Legal Issues in Getting A Website Up and Running
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Introduction
The use of the Internet as a means of commerce and communication has increased rapidly in recent years, particularly due to the reduction in the costs of computer hardware, software and telecommunications services (such as hosting and communication) and the increasing availability of content. Almost all commercial organisations now have websites. Some are simple having limited functionality and provide visitors to the website with limited scope to interact. Others are complex having large amounts of content (in the form of text, images, audio and report generation) and allow visitors to interact with the website operator by purchasing products, leaving comments, participating in promotions and other activities.
There are many legal issues to consider in implementing and maintaining an online presence. However, it is important to note that while a website is a relatively modern phenomenon, it is a combination of existing media and the considerations relevant in the development and acquisition of those media can be applied to the development and acquisition of websites. The purpose of this lens is to discuss some of the issues that arise in getting a website up and running.
Although this lens focuses on the legal regime in Australia, it does contain useful information for persons both in and outside Australia. This lens contains general information only and is not intended to constitute legal advice. Each reader of this lens should obtain specific advice relevant to their individual circumstances.
There are many legal issues to consider in implementing and maintaining an online presence. However, it is important to note that while a website is a relatively modern phenomenon, it is a combination of existing media and the considerations relevant in the development and acquisition of those media can be applied to the development and acquisition of websites. The purpose of this lens is to discuss some of the issues that arise in getting a website up and running.
Although this lens focuses on the legal regime in Australia, it does contain useful information for persons both in and outside Australia. This lens contains general information only and is not intended to constitute legal advice. Each reader of this lens should obtain specific advice relevant to their individual circumstances.
Important!
The Most Important Thing
While a website is a relatively modern phenomenon, it is a combination of existing media. Therefore, the considerations relevant in the development and acquisition of those media can be applied to the development and acquisition of websites.
Which laws apply?
As a general rule, laws that apply in or to the physical environment will apply to the online environment. In some instances, the law for the physical environment will apply in the same way to both the physical and online environment but in other instances, the law will apply in a modified way. In addition, specific laws apply to the online environment.
As is the case with a business which is undertaken in a physical environment, when identifying which laws apply to a website, it is necessary to consider the legal risk associated with the website and business to be conducted via the website. As is the case with all businesses, when designing a website or an online business, the website operator should consider the legal risk profile of the business. The website operator should ensure from the beginning of the process that steps are taken to minimise or deal with the legal risk associated with the online business. The legal risk profile of the website will depend on the complexity of the website and the operations that visitors to the website can undertake. Generally, a static site which only provides information and does not allow a visitor to undertake any transactions will have a lower risk profile than a site on which the user can undertake transactions such as buying goods or services and making payment for the purchases.
As is the case with a business which is undertaken in a physical environment, when identifying which laws apply to a website, it is necessary to consider the legal risk associated with the website and business to be conducted via the website. As is the case with all businesses, when designing a website or an online business, the website operator should consider the legal risk profile of the business. The website operator should ensure from the beginning of the process that steps are taken to minimise or deal with the legal risk associated with the online business. The legal risk profile of the website will depend on the complexity of the website and the operations that visitors to the website can undertake. Generally, a static site which only provides information and does not allow a visitor to undertake any transactions will have a lower risk profile than a site on which the user can undertake transactions such as buying goods or services and making payment for the purchases.
Hosting the website
Unless a website operator intends to manage and host their own website, the website operator will need to enter into a hosting contract with a hosting services provider. The complexity of the contract will depend on the scope of hosting services required.
At the most basic level, a hosting contract only covers secure hosting of the website on a server in a secure environment and a connection to the Internet.
At a more complex level, the hosting contract could cover all or a subset of the following: hosting on a server in a secure environment, connectivity to the Internet, email, hardware management, software management, network performance management, security, storage and content procurement and updating.
Depending on the type of business, complexity of the website, any regulatory requirements applicable to the business (and leaving aside cost considerations), the website might be hosted on a shared server with one or more websites or on a dedicated server.
At the most basic level, a hosting contract only covers secure hosting of the website on a server in a secure environment and a connection to the Internet.
At a more complex level, the hosting contract could cover all or a subset of the following: hosting on a server in a secure environment, connectivity to the Internet, email, hardware management, software management, network performance management, security, storage and content procurement and updating.
Depending on the type of business, complexity of the website, any regulatory requirements applicable to the business (and leaving aside cost considerations), the website might be hosted on a shared server with one or more websites or on a dedicated server.
Building the website
The complexity of a website development contract will reflect the complexity of the website. But having said that, there are a number of issues that should be covered in all website development contracts.
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What can the website operator expect?
* The contract should clearly describe what is being developed including the functionality required and any milestones or deliverables that must be completed and developed during the development phase prior to completion of the whole website. -
What is being done by whom?
The contract should set out each party's obligations in clear terms. It should, as a minimum, include provisions which:
* Identify the specific obligations of the developer and any dependencies.
* Identify the specific obligations of the website operator (eg, the website operator may be required to provide an input such as content before the developer can complete a task).
* Allow the website operator to request changes in functionality or technology and any costs consequences associated with a change. -
Delivery
The development of a website is usually a time critical factor for the website operator. Therefore, the contract should include provisions dealing with the following:
* Include a timetable or project plan which includes each component the developer must deliver and the date for deliver for the whole website as well as key portions (if applicable). (including situations in which extensions of time will apply).
* Include a mechanism for reviewing or extending the project plan in agreed situations.
* Specify the consequences of a failure to meet the agreed timing. The consequences could include compensation for late completion. -
Acceptance
The website operator should be satisfied that the delivered website meets the functional requirements specified by the website operator. Therefore, the contract should include provisions which specify the processes that will be undertaken to determine whether the website meets the specified requirements and what will be done if a component or the entire website does not meet the specified requirements. -
Payment
From an website operator's perspective it is usually preferable that the fee be fixed rather than a time and materials rate so as to give the website operator cost certainty. However, there may be a premium attached by the developer if an website operator requires a fixed price contract.
In any event, the contract should specify the price payable (whether fixed or time and materials) and any milestones that the developer must complete before receiving payment. -
Warranties and Indemnities
The website operator is entitled to assume that the developer's work will be of a satisfactory standard. Therefore, the contract should include warranties in relation to the standard of work and compliance with specification. Depending on the type of website and the scope of the development, it may be appropriate to include more extensive warranties and even indemnities (which are, in effect, a promise to compensate another party). From the website website operator's perspective, it would be preferable for the warranties and indemnities to be as broad as possible. -
Intellectual property issues
If ownership of the website is not considered and dealt with specifically, it may have a serious impact on the website operator's ability to use, update and transfer the website. Therefore, the following issues should be considered.
* Include provisions specifying who will own the intellectual property rights in the website. From the website website operator's perspective it would be preferable for the website operator to own the intellectual property. However, there may be some reasons why that is not essential. For example, if the developer is merely configuring or making minor amendments to a template website which the developer has designed and owns, then it may be impractical for the website website operator to own the website as a separate copyright work.
* Identify third party products such as software or content that will be used in the website and the licence or other arrangements that will apply to the incorporation and use of the content.
* Include warranties and indemnities in relation to the developed intellectual property not infringing the intellectual property rights of other persons. From the website website operator's perspective, it would be preferable for the warranties and indemnities to be as broad as possible.
* As Australian law provides that an independent contractor will own the intellectual property the contractor develops, the contract should include an assignment of the copyright from the contractor to the website website operator.
* If the developer will retain ownership of the website or parts of it, then the contract should include a licence which sets out clearly the website operator's rights in relation to the ongoing use, updating and transfer of the website on transfer of the website operator's business.
* Consider how the confidential information of the website website operator and developer will be protected and used. -
Service levels
If the developer will be providing ongoing support after completion of the development, the contract should describe the support to be provided, the response times and other service levels that apply, the fees payable by the website operator and any consequences of the developer's failure to meet the service levels.
Adding content to the website
If the website operator is not a content producer, the website operator will need to acquire content. The content can be acquired by commissioning someone to produce the content (in which the issues discussed in the section on website development agreements will be applicable) or by acquiring content from a content provider either by buying the copyright outright or acquiring a licence to use the content. Generally, if the content is of high value, then it is more likely that the content will be licensed rather than sold outright.
In addition to licence fees and other payment related issues, the following issues are relevant to a content licence:
In addition to licence fees and other payment related issues, the following issues are relevant to a content licence:
- The scope of the licence is the most significant issue. It is essential to describe the applicable distribution rights (eg, for website or Internet only or also for hardcopy publications such as newsletters and marketing materials). Is any of the content provided on an exclusive basis?
- Identify and describe the framing or linking rights that apply to the content particularly in light of any sponsorship of the website or advertising to be included on the website.
- The delivery format for the content.
- The delivery schedule for the content.
- The inclusion of warranties in relation to accuracy of the content and copyright ownership of licensing rights (including warranties in relation to appropriate clearances having been obtained).
- Provisions dealing with editorial issues.
- Provisions dealing with the exchange of information between the content provider and the website operator (including provisions relating to the content provider's use of any data provided by the website website operator such as the ability of the content provider to include the data in content it providers to its other customers and privacy issues).
Website terms and conditions
All websites should include terms and conditions which regulate a user's access to and use of the website. The exact terms and conditions of a website will depend on the content and the function and complexity of the business that can be transacted on the website. The types of provisions usually included in website terms and conditions include the following:
- a term restricting offers made on the website to a specific geographical area;
- a term to the effect that the website and any specific statements on it are not offers but invitations to the public to make offers (this is so that the website website operator retains control of contracting);
- a term to the effect that the information contained on the website is for information purposes only and does not constitute professional advice;
- a term to the effect that the website operator is not liable for information posted on the website by users and a provision to the effect that each user who posts content indemnifies the website operator;
- terms dealing with the basis on which a user can post content and the website operator's entitlement to reuse the content;
- terms on which users are entitled to reuse content included on the website;
- the law that applies to the interpretation and enforcement of the terms;
- disclaimers in relation to quality and accuracy of content;
- disclaimers in relation to availability of the website; and
- disclaimers of endorsements of and exclusion of liability in relation to any websites to which the operator's website links.
Enforcement of website terms and conditions and transactions
Under Australian law, a contract comes into existence when a person accepts an offer of which the person accepting the offer has had reasonable notice of the applicable terms and conditions. Therefore, for website terms and conditions to be enforceable and for the terms and conditions for the supply of services and products acquired over the Internet to be enforceable, it is necessary to show that users were given reasonable notice of the terms and conditions and that the users accepted the terms and conditions. The best way of doing this is by having users read the terms and conditions before accessing the website or specific content on the website and then requiring the user to accept the terms. There are two methods of obtaining user acceptance:
* Click-wrap - In this method, the terms and conditions are set out and an "Acceptance" button or other acceptance acknowledgement is included at the end of the terms and conditions. The user cannot continue until the user has confirmed acceptance by selecting the "Acceptance" button.
* Browse-wrap - In this method, a link to the terms and conditions is included and the user is supposed to click on the link which takes the user to a separate page which sets out the terms and conditions. An "Acceptance" button or other acceptance acknowledgement is included after the link. The user is expected to click on the link to read the terms and conditions.
* Click-wrap - In this method, the terms and conditions are set out and an "Acceptance" button or other acceptance acknowledgement is included at the end of the terms and conditions. The user cannot continue until the user has confirmed acceptance by selecting the "Acceptance" button.
* Browse-wrap - In this method, a link to the terms and conditions is included and the user is supposed to click on the link which takes the user to a separate page which sets out the terms and conditions. An "Acceptance" button or other acceptance acknowledgement is included after the link. The user is expected to click on the link to read the terms and conditions.
Copyright
Copyright protection applies to content and software incorporated into or made available on a website and content sent via the website by completing forms or by email.
An operator must ensure that the operator owns or is licensed to use each item of content or software that the operator incorporates into or makes available on the website. For licensed software and content, the operator must ensure that the use is consistent with the applicable licence. In addition, the operator should ensure that each item of software and content is protected. From a contractual perspective, this takes the form of including appropriate terms and conditions in the website terms of use or in the terms of supply for services and products acquired by users on the website. From a practical perspective, this includes putting in place appropriate technical measures to ensure that the material is dealt with by users only in the ways intended by the operator.
An operator must ensure that the operator owns or is licensed to use each item of content or software that the operator incorporates into or makes available on the website. For licensed software and content, the operator must ensure that the use is consistent with the applicable licence. In addition, the operator should ensure that each item of software and content is protected. From a contractual perspective, this takes the form of including appropriate terms and conditions in the website terms of use or in the terms of supply for services and products acquired by users on the website. From a practical perspective, this includes putting in place appropriate technical measures to ensure that the material is dealt with by users only in the ways intended by the operator.
Trade marks
Trade mark protection applies in the online environment. An operator must ensure that the operator owns or is licensed to use each trade mark included on the website. For licensed trade marks, the operator must ensure that the use is consistent with the applicable licence. From a contractual perspective, this takes the form of including appropriate terms and conditions in the website terms of use or in the terms of supply for services and products acquired by users on the website. From a practical perspective, this includes putting in place appropriate technical measures to ensure that the trade marks cannot be copied.
Linking
A hyperlink links a webpage to another webpage. The link can be to a page in the website or to another website.
It is arguable that the operator of a website by virtue of the fact that the operator makes a website available on the Internet grants others a license to link to the operator's website. It is generally accepted that the inclusion of a hyperlink in a website to home page of another website is unlikely to be considered to contravene any law. However, if a hyperlink is to pages deep within a website, this is more problematic as there is an argument that linking to a page deep inside a website is a representation to the effect that there is some connection between a website and the website to which it is linking or there is an attempt to take advantage of the reputation of the website to which it is linking. To minimise the risk of an accusation of taking advantage of another's reputation, a website operator should always obtain permission from the owner of the linked website to include links to pages deep within the linked website. (For a discussion of passing off and misleading or deceptive conduct, see Passing Off and Misleading or Deceptive Conduct.)
It is arguable that the operator of a website by virtue of the fact that the operator makes a website available on the Internet grants others a license to link to the operator's website. It is generally accepted that the inclusion of a hyperlink in a website to home page of another website is unlikely to be considered to contravene any law. However, if a hyperlink is to pages deep within a website, this is more problematic as there is an argument that linking to a page deep inside a website is a representation to the effect that there is some connection between a website and the website to which it is linking or there is an attempt to take advantage of the reputation of the website to which it is linking. To minimise the risk of an accusation of taking advantage of another's reputation, a website operator should always obtain permission from the owner of the linked website to include links to pages deep within the linked website. (For a discussion of passing off and misleading or deceptive conduct, see Passing Off and Misleading or Deceptive Conduct.)
Framing
Framing is the practice of presenting a webpage within a defined space or frame of another webpage. This practice raises issues in relation to whether the operator undertaking the framing is claiming some connection with the "framed" material or the owner of the "framed" material or is otherwise trying to take advantage of the reputation of the owner of the framed material. To minimise the risk of an accusation of taking advantage of another's reputation, a website operator should always obtain permission from the owner of the "framed" material to include the material on the operator's website and to frame the material. (For a discussion of passing off and misleading or deceptive conduct, see Passing Off and Misleading or Deceptive Conduct.)
Some other issues
- Gambling - Australia and some other countries have laws which prohibit or regulate gambling on the Internet. The Australian legislation provides it is an offence to provide interactive gaming services (with some exceptions - eg, telephone betting services) to a person who is physically present in Australia. The offence applies to both operators located in Australia and those located outside Australia. However, it would be difficult for a prosecution to be brought against an operator who does not have a connection with Australia. ISPs are not guilty of any offence if their activities are limited to providing the access to the Internet.
- Financial advice - The Australian legislation which regulates financial services is very broad. Therefore, if a website provides any information which could be considered to influence a person's decision in relation to a financial product, it may be caught by the legislation.
- Advertising - In relation to avoiding passing off or misleading or deceptive conduct (see separate paper for a discussion of these topics), a website operator must ensure that it complies with all applicable laws and industry standards in relation to advertising. If the operator is including advertisements by other businesses on its website, the operator should ensure that its agreement with the advertiser protects the operator in circumstances where the publication of the advertisement results in the operator incurring some liability.
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Defamation - Defamation occurs when a statement that causes damage to a person's reputation is published. For the statement to be defamatory, the statement must be likely to cause a reasonable member of the community to think less of the person or avoid the person or injure the person's reputation or the person's ability to trade or the person's credit. Generally, anyone who participates in or authorises the publication is liable.
Defamation can lead to both civil and criminal liability. Therefore, the website operator should put in place measures to review content included on its website. This is particularly important where a website allows users to post content. - As a consequence of the wording of Australian censorship laws, it is likely that software which is made available for downloading via a website is required to be classified. Civil and criminal consequences apply for selling or displaying unclassified computer games for sale and for selling misclassified computer games.
Books about the Internet
Books about ecommerce
Books about launching a web-based business
Books about SME legal issues
Books about intellectual property law
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Your comments are very welcome
Please leave comments about this lens. Thank you.
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Tolovaj
Jul 4, 2011 @ 3:54 am | delete
- This is very well written list of resources. Legal isssues are serious stuff, so... Thanks!
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BusinessSarah
Jun 24, 2011 @ 12:23 pm | delete
- Great information -- and great list of resources! thanks.
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JeremiahStanghini Feb 1, 2011 @ 4:32 am | delete
- I didn't realize there was so much to consider in creating a website!
With Love and Gratitude,
Jeremiah
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Pastiche
Nov 22, 2010 @ 3:06 pm | delete
- You've nailed some important facts and business points that new web designers often overlook. Having been in the business since the mid-1990s I can say it's only gotten more complex, especially in the US, to build and host a web site, particularly a site that conducts e-commerce.
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PizmoBeach
Nov 30, 2010 @ 1:21 am | delete
- Thanks for taking the time to read this lens and leave a comment.
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I live in Sydney, Australia. Amongst other things, I am interested in small businesses (especially intellectual property rights and other legal issues),... more »
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