© 2000 John S. Foster, Esq., CHME, All Rights Reserved, Atlanta, Georgia
Reprinted with permission of the author.
Whether your organization already has a Web site or is planning to create one, it's never too late (or too early) to conduct a legal audit of the site. As our society shifts more to an Internet based system of e-commerce and research, failing to keep up and comply with the complex and changing legal rules being created daily can be fatal.
The precise legal standards for Web sites aren't easy to define because the law is still developing. Unfortunately, because the Internet is still in its infancy many people believe that anything goes and all you have to do is throw up a Web site and start your business. Wrong! In some regards everybody regulates the Internet and "Cyberspace" including all 50 states, Congress, and even other countries if your organization conducts business there.
A web site legal audit begins by identifying the types of content and services provided, the terms of service or legal disclaimers needed intellectual property rights, and other potential hot spots that may give rise to liability for the owner. Generally, the key areas and issues to look at and consider are:
WEB SITE CONTENT
INFORMATION ACCURACY - DEFAMATION
In our legal system you are responsible for what you do and say whether in a group of people or on the Internet. If what you say is false and injures the reputation of a person or a business you can be held liable for monetary damages. Generally, a statement is defamatory if it is: (i) false; (ii) made or "published" to a third party; and (iii) tends to injure the reputation of the person about whom it is made by lowering the respect, esteem or goodwill in which they are regarded in their community, exciting adverse or derogatory feelings against them, or by dissuading others from dealing or associating with them.
A defamatory statement need not be direct. Defamation can result from the overall context in which a statement was made or from inference, insinuation or innuendo. Even a joke can be defamatory if it is not obviously meant or understood as such.
Defamation is divided into three categories: "libel" which involves a written statement, "slander" which involves a spoken statement, and "injurious falsehood" which involves the reputation of a business.
If the offending material or statements reflect only opinions, it would not be defamatory. If the material, however, reflects facts and the facts are untruthful then the maker of the statement can be held responsible under the law. Remember that truth is an absolute defense to a claim of defamation.
A key concern for Web site owners is whether they can be held liable for information on their Web sites. The answer depends on whether the Web site owner is the "publisher" of the material or merely the "distributor". The law is clear that the original publisher of any media, i.e. newspaper, magazine or Web site, is responsible for the accuracy of the material they publish. A publisher is defined as one who has the right to create, change, alter or suppress material.
Next is the issue of liability for messages posted on Web sites by third parties via bulletin boards, chat rooms or listservs. Third parties can be either members of the public or members of an organization. In 1995 a landmark lawsuit held the Internet service provider Prodigy responsible for defamatory and false statements posted on its site. Congress superceded and reversed the result of this case by enacting the Communications Decency Act of 1996 (CDA). Section 230 of the CDA prevents Web site owners and Internet service providers from being treated as the publisher or speaker of any information provided by another content provider. Even though web site owners have legal protection they should have clear and specific policies and disclaimers for handling complaints when users occasionally make offensive or otherwise objectionable comments online. The CDA also protects Web site owners from liability when the owner makes voluntary, good faith efforts to monitor and restrict other third party content providers, i.e. users, from posting objectionable material.
In 1998 Congress also passed the Digital Millennium Copyright Act (DMCA) adding additional protections for Web site owners and online service providers if they follow certain procedures. The DMCA provides a limited safe harbor for online owners that knowingly or inadvertently post, link to or transmit infringing material provided by third parties. To be protected by this safe harbor, web site owners must register with the Copyright Office and put in place a policy for reporting possible copyright infringement on their site. The DMCA is only intended to protect web site owners from copyright infringement in material posted by third parties, not from material the owners post on the site as a publisher.
INTELLECTUAL PROPERTY ISSUES
Web site owners have three methods of obtaining content for their site: they can create it, use pre-existing content with permission form the Author, or use pre-existing content without permission of the owner (called stealing).
Regardless of the method, content comes from three sources: (i) Employees of the web site owner, (ii) Volunteers to the organization, (iii) Independent contractors.
Each of these methods and sources raises significant legal issues that need to be considered by web site owners. These issues are discussed below:
Copyrights attach automatically to all original, creative work in a tangible or digital form. Copyright infringement occurs when someone violates one of the five exclusive uses of rights given to a copyright owner by The Copyright Act. These exclusive use of rights include the right to reproduce the work ( or prevent someone else from reproducing it), the right to prepare adaptive works, the right to distribute copies and the right to publicly perform or publicly display the work. Web site owners must be careful not to infringe the copyrights of others.
The only way a web site owner can safely use copyrighted material on the site as a publisher is to insure that usage falls under one of the exceptions to the exclusive use of rights doctrine. These exceptions include the following:
Work done in the scope of employment: If an employee creates an original work in the scope of their employment the work automatically belongs to the employer. For instance, an organization hires a staff person to research and write articles about a certain topic. These articles are created with the staff person's scope of employment and therefore belong to the organization.
Written agreement transferring ownership: The ownership of copyrights cannot be transferred orally. Ownership can only be transferred in writing containing an express statement that the ownership is being transferred for an existing work or that the work is being completed as a "work for hire" if the work is to be created for the web site owner.
Express or Implied License: Copyright owners can license the use of their work to web site owners. It's best if the license is given in writing but it isn't required. If someone sends an article or photograph to a web site owner with the understanding that it will be used on the site, the law will infer an implied license but not a sale. An implied license can also be created by a statement accompanying the work such as "permission is granted to copy and distribute this document (or photo) provided proper attribution and copyright notice is included"
Fair Use: Section 107 of the Copyright Act says that copyrighted work used by others .".... for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research, is not an infringement of copyright." There are several criteria used to make this analysis including how much of the work is used and whether the usage diminishes the potential market value of the work.
Work in the Public Domain: Copyrights don't last forever. Works created after 1976 last for the life of the creator plus 50 years for individuals or 100 years for a corporation. Recent legislation raised the term for individual copyrights from 50 to 70 years. When a copyright expires it is said to be in the public domain and the work can then be used by anyone.
LINKING AND FRAMING
A key feature of Internet Web sites is the ability to include links to other Web sites. A Web site owner may be held liable for contributory infringement or vicarious liability for knowingly linking to another site that contains copyright infringing material or otherwise engages in infringing activity. Here are some general rules to follow:
A mere link to another site does not present copyright problems since nothing from the linked site is copied.
Deep-linking: Deep-linking occurs when you link someone else's site to yours but you bypass the other site's opening page and link "deeper" into the site. In one of several high-profile suits, Ticketmaster sued Microsoft because Microsoft deep-linked the Ticketmaster site by connecting web users directly to the ticket sales page of Ticketmaster's site. This bypassed the Ticketmaster home page and various advertisers. The parties settled the suit without a verdict. Although deep linking has not been held to be a violation of any rights, many web site owners strongly object to it. If a web site owner wants to deep-link another site they should get that site owner's permission. If you don't want someone to deep-link your site you should have an opening screen that states the legal terms and conditions of use disallowing deep linking. The opening screen should also require the user to consent to the terms with the following verbiage: "By using this web site you agree to be bound by all terms and conditions. If you agree, click here". This is known as a Web-wrap contract.
Framing: Going beyond a simple link and incorporating Trademarks, HTML code or content from another Web site may, however, constitute copyright infringement. A Web site owner also may be found liable for trademark infringement or Unfair Competition for "framing" another site on its site. An example of this is the case of the Washington Post et al. Vs. TotalNEWS. A number of news media organizations, spearheaded by the Washington Post, sued the TotalNEWS web site for aggregating and listing the other news sites on the TotalNEWS site and "framing" those other news sites with their own ads. This effectively allowed TotalNEWS to derive ad revenue based on the other site's content without their permission.
A trademark is a word, image, slogan, or other device designed to identify the goods and services of a particular person or organization. Trademark infringement occurs when one party utilizes the mark of another that creates a likelihood of confusion, mistake and/or deception with consumers. The confusion created could be that one party's products or services as the same as that of the actual trademark owner. In the context of a web site, any use of a trademark on your site, or link to another site that falsely leads the end user to conclude that the first web site owner is somehow affiliated, approved or sponsored by the true trademark owner is trademark infringement.
DOMAIN NAMES & CYBERSQUATTING
Merely registering a domain name does not legally bestow the absolute right to use that name. Many well-know companies and celebrities have sued because others have tried to register the well-known companies' as their own and them sell them back to the real owner. Examples are : Delta Airline, McDonald's , MTV, and Julie Roberts, to name a few. This practice is known as Cybersquatting. There are numerous bills pending in congress to make it clear that this is an illegal practice. An organization that wants to use a particular domain name should also do a search in the Trademark Office in Washington, D.C. If someone else already has the name or it is likely to cause confusion, the trademark office will decline the registration.
PASSING -OFF / REVERSE PASSING OFF
"Passing-Off" occurs when one person or entity passes off their goods or services as those of another. "Reverse Passing Off" occurs when someone takes another person's goods or services and labels them as their own. In the context of a web site, the leading case is Playboy v. Frena. Playboy sued a bulletin board owner for placing Playboy photos on the bulletin board site for downloading and purchase.
TRADE DRESS INFRINGEMENT
"Trade Dress" is a broad term covering g the design of a product on the packaging or presentation of a product or service. It is unlawful to copy another person or entity's trade dress if it will cause likelihood of confusion. Examples of trade dress that have all been the subject of lawsuits are: the package and bottle design of Chanel perfume, the distinctive design of the Dallas Cowboy's cheerleaders uniform, the cover format of People magazine, the shape of a Coke bottle and the Rubik's cube puzzle design.
A meta-tag is a device used by web site developers to describe their web site with certain key words to make it easier for web users to find their site when using search engines. For instance, if you put the words "automobile" and "Lincoln" in your search engine you would get a hit on the Ford Motor Company home site, among others. If, hypothetically, Ford buried a meta-tag on its site for "Chevrolet", users looking for the General Motors web site would also pull up the Ford Motor Company. This is meta-jacking and has been held to be a form of trademark infringement
INVASION OF PRIVACY
There are three types of privacy torts that may arise from statements made on web sites: public disclosure of private facts, statements that place a person in a false and defamatory light, and the commercial use of another's image or likeness without their permission. Web site owners may not be held liable for statements of third parties but they should nevertheless have terms and conditions that forbid this type of activity.
No other topic is hotter right now in Congress than the issue of Web site user privacy. There are currently more than 40 bills pending regulating what web site owners can do with user information it collects. All of the bills have certain terms in common.
Users are entitled to know: (i) what information is collected, (ii) how the information will be used, (iii) to whom the information will be disclosed, (iv) how to verify that the information collected is accurate and (v) how to access the information so that revisions can be made. Users are also entitled to have the opportunity to opt out of the process so that the web site owner will be on notice that the consumer doesn't want their private information collected or disseminated.
A web site audit should include a review of the Web site's collection of information policies to ensure that the site is in compliance with Federal and State privacy statues already enacted and those pending.
ADVERTISING AND PROMOTIONS
Many organizations accept advertising on its web site by its members or by third parties. All advertising is regulated by Federal and State laws. Advertising that is false or misleading can be banned or be held liable in a civil lawsuit. A web site audit should include a review of the site's guidelines for accepting advertising, particularly banner ads that link to the advertiser's site. The only way a web site owner can protect itself from claims of accepting false or misleading advertising on its site is to have written agreements with every advertiser where the advertiser warrants and represents that their advertising complies with all legal requirements and the advertiser agrees to indemnify, hold harmless and defend the web site owner from lawsuits or government agencies claiming other wise. Promotions and sweepstakes are also common on web sites. An audit should ensure that this activity complies with state and Federal contest laws.
RIGHT OF PUBLICITY
When Johnny Carson ruled the nighttime airwaves he sued a company called Johnny Portable Toilets, Inc. because of their advertising. The company's advertising headline was "Here's Johnny" combined with the slogan " The World's Foremost Commedian". Johnny Carson was not amused and he prevailed in his suit. The essence of the Right of Publicity is the right to control the use of your name, nickname, voice, picture, likeness, performance style, signature phrase and other identifying characteristics. It's the right that every person can exercise to either commercially exploit or prevent the commercial exploitation of their identity. Infringements usually occur against celebrities and sports figures but the right exist for everyone.
A web site audit should make sure that no one's identity is appropriated for the web site's commercial benefit without written permission from the person. The Right of Publicity is similar to the Right of Privacy with the distinction being whether the material is used for commercial exploitation.
SALES AND CONTRACTS
Generally, most web sites should contain notices and disclaimers which sets-out applicable intellectual property notices (copyrights and trademarks). Additionally, users of the site should be advised that information contained on the site does not necessarily represent the views or opinions of the site owner and information on the site should not be relied on as legal, business or tax advice. Further, notice should be given that no warranties or representations are given regarding the content of information on the site or of information on other sites if links are provided. Every site should also have a copyright notice that identifies the owner of the site and complies with all international copyright laws.
If the site has a chat room where users can converse in real time there needs to be a set of rules governing the use of the chat room. The rules should include, among other things, a ban on defamatory statements as well as a ban on anti-competitive discussions that might give rise to antitrust claims against the web site owner for aiding and abetting.
One of the risks of operating a web site is the risk of being sued in another jurisdiction other than the web site owner's home city and state. These jurisdiction and venue issues can be resolved in favor of the web site owner by stating that any suits filed against the site owner must be filed in the owner's city and state. This statement combined with a statement that any user who accesses the site agrees to all terms and conditions state will be sufficient for the site owner to enforce these terms.
Every web site has the potential of subjecting the site owner to liability. As the body of Internet law continues to evolve, web site owners will continually need to audit their sites on a periodic basis to ensure maximum compliance with legal precedents and the implementation of valid risk management techniques. Every web site owner needs to have a procedure in place whereby their web site design and maintenance personnel are advised of pertinent legal considerations. Procedures should also be in place to provide that the organization's legal counsel will be consulted in the case of any questions arising about the legal implications of planned or existing web site content.
© 2000 John S. Foster, Esq., CHME, All Rights Reserved, Atlanta, Georgia
This article is intended to be educational but is not intended to provide legal advice. Readers should contact an attorney for advice who has knowledge of the reader's specific circumstances.