criminal penalties were added for infringement under the No Electronic Theft Act (NET).

Because it is so easy to copy and distribute works on the Internet, the laws are going to be in flux for several years. To be safe, don’t copy the works of others without permission. Contributory infringement is also actionable, so a site owner should employ reasonable measures to ensure that the goods being peddled on the siteare not infringing.

ExportLaw

There are various goods, countries, and designated persons that you are considered off-limits. Your site may have to consider incorporating the appropriate disclaimers and possibly use measures to prevent unauthorized shipments. The New England region is blessed by having the International Trade Resource Centerlocated at 17 New Hampshire Ave., Pease International Tradeport, Portsmouth, NH(603.334.6074) (http://www.NHeconomy.com). This organization is an invaluable resource for exporting information and questions of international trade.

Taxes

Thee-commerce tax issue has adopted the same guidelines established for mail-orderprocessing. If a business has a“nexus” or presence in a given state, it is subject to the tax requirements of that state.

The problem with the Internet is that the point-of-sale and the "nexus"requirements are difficult to as certain. A buyer in New York may be buying a product using a server in California, but the purchase order may travel through several states and be filled by a company in Florida.

There is a moratorium on all use and sales tax on the Internet for the next few years, but taxes and e-commerce are going to be subject to major changes in the next few years. There is a huge amount of money being transferred on the Internet, and eventually the state and federal governments are going to work out a way to get a piece.

Jurisdiction

Businesses underestimate the consequences of offering their goods and services on the Internet in terms of jurisdictional and venue problems. Many small business owners never expect to be hailed into court in a another state, but this can happen depending on whether your website is passive, interactive, or if you are actually doing business in that state.

Merely informational sites usually do not establish personal jurisdiction. But, the more that your site seeks to solicit orders and contract with citizens of a given state, the greater the likelihood that you could be subject to that states jurisdiction.

Local Laws

Every state and foreign country has commerce regulations to protect its respective citizens. Commercial transactions that are available in one state may be restricted in another. For example, a gift basket containing a bottle of wine may be in violation of a state law prohibiting interstate sale of alcohol beverages. Your site should comply with local and international laws, depending on the goods.

Warranties, Disclaimers & Liabilities

In the US, warranties and disclaimers are generally covered by the UCC, FTC, andstate and federal consumer protection laws. Express warranties relate to what is disclosed or written about the product, either on the web page or on the product packaging, or based on a test sample. The buyer expects the product to conform to the express warranties. Implied warranties can generally be disclaimed such as displaying that the goods are sold "AS IS", but the disclaimer must be conspicuous to the buyer. Other implied warranties may apply, such as an implied warranty of merchantability and fitness for aparticular purpose. The seller can attempt to limit liability and damages by placing these restrictions in the agreement prior to the purchase. Itis possible to place a cap on damages, or limitations on consequential or indirect damages.

On-line Agreements

The Uniform Commercial Code (UCC) typically governs contracts for the sale of goods, including those on the Internet. Contracts for services or other transactions are generally governed by common law rules. The Internet poses some particular concerns because the familiar terms of contracts - offer, acceptance, and a 'meeting of the minds' - is somewhat altered.

E-commerce has brought about new terms - "clickwrap", “webwrap”, or" point-and -click" agreements - are those on-line contracts that appear on the various websites, and usually have an "I ACCEPT" box that the user must click on to continue. Whateverit's called, it is designed to establish the terms between the buyer and seller.

Click-wrap agreements with appropriate disclaimers and provisions are considered enforceable if properly written and properly displayed. All e-commerce sites should employ agreements that users must "Accept" before purchasing goods. Consumers should read these restrictions, because in the event that the consumer is dissatisfied, they maybe limited to the remedies provided by the agreement.

This article is not intended to scare off businesses from entering the e-commerceforay, on the contrary, it is intended to highlight areas of concern and make your Internet train ride less bumpy.