InternetLitigators: Internet & Technology Law Blog

InternetLitigators is proud to announce the selection of Jeffrey A. Cohen as a speaker at HostingCon 2010. Mr. Cohen will be featured in a panel entitled “3 Easy Strategies to Minimize Litigation in the Cloud”. This seminar will discuss the legal risks to your web hosting company from a cloud strategy whether you are offering cloud based services or providing third party cloud services to your customers.

Registration is not a necessary jurisdictional prerequisite for a copyright infringement action. Merely the filing of a complete application will suffice. Cosmetic Ideas, Inc. v. IAC/InteractiveCorp No. 08-56079

By Jeffrey A. Cohen
and Vanessa Pfaff
April 7, 2010

The U.S. Court of Appeals threw out the Federal Communications Commission’s 2008 cease and desist order against Comcast on Tuesday, thereby ruling that the FCC does not have the legal authority to enforce Net neutrality regulations on Internet providers.

In August 2008, as a part of their effort to regulate providers and promote Net neutrality, the FCC issued a cease and desist order to stop broadband provider Comcast from favoring certain sites and services over others. Specifically, the FCC order was aimed at Comcast’s 2007 interference with BitTorrent, an online file-sharing service. Comcast had attempted to control BitTorrent’s access to bandwidth, claiming that BitTorrent’s subscribers were using too much bandwidth and subsequently were slowing Internet traffic. The FCC stepped in to prevent Comcast from interfering with the FCC’s Net neutrality policies, doing so by issuing an order forbidding Comcast from blocking these subscribers’ use of bandwidth.

Comcast complied with the order, but then responded by suing the FCC, arguing that the FCC’s order was illegal and that the FCC lacked the authority to enforce such an order in the broadband sector, which had been deregulated by law under President George W. Bush. The FCC maintained, however, that it had the authority under existing law to set certain rules for information services, such as broadband, and that these rules could include Net neutrality rules.

On Tuesday, the U.S. Court of Appeals for the District of Columbia Circuit ruled that the FCC had no such authority to enforce this policy, rejecting the FCC’S reasoning and making future litigation in this area likely.

This ruling has placed a roadblock in front of the FCC’s pending initiative to draft formal Net neutrality rules, which it announced last October. According to the FCC, whose policies are committed to promoting open and affordable broadband to all of the U.S., such rules are necessary to prevent phone and cable companies from restricting online access to users.
The Court stated that the FCC’s regulatory behavior was not backed by Congressional law and that the FCC did not have the power to regulate the neutrality of Internet providers. Judge David Tatel’s Opinion on Petition for Review of an Order of the FCC of April 6, 2010, states that the FCC does not have “authority to regulate an Internet service provider’s network management practices” unless “it demonstrates that its action…is reasonably ancillary to the…effective performance of its statutorily mandated responsibilities.” In this case, the Court has ruled that the FCC’s cease and desist order is does not meet such qualification and is outside the FCC’s legal authority.

This ruling also has an effect on some of the other plans that the FCC has, such as its National Broadband Plan, which it announced last month. This plan, headed by FCC Chairman Julius Genachowski, is intended to make high-speed Internet widely accessible and affordable across the U.S. Actions through which the FCC assumes some level of regulatory power now appear to be under the threat of litigation.

Although this decision has implications on the FCC’s ability to control and enforce Net neutrality, the Opinion issued by Judge Tatel did not contain any assessment of the importance of Net neutrality as a policy. Neither did the Opinion express any judgment or acquittal of Comcast’s interference with broadband use. The ruling was specific to this case, but still set a precedent for future FCC regulation disputes. The Court has found Net neutrality, in this instance, to be unenforceable, at least by the FCC.

Copyright (c) 2010 – JACO Product Development LLC – All Rights Reserved.

Jeffrey A. Cohen is the founder of InternetLitigators and a partner in the El Segundo, California office of Cohen & Richardson, LLP. Mr. Cohen can be reached at JCohen [at] InternetLitigators.com. Mr. Cohen’s practice is focused upon the representation of Internet and technology companies. Miss Pfaff is a Law Clerk for the firm. The reader is cautioned that the information contained herein is not legal advice and is not a substitute for legal advice. There is no attorney client relationship created by this information.

Our Founder Jeffrey A.  Cohen was interviewed by WHIR TV on the subject of the establishment of InternetLitigators, Cohen & Richardson, LLP and current events in Internet Law.

2/2/10 Case Report – Arbitration clause found unconscionable where customers were provided no opportunity to negotiate terms and effect of clause was overly harsh. Effect upon click through agreements uncertain. Lhotka v. Geographic Expeditions, Inc.

InternetLitigators represents clients in cities all of over the United States and many other countries. This includes clients in the City of Los Angeles. As of 2001, out of the 20 largest US Cities only three imposed a Gross Receipts Tax upon their businesses. See Chart. Of those Gross Receipts Taxes, the City of Los Angeles was by far the highest. The City of Los Angeles’s tax rate is variable depending upon the type of business conducted. In 2009 the City of Los Angeles Gross Receipts Tax ranged from a low of $1.01 to a high of $5.07 for each $1,000.00 of Gross Receipts earned within the City. By way of illustration, on Gross Revenue of $20 million that is a range from $20,200/yr to $101,400/yr depending upon the classification that you are placed in.

Another factor that can greatly effect your overall tax liability is the allocation of gross revenue between operations that you may have within the City and outside the City. With regard to web hosting, the city may argue that it is the location of your web hosting servers that is determinative and not your sales, customer service or web design services. This is an unpleasant reality currently facing Los Angeles Data Centers. Specifically, the City of Los Angeles has become aggressive not only in increasing its audit percentages but in attempting to reclassify businesses previously accepted as falling within reduced tax classifications. In addition, the City of Los Angeles has become aggressive in expanding the definition of revenue that is earned within the City. For businesses in the City of Los Angeles this can be a shocking combination. There are numerous reports of companies simply leaving the city rather than deal with these reclassifications thereby resulting in what appears to be a net loss to the City as the result of their efforts.

The InternetLitigators team of attorneys recently prevailed against the City in an administrative hearing against just such a claim. Our litigation team successfully argued that web hosting, when combined with the standard web development services provided by most if not all web hosting companies does fall within the definition of a “multimedia business” according to the City of Los Angeles guidelines and historical notes for that exception despite the City’s assertion to the contrary. If the City complies with the ruling of the hearing officer we will successfully have avoided the trouble and expense of litigation against the City for our client.

Bottom Line: In the event of an audit, we recommend that you closely evaluate the purported gross revenue which serves as the basis for any assessment and the methodology used for reaching those figures. We recommend that you evaluate your “out of city” operations and perform your own allocation between “in city” and “out of city”  revenue sources. Finally, we recommend that you closely evaluate your possible entitlement to classification within any of the reduced tax classification categories.  Seek the assistance of a CPA and legal counsel familiar with the city’s administrative procedures and classification guidelines.

The 2009 City of Los Angeles Tax Classification Table can be found here.

Copyright (c) 2010 – JACO Product Development LLC – All Rights Reserved.

Jeffrey A. Cohen is the founder of InternetLitigators and a partner in the El Segundo, California office of Cohen & Richardson, LLP. Mr. Cohen can be reached at JCohen [at] InternetLitigators.com. Mr. Cohen’s practice is focused upon the representation of Internet and technology companies.  The reader is cautioned that the information contained herein is not legal advice and is not a substitute for legal advice. There is no attorney client relationship created by this information.

It sounds obvious. However, as the economic downturn begins to show signs of a turn around, the frequency of Internet transactions are on the rise. The downturn has created some change in the market. Companies have become more efficient than ever. The market downturn has also restructured the workforce significantly and has, in some instances unwillingly, created thousands of new Internet entrepreneurs either seeking to supplement their income effected by lower raises or bonuses or in many instances replacing jobs that were eliminated as the result of layoffs and restructures.

Increased Complexity in Transactions

The world of Internet content development, marketing, traffic and lead generation is entering its adolescence and as a result deals in these areas are becoming more and more mature and complex. As a result of these changes, our office is seeing a larger than ever increase in the number of unrepresented companies on the opposite side of deals and transactions. This means that these unrepresented parties are being placed at a greater and greater disadvantage.

Read Every Word

We are constantly surprised at how many, thus far, very successful business owners are so willing to simply sign an agreement seemingly without spending the time to have it reviewed by an attorney with their best interests in mind or even apparently reading it themselves. Our advice this month hopefully serves as a reminder more than any earth-shaking new advice. That is that in any business transaction that you enter into, read what you sign carefully before you sign it and ask questions about anything that is not perfectly clear. Where possible, form a relationship with a qualified attorney familiar with the Internet and with your company so that you have efficient and immediate access to someone that can answer your questions and suggest alternatives on a moment’s notice.

Raise only Appropriate Issues

Just as dangerous to themselves is the unrepresented party that makes a far bigger deal out of a term in an agreement than is necessary. Almost as if these individuals feel that they cannot sign a document without making some sort of fuss to make them feel as though they have accomplished something, they argue a point that needs no arguing and wind up signing a document that includes a difference with no distinction from the original. Having business counsel can avoid this situation and the extra expense and delay that arises by wasting everyone’s time – not to mention the actual loss of reputation that is created for these individuals when everyone else realizes what has occurred. The party develops a reputation for being difficult and the changes he or she proposes in the future begin to lack credibility.

At a minimum, read what you are signing and ask questions about the terms that you do not understand. By this we mean read it – not skim it to see if anything jumps out – we mean actually take the time to sit down and read every word. There have been very few agreements that we have ever approved without any change or correction.

Copyright (c) 2009 – InternetLitigators – All Rights Reserved.

Jeffrey A. Cohen is a partner in the El Segundo, California office of Cohen & Richardson, LLP. Mr. Cohen can be reached at JCohen [at] InternetLitigators.com. The reader is cautioned that the information contained herein is not legal advice and is not a substitute for legal advice. There is no attorney client relationship created by this information.

5/18/09 SCAM ALERT: Domain registration scam in China. Fraudulent email claims to be from “Department of Registration Service in China” after having received purported domain name registration applications for your trademark.

4/16/09 SCAM Alert: Annual Review Board – Letters demand payment of $228.00 to file an almost identical form with the State that should cost $20.00. See Report.

As the year draws to a close, December is our month for annual client reviews. We recommend that all of our clients conduct an annual legal review of their existing policies, procedures and content and, in general, there is no better time then the end of the year.

The following are some of the areas we consider in our review.

1. Review Terms of Service Read your Terms of Service. Look for things that are outdated, that you don’t do any more or which have changed. Look closely at your guarantees, payment terms, and agreement term and termination provisions. If you have one, include your acceptable use policy in your analysis. Mark it up and send your comments to your lawyer for review and incorporation into your TOS or an explanation as to why the change is unnecessary or ill advised. Generally changes that make sense to you will also make sense to your lawyer. There are instances where this is not true so clear anything of substance with experienced Internet counsel.

2. Review Privacy Policy Read your Privacy Policy. Make sure that it still reflects your privacy practices. Be certain that you are doing what you promise that you are doing. Speak with your tech people directly if you are uncertain. Be sure they are familiar with your policy. Make any changes that seem to make sense to you and have them reviewed by your lawyer.

3. Evaluate Trademarks Verify your trademark status with the USPTO. Search the Internet for your company name and domain names to see if anyone is improperly using your marks or anything confusingly similar. Examine your own site for any use of trademarks that you do not own or have the right to use.

4. Evaluate Domain Name Portfolio You may own your domain name but not the right to use it. Take a look at last month’s column for the specifics of this one but the idea is that you should consider whether your use of any domain name is violating someone else’s right to the exclusive use of the name. Consider registering your domain name as a trademark and other things that you can do to protect your mark.

While it is generally not necessary to register domain names in all top level domains, collecting the most common ones is an easy way to make sure that you don’t get stuck in a legal battle to get it away from someone that tries to use it. Review your Domain name portfolio from a legal standpoint. Pay attention to your expiring domain names. Strongly consider automatic renewal options. Consider options such as private registration available from your web hosting company.

5. Update Copyright Designations Update your copyright designations throughout your website. Update the year and if you have changed the name of your company or changed your corporate structure be certain to include the proper designation. Is there an aspect of your website that is subject to copyright protection? Consider whether registration would offer you any protection.

6. Update Trademark DesignationsIf you have achieved formal registration for any of your trademarks during the year make sure that your registration is properly designated with the ® symbol. If you claim the right to a mark that is not yet registered you may be able to use the TM symbol depending upon the requirements of your particular State.

7. Review UDRP Agent DesignationsVerify your agent for notification of claims with the United States Copyright Office at http://www.copyright.gov/onlinesp/list/index.html. Registration in addition to strict adherence to your DMCA notice policy is necessary to take advantage of the Safe Harbor Provisions of the DMCA. If you do not have a policy in place, contact your lawyer to determine whether such a policy and registration is necessary.

8. Review Marketing Creative Consider your current marketing activities. Have you added or changed your campaigns since your last legal review? Has your current creative been approved by legal? Are you in compliance with all existing State and Federal laws concerning E-Mail, text messaging, telephone marketing, affiliate programs, lead generation, contests and sweepstakes.

9. Review Website for IP violationsTake a look at your own website with an eye towards the use of any material that belongs to anyone other than you which you have not secured the legal right to use. Consider text, photographs, logos, company names, artwork, music, and video. If you have questions about your use of any items seek the advice of your Internet lawyer.

10. Update your Business PlanWe often assist our clients in a consulting role to develop a comprehensive business plan at the commencement of a new business. Significant time, effort, thought and energy is put into the process. Our most successful clients take the time now and then to refer back to their business plan and update it to reflect the current status of the company from several important perspectives. It is an opportunity to take stock of the past year and determine what goals have been met and evaluate those that have not. It is an opportunity as the year closes to think about the coming year ahead, set new goals for yourself and your company and those around you.

Copyright (c) 2010 – InternetLitigators – All Rights Reserved.

Jeffrey A. Cohen is a partner in the El Segundo, California office of Cohen & Richardson, LLP. Mr. Cohen can be reached at JCohen [at] InternetLitigators.com. The reader is cautioned that the information contained herein is not legal advice and is not a substitute for legal advice. There is no attorney client relationship created by this information.

 11/13/08 Washington Post: Alleged major source of online scams and spam McColo Corp. knocked Offline.

New Case – Interactive Nevada website even when combined with Illinois targeted advertising is insufficient to confer jurisdiction upon website owner for injuries occurring in Nevada. Linehan v. Golden Nugget USDC Northern District of Illinois 05 C 7030

What is a Trademark? Think of a trademark (or servicemark for services) as a word, phrase, symbol or design the identifies and distinguishes one source of goods or services from another. It is not necessarily the name of your company but the mark that you use to identify your goods or services.

Why Register a mark? In general terms, if you have such a mark and you have used the mark in commerce you already own it. Trademark rights come into being upon use in commerce – not upon registration as many people believe. However, registration with the United States Patent and Trademark Office (USPTO) provides protection in many ways that most people feel are worth the comparatively reasonable expense. The benefits of Federal Registration are:

·         constructive notice to the public of the registrant’s claim of ownership of the mark; ·         a legal presumption of the registrant’s ownership of the mark and the registrant’s exclusive right to use the mark nationwide on or in connection with the goods and/or services listed in the registration; ·         the ability to bring an action concerning the mark in federal court; ·         the use of the U.S registration as a basis to obtain registration in foreign countries; and ·         the ability to file the U.S. registration with the U.S. Customs Service to prevent importation of infringing foreign goods.

Essentially, this means that while you may own the mark in advance of registration,  it becomes somewhat difficult to enforce the ownership of your mark against another person if you do not have access to Federal courts to enforce the mark – or at least so that you have the threat that you may do so if necessary. Also, given that registering the mark affords you the “legal presumption” of the ownership of your mark and that your mark becomes publicly searchable by all those that are interested in such things, the likelihood of an unintentional infringement is reduced significantly.

What does it cost to Register a Mark?  The fees are presently set at figures that range between 275.00 and 375.00 PER INTERNATIONAL CLASS. An International Class is essentially the type of goods or services that you provide. If you sell t-shirts and shot-glasses for example, those are two different International Classes. If you have an attorney prepare the application for you, you should get an estimate up front and not expect to pay more than an few hours for anything but the most complicated of applications. At InternetLitigators, we often complete single class applications in under an hour.

Can I register a mark before I start using it? Recognize that you may file an application even before you start using the mark. This is called an “Intent to Use” application and is quite common. Once approved you have 6 months to prove your use of the mark. This way, when you have that sudden spark of inspiration for a new product or service name, you can immediately protect the mark so that when you finally start using it your claim will pre-date anyone that came up with the same idea in the meantime. The process typically takes about 8 months so filing an Intent to Use application is not a bad idea if you are just getting started.

Do I need a Lawyer? You do not need an attorney to register your mark. However, we have had many clients come to us after having their application rejected by the Examining Attorney. This can significantly delay and/or complicate your registration. In addition, if you represent yourself, be certain that you comply with all requirements of the trademark statute and procedural rules.

May I use the TM, SM, ® Symbol? Prior to your successful registration you may NOT use the ® symbol. This is a designation for marks that have achieved a Federal Registration only. Up to that point in time you may label marks in which you claim ownership with either TM or SM as long as the use of those designations is not otherwise prohibited in your State.

See. InternetLitigators Blog Entry: You Registered a Domain Name, But Do You Have the Right to Use It? for more information.

About: Mr. Cohen is a Shareholder in the Law offices of Chapman, Glucksman & Dean apc in Los Angeles, California. He chairs the firm’s Internet & Technology Practice Group and represents Internet companies Nationwide on all business law issues. He is also the director of InternetLitigators – a membership based group facilitating group rate access to Legal Services for Internet companies. This Blog neither constitutes legal advice nor creates an attorney client privilege with the reader. Do not post comments concerning specific legal situations. Mr. Cohen can be reached at jcohen [@] InternetLitigators.com.

By Jeffrey A. Cohen 

This month InternetLitigators has been presented with several issues involving website development and design. We represent both web designers and webmasters regularly so our experience and comments on this issue are intended to address both sides of this deal.

Whether you are a Designer or a Webmaster there are a few things that you should always do with regard to your web design agreement.

Put it in Writing

This may seem obvious but we have been presented with many situations where work was done with out any written agreement in place at all or where such an agreement may have existed but was not signed. There are many terms that should be addressed in advance of any work being performed and the written agreement is the best place to do so in order to avoid conflicts and misunderstandings in the future. The process of negotiating the agreement is an excellent way to ensure that the parties each understand what is being promised. Once things go bad, reaching any agreement to terms becomes far more difficult.

Be sure that the agreement is signed by both parties to the agreement. Keep a copy of the agreement for your reference in the event that you should ever need to refer to it during the course of the project or at any time afterwards.

Read it, Understand it, Negotiate it and THEN sign it.

First of all one should understand that it is typical for a designer to provide the form of agreement for web design services. Typically, the designer will have an attorney draft an agreement to specifically address the services that they provide and the terms that they require. As would be expected, when a web designer client hires an attorney to prepare such an agreement, the terms that are included will most likely favor the client, sometimes strongly and sometimes unfairly.

This is particularly true where the agreement is framed as an on-line click through type agreement and as such it is very likely that in most instances it will be looked at with nothing more than a passing glance. An astonishingly high number of agreements we have seen, particularly the ones that appear somewhat informal, are filled with terms that if you as a client read and understood them should send you running.

Therefore, while it may seem to be an obvious point to remind readers to be certain to read any contract before you sign it – it is necessary because it is not uncommon, particularly for smaller projects to have people tell us that they simply didn’t do so and instead relied upon what they were told by the designer. Unfortunately, this is a poor practice for a number of reasons not the least of which is the fact that it is very common for design agreements to contain a standard provision that says (in not so certain terms) that you agree that anything that you have been told in negotiations by the designer is irrelevant to your agreement and that you agree that you are not relying upon any of the statements made to you by the designer and that the written agreement terms are all that matters.

By way of illustration, we recently were provided with an agreement filled with unfair (and in one instance unlawful) provisions. We made numerous significant changes to the agreement for our webmaster client making the agreement fair and forcing the designer to take responsibility for his work and certain problems that could be created by the designer with his work on this particular project. We had essentially created an entirely new agreement that ran in favor of our client. The client provided the agreement back to the designer and we honestly expected the designer to flatly refuse the new terms. To our surprise, the designer signed the agreement including all of our changes – it seemed as though he apparently didn’t bother reading it!

The point is that where there is a term in an agreement that you do not like, do not be afraid to change it. Remember that you are the customer and the designer needs your business. Be certain that you understand the explanation. If the explanation does not make sense do not sign the agreement. If the designer offers an explanation of the term, put it in the agreement or at the very least ask that it be put in another writing.

As a Designer, if a customer makes changes to your standard agreement make sure that you understand the changes and their effect upon the balance of the document before you agree to the changes. It is much better to learn of a basic disagreement in the initial stage before any work is commenced than it is to learn of any disagreement as to contractual terms later.

For Designers or Webmasters, where there is any term that you do not understand hire an Internet attorney to look over the agreement, explain the effect of the term and advise you of any particular concerns.

There are many issues that should be covered in any web design agreement. The issues that should be addressed depend upon the nature of the work to be performed and should be addressed to any specific situation individually. Some important issues to consider for each side of the deal are as follows:

ISSUES FOR DESIGNERS

1 – Payment Terms

Make sure that they are perfectly clear as to what must be paid when and what happens if the payment is not made. Consider requiring payments in stages of completion of the project. Consider conditioning your obligation to provide deliverables upon final payment.

2 – Deliverables

Consider utilizing a development site where you remain in control of the files but your clients can log in and see the progress of your work. Consider the use of php or other server side code to protect any pre-mature copying of your work. Consider imbedding your company name into the files until they are complete.

3 – Client Participation

Make clear what you expect to receive from your client and when. Condition your obligations upon the completion of the client obligations. If your client will be providing copy, your final deliverable dates should be based upon the date that you receive the information that you need. Confirm the date of agreement, receipt of materials and completion in writing.

4 – Copyright

Consider an agreement that any materials provided by the client are provided with all necessary rights to use them. Consider a strong indemnity provision against any third party claim of any lack of such right. Language such as “work for hire” can drastically change the nature of the rights vested in either party. Consult legal counsel in relation to any language that you do not understand.

5 – Arbitration

Consider an arbitration provision that allows any disputes to be handled without the expense and inconvenience of civil litigation.

ISSUES FOR WEBMASTERS

1 – Pay Special Attention to the Payment Terms

Pay special attention to the payment terms. The services provided can be limited, for example, to a number of hours or a number of pages and they can authorize the designer to perform additional work OVER AND ABOVE THE CONTRACT PRICE and bill you for it. Be certain that you understand EXACTLY what the agreement is going to cost you when all is said and done. Any extra work should be subject to your approval only.

2 – Scope of the Assignment

Be certain that your agreement clearly and accurately states what it is that you expect from the designer. Consider specific reference to the number of pages, any special coding (flash etc), any other services that you expect to be included, any promises that have been made by the designer.

3 – Completion Date

Be certain that there is a clearly stated date that you may expect the work to be completed. Watch out for complicated terms that allow the designer to delay the completion indefinitely.

4 – Final Approval

Make sure that before your final payment is due that you have the opportunity to give final approval of the website. Ideally this approval should be given throughout or in stages so that you can remain involved with the project. If the design or any component thereof does not meet your approval PROMPTLY notify the designer of your exact concerns. Be certain that there is no penalty to you or requirement to pay until the site meets your approval and functions the way it is supposed to on your selected web hosting service provider or server.

5 – Copyright Issues

This can be a complicated issue. In general terms, you want to be certain that you own the site that is completed. Rights less than ownership including a license to use the site are limited rights and may not allow you to use the site or all of its components the way that you want and could subject you to additional fees or costs. An unfair license agreement could force you into an ongoing relationship with the designer. Language such as “work for hire” can drastically change the nature of the rights vested in either party. Seek legal advice where you are not absolutely clear as to your specific situation.

About: Mr. Cohen is a Partner in the Law offices of Chapman, Glucksman & Dean apc in Los Angeles, California. He chairs the firm’s Internet & Technology Practice Group and represents Internet companies Nationwide on all business law issues. He is also the director of InternetLitigators. This Blog neither constitutes legal advice nor creates an attorney client privilege with the reader. Do not post comments concerning specific legal situations. Mr. Cohen can be reached at jcohen [@] InternetLitigators.com.

By Jeffrey A. Cohen, Esq.

We receive inquiries quite often from prospective clients wanting form documents to use as Terms of Service to govern the use of their website or inquiring as to whether a set of Terms drafted for one operator site, or worse, simply found on an unrelated website, can be used instead of having terms drafted for the particular site involved. For purposes of this article, Terms of Service include Terms of Service, Terms and Conditions, Privacy Policy, Acceptable Use Policies, Subpoena Policies, UDRP policies, Child User Policy, Copyright Claim Policies, and any other policy or procedure that you have in place for users of your website or the operation of your online business.

While there is no law that requires a website operator to post Terms of Service (other than a Privacy Policy in some instances) your Terms give you the opportunity to set forth the conditions under which you allow the users of your website to purchase your products or services, post content or use and depend upon the information and materials that you provide them. Your Terms are your opportunity to set the expectations of your users in order to avoid, as much as possible, any disagreement about your user’s rights to use your site, your user’s right to depend upon the availability of your site, your user’s need to pay for your site, your user’s right to post content to your site, your right to remove content, and the terms under which you offer any product or service for purchase from your site and the your applicable limitations among many other things.

A website without such terms leaves the agreement between the operator and the user to be gleaned from the nature of the site or kind of transaction which may ultimately be determined to be significantly different than intended by the operator.

In general, posting such terms alone is insufficient. In many instances, securing some evidence of agreement by the user or customer to the Terms is required to successfully enforce them. This is often accomplished by a simple check box next to a statement of agreement to the terms.

Another general rule is that the closer the user is to the actual text of the Terms the greater the likelihood of enforceability. For example, if your user checks a box saying they agree to your Terms of Service but you do not provide a conspicuous, direct link to those terms, any enforcement of the best Terms could be difficult. Where agreement to certain terms is crucial to operations some require not only a link to the terms but they require the user to scroll to the end of the terms before allowing them to indicate their agreement. Other operators require a user to type their “signature” to evidence their agreement to the terms. A signature in that instance can usually be any electronic representation the user intends to bind them to the agreement but typically takes the form of the users name surrounded by slash marks (eg: /User First and Last Name/) This makes it that much more unlikely that a user could argue that they did not understand that they are agreeing to Terms or to exactly which Terms they are agreeing.

For InternetLitigators attorneys, the process of drafting terms of service for any website involves three stages.

1. Interview Preferably in person but often by telephone we spend the time to get to know the personality of the operator and their attitude toward customers, users, privacy, returns, payment, and other issues relevant to the site.

2. Investigation By this we mean a thorough investigation and examination of the bsite including any information collected from users or customers, eCommerce, user content, third party content, graphical content, video content, musical content and all services provided. If there is a membership process we actually register for the site and work through the entire membership script from beginning to end.

3. Drafting The information obtained in the first two stages is brought together into one (or more) documents that reflect the specific business of the website, the philosophy of the operator, and the specifics of the day to day operations of the website and business.

There is a fourth stage, annual review, where the website policies are updated to reflect changes in policies or procedures as well as any applicable changes in the law.Any process that fails to include each of these stages risks inappropriate, incomplete, inaccurate or outdated terms of service and consequences including customer complaints, returns and chargebacks, copyright infringement claims, and even lawsuits and customer complaints, to lawsuits by customers or users and even third party liability.

Some online services offer form agreements for sale and market them as being for use on websites however in our experience each such services are without fail careful to point out that they are not offering legal advice and cannot guarantee the applicability of any form agreement to any particular situation causing one to wonder exactly what value such an agreement provides.

InternetLitigators has written a great many sets of Terms for clients. About half of our assignments in this regard are from clients that already have Terms posted which are either written by the client or adopted from a collection of sources. The other half is from clients that have no posted Terms at all. Either option is perfectly acceptable.

Generally, a set of Terms for a website will take the same amount of time to draft from scratch as it will to prepare from a document created by the client. This is because re-writing is, in general, a slower process. Often, fixing problematic or internally inconstant, inapplicable or ineffective language is more time consuming that simply drafting an agreement from the beginning.

In some instances, the setting and posting of certain terms are required by law. California, for example, requires any website collecting personally identifiable information from California residents to post a privacy policy containing at least the following information:

• An identification of the categories of personally identifiable information that the operator collects from consumers.
• An identification of the categories of third-party persons or entities with which the operator may share that personally identifiable information.
• A description of any process in place for consumers to review and make changes to the information collected.
• A description of the process by which the operator will notify users of any material changes to the policy.
• Identify the effective date of the policy. Conclusion The effect of any policy that you post can have significant consequences. The failure to post a policy can create significant ambiguities with Users and Customers and in some instances can be a violation of law. The thought of buying an “off the shelf” policy or simply posting a policy without some legal review by and Internet Attorney is cause for concern and appears, based upon our experience, to be a strategy that is now seldom adopted for serious business websites.

Mr. Cohen is a Partner in the Law offices of Cohen & Richardson LLP in El Segundo, California. He chairs the firm’s Internet & Technology Practice Group and represents Internet companies Worldwide on all business law issues. He is also the director of InternetLitigators. This Blog neither constitutes legal advice nor creates an attorney client privilege with the reader. Do not post comments concerning specific legal situations. Mr. Cohen can be reached at jcohen [@] InternetLitigators.com.

This month we have seen several issues arise concerning the use of domain names with respect to the rights of registered trademark owners. Registering a domain name is not the same as registering a trademark and I thought some information as to the difference and how they might interrelate would be helpful. Understanding the difference and taking steps to protect the trademarks that you have some claim to can save you significant aggravation and expense down the line and help you avoid the risk of possibly losing your domain name or your marks.

According to the United States Trademark Act which is also known as the Lanham Act 15 U.S.C. §1127 defines a trademark as follows:  Any word, name, symbol, or device, or any combination thereof (1) used by a person, or(2) which a person has a bona fide intention to use in commerce and applies to register on the principal register established by this Act,to identify and distinguish his or her goods, including a unique product, from those manufactured or sold by others and to indicate the source of the goods, even if that source is unknown.

Servicemark is the correct term used for services as opposed to products.

One key to the ability to register a mark is that there must be either an actual use or an intent to use the purported mark in commerce or trade in a manner that indicates the source of the goods and distinguish them from the goods of others. Registering a domain name is most certainly insufficient by itself to qualify for trademark registration or protection.

Furthermore, registering a domain name does very little to secure your trademark rights under the Lanham Act. While you own a trademark upon your use of the mark in commerce, in order to secure your right to protection under federal trademark law you must register your mark with the United States Patent and Trademark Office. This process involves the submission of an application, payment of the appropriate fees which is based upon the number of International Classes of products or services that you offer under the mark. Approximately 6 months from the submission of the application you will receive your first contact from your assigned trademark examiner.

If the evidence that you have submitted in support of your mark is appropriate for the information in your application and your mark is otherwise the type of mark that is able to be registered and there is no prior conflicting use of your mark and there is no opposition to your application then you may be granted publication in the Principal register. Only then can you be said to have registered your trademark. The process takes approximately one year from start to finish.

An attorney is not required for this process. An applicant is responsible, however, to observe and comply with all substantive and procedural issues and requirements whether or not they are represented by an attorney. In many instances even where you feel comfortable making our own filing it may be desirable to employ the services of an attorney who is familiar with trademark matters to greatly simplify the procedure.

Only federally registered trademarks may be designated by the federal registration designation ®. The SM and TM marks are used to designate a claimed trademark right however their use may be governed by the law of your particular state. The federal registration symbol should only be used on goods or services which have been identified in the applicable federal registration.

Federal trademark registration has the following benefits.(1) It provides constructive notice to the world of your claim to the ownership of the mark.(2) It serves as evidence of ownership of the mark.(3) You may bring actions in Federal Court to protect your mark.(4) It may be used as a basis to secure registration in Foreign Countries(5) With respect to goods, your mark can be filed with the US Customs service to prevent the importation of infringing foreign goods.

With that understood, because of the large and always increasing number of top level domain names and the ease with which they may be registered, the owner of a trademark can often learn that another has either intentionally or unintentionally registered a domain name consisting of the trademark owner’s mark. In general, the owner of a federally registered mark has the luxury of a choice between (1) proceeding to Federal court to secure an order allowing the recovery of the domain name together with monetary or other damages according to proof or (2) proceeding under the Uniform Dispute Resolution Policy (UDRP) developed by ICANN.

Although it is helpful, trademark registration is not necessary to proceed under the UDRP however there can be no award of any damages other than an order to transfer the domain name in question. Under the UDRP an arbitrator or panel of arbitrators can issue a binding order to a registrar to transfer a particular domain name. There are some registrars that do not subscribe to the UDRP which can present certain difficulties when attempting to recover a domain name registered in bad faith.

The proof necessary to prevail in Federal Court for trademark infringement under the Lanham Act is not the same as the proof necessary to prevail under the UDRP. The specific proof necessary is dependant upon the nature of the cause of action which is beyond the scope of this entry. In general, however where you have registered a trademark for certain services (such as web hosting) and another company is offering the same or similar services under a domain name that is the same or confusingly similar you are likely well within your right to not only demand that the company stop the use of your mark but that they may be responsible to pay damages resulting from their use of your mark and that they must turn over the domain name to your control as well.

Often we are contacted by individuals that have received a cease and desist letter from a lawyer representing a trademark owner claiming a violation of trademark law. These individuals often express frustration based upon the misunderstanding that because the trademark owner left the domain name open by failing to register it that they are somehow entitled to some right simply because they have successfully registered the domain name. This is simply not the case. There are many domain names available for registration which are essentially useless to anyone but the owner of the mark.

Before you register a domain name, it would be prudent to examine whether the domain is registered as a trademark, is the type that is subject to registration, or is otherwise in use in commerce by others before you spend too much time and effort getting used to your new domain.

Copyright (c) 2007 – InternetLitigators

InternetLitigators has attended the premier web hosting event in the Country for the third year in a row. This year, HostingCon was at the beautiful Navy Pier in Chicago, IL. Sessions on Search Engine Marketing presented by Ben Fisher of TechPad Agency and Neil Patel of ACS offered valuable tidbits of information useful to anyone interested in raising their relevancy on the Internet. Derek Vaughn of TechPad Agency gave a Nostradamus like prediction of the future of the Internet and the place that web hosting will take in that future.

The merging of Media was an obvious theme and several examples were offered. We even got to see an iPhone obliterated in a blender to illustrate the point of thinking creatively in your marketing strategy.

Viewing Web Hosting as a somewhat ubiquitous commodity necessary only to provide the true products and services in demand by consumers was a common thread in many presentations. This was highlighted succinctly by Richard Rosenblatt of Demand Media in his presentation entitled Next Generation Web: What Lies Ahead for Hosting.  What is Web Hosting? asked Rosenblatt rhetorically. Lou Honick of HostMySite prophetically added a footnote to his own comments in the keynote panel discussion reminding the audience that dismissing the entrance of some larger companies into the web hosting market is unwise. Honick suggested that maybe it is the rest of us that should learn something about the products and services that these entities have chosen to offer to the public.

Overall HostingCon 2007 was a valuable opportunity to connect with the Web Hosting industry for educational and business opportunities alike.

As you have probably noticed, our new site was launched June 1, 2007 exactly on schedule. We are very pleased but it is what our clients think that is most important. Please let us know what you think of the design and function. If you notice any problems please let us know that as well. Your continued support is appreciated.

InternetLitigators Staff

InternetLitigators has a full service litigation team comprised of attorneys with vast experience in all aspects of commercial and business litigation arbitration and mediation including copyright, trademark, trade secret, employment, domain name, contract, unfair competition, CAN-SPAM Act, DMCA Arbitration and more. We have secured numerous favorable Judge and Jury Verdicts for clients throughout the Nation. We have achieved hundreds of favorable arbitration awards and mediation settlements and remain one of the Nations leading Internet law firms.

 Where the Internet is concerned, you need InternetLitigators in your corner.

On May 23, 2004 InternetLitigators launched what was at the time its third major website redesign. It was state of the art, well organized, easy to navigate and has served us exceedingly well since that date. As many of you know in coming weeks we will say a fond goodbye to the 5/23/04 design and launch InternetLitigators Version 4.0.

We are very excited about the new design. It is fresh, clean, better organized, easier to navigate and we feel that it represents our significant and substantial growth over the past three years and it also better highlights the large range of services that we provide.Members will receive a notice once the new site is launched. All passwords and user IDs will remain the same. Most importantly, members will continue to receive the same hands on, service oriented, efficient, effective, aggressive, and responsive service as always.

Thank you for helping to make our continued growth possible.

Los Angeles, CA, January 15, 2007 

InternetLitigators in association with the Law offices of Chapman, Glucksman & Dean apc  has announced that it has begun offering an exclusive Pre-Paid legal services plan designed specifically for Web Hosting company members of InternetLitigators. Unlike any other pre-paid legal services plan this arrangement is directly with a law firm that specializes in representing web hosting companies and will handle all matters in house.

Through this plan, InternetLitigators members receive access to one of the Nations leading Business law firms in the area of Internet and Web Hosting. Members will affordably gain access to and develop relationships with experienced individual attorneys so that when future legal issues arise they have immediate and unfettered access to the top experts in the field. This plan covers the real world legal issues faced by most Web Hosting companies on a day to day basis said Jeffrey Cohen of InternetLitigators. The new plan announced on Monday includes consultations, letter writing, and even litigation. Typical uses are expected to be Terms of Service and Privacy Policy review,  DMCA complaint response, National Security letter and Subpoena response as well as Trademark, Copyright and Corporate issues. This is a fully legitimate guaranteed arrangement for 5 hours of pre-paid legal services directly with a California law firm that practices Internet Law, Business Law, and Employment Law at an extremely favorable hourly rate said Cohen. This places our members in a position where they have unique and affordable access to the advice that they need immediately when issues arise.Legal services provided by law firms with relevant industry experience often charge rates in excess of $400.00 per hour. At $750.00 an InternetLitigators membership includes 5 hours of lawyer time which translates to a rate of $150.00 per hour.  Members then also receive the right to purchase additional hours at a significantly reduced member rate. Typically such discounted rates are offered by law firms only to their long standing and highest volume clients. By consolidating resources, InternetLitigators members are able to obtain these same advantages. This plan turns conventional law firm thinking on its head by offering the discounted rate up front in a clear move to create the long standing relationships going forward.Cohen, a partner in the Los Angeles office of Chapman, Glucksman & Dean and Chair of that firm’s Internet & Technology Practice Group created this arrangement in response to recognition that many hosting companies operate dangerously without ever seeking or even recognizing the need for proper legal advice until they find themselves in the midst of significant and costly legal issues. With proper advice of experienced counsel this situation can often be easily avoided. All legal services provided to InternetLitigators members are handled directly by the firm’s 5 offices throughout the State of California.

For additional information on the InternetLitigators Membership plan visit www.internetLitigators.com

The response to our new program has been amazing. Thank you to all of you that have signed up. It has been a pleasure to get to know all of you. The services that we have provided under the plan this week include letter writing, trademark applications, incorporation, pre-litigation negotiation, website review, employment agreement, insurance claim filing and several other items.

The member area is shaping up nicely so if you are a member and have not logged in yet please take a moment and check it out. If you need to purchase additional discount member hours you can easily do so there. You can also view our exclusive “members only” articles. We will continue to make additions of valuable member benefits with member discount codes so keep checking back.

Thank you for all your support and nice comments too! We look forward to exciting times ahead. 

InternetLitigators