Copyright and the Internet
The Internet poses both enormous promise and great risk for companies. Although the Internet opens a vast array of new business opportunities to customers without the need to establish brick-and-mortar stores, a company's valuable trade secrets and other assets can be disseminated easily to millions of others with just a keystroke. Moreover, improper use of a company's resources can lead to liability for infringement, defamation, and harassment.
Perhaps the three most significant issues confronting businesses in the electronic age are the use of unlicensed software, which can subject a company to civil and criminal liability; improper use of the Internet by employees, which can also subject a company to liability; and protection of a company's Web site. Although companies cannot predict or avert every possible danger, they can go a long way toward protecting themselves from liability by establishing and enforcing software compliance and Internet usage policies. Samples of policies are found in this chapter. Similarly, companies can protect their Web sites from infringement by implementing and posting a legal notice or disclaimer section on their Web sites confirming the terms and conditions for use of their sites, verifying that no warranties are being made, and stating that links to others' sites do not constitute endorsement of products or services offered at those sites. Further discussion of Web site terms and conditions policies is found later in this chapter.
The Risk of Using Unlicensed Software
One of the most alarming trends today is the use of unlicensed software. Experts estimate that the use of unlicensed software causes a loss of revenue of nearly $3 billion annually in the United States. The proliferation of unlicensed software is easy to understand because improper use is so readily accomplished. No additional product need be bought, and software can be copied easily or accessed by multiple users through a network. The ease of copying and access itself leads to the misconception that the purchase of one software package for a company is sufficient for companywide use.
Software makers have become increasingly vigilant about ensuring that their software is not pirated or used without license. Because it is quite common for employees to make copies of software and install it on another computer for home use, for a friend, or for a coworker, software makers often join associations to protect their proprietary rights. One of the best known associations is the Software Information Industry Association (SIIA, formerly known as the Software Publishers Association), which has established an antipiracy division devoted to locating cases of retail, corporate, and Internet piracy. In many instances, former disgruntled employees report piracy to SIIA. Microsoft has become especially effective in locating software pirates and maintains an office in Florida dedicated exclusively to combating software piracy in South Florida and Latin America. Penalties for the use of unlicensed software have included back payments for the unlicensed software, injunctions ordering audits of a company's computers to locate pirated software, and imprisonment. In 1999, a father and son were sentenced to five years and one year in prison, respectively, for engaging in a conspiracy to sell more than $20 million of pirated Microsoft software.
One issue confronting many companies today is the use of software by employees who work at home either exclusively or on a flexible telecommuting schedule. Although some software companies allow their software to be used both on company premises and at home, in many instances loading a copy of a software program licensed to an employer onto a home computer is a violation of the software license and of copyright law. Thus, companies need to make sure that software used at home for business use is properly licensed. Additionally, the use of unlicensed software promotes viruses, which can readily destroy a company's valuable information stored on a computer.
How can a company protect against piracy? SIIA offers an audit program to identify whether a company's software is properly licensed. Access SIIA's Web site at www.siia.net and search for ''Audits'' or ''Software Management Tools.'' Companies should also implement and enforce a software compliance program that clearly notifies employees that software used by employees must be properly licensed and must not be copied for home use and that employees should report any violations or piracy to a designated company representative. Policies related to software usage can be presented to employees as separate agreements or can be included in the company's employee handbook, which employees should be required to sign, confirming that they have read the handbook and agree to its terms. See Figure 12-1 for sample software usage policy.
Internet Policies
Because a company's electronic communication systems are owned by the company, it must ensure that those systems are used for business purposes only. Improper use of the Internet during business hours not only results in a loss of productivity but can also lead to liability, as a court recently ruled in holding that Continental Airlines could be liable for defamatory and harassing remarks about an employee that were posted in a chat room that Continental Airlines knew about and could have controlled. Thus, companies should implement Internet usage policies to ensure that employees understand that use of the Internet during business hours must be for business purposes only and that improper use can lead to discipline, including termination.
How does a company determine that its electronic communication systems are being used improperly? Generally, companies have a right to monitor use of their online communication systems as long as employees are notified that the company might engage in such monitoring. Implementing and enforcing an Internet usage policy is the easiest way to help protect a company from liability for improper Internet usage during business hours. Such policies can be provided to employees as separate agreements or can be incorporated into a company's employee handbook. Monitoring of phone conversations by employers is generally illegal. (Customer service and telemarketing calls can be monitored if it is disclosed each and every time at the beginning of the call. See Figure 12-2 for a sample Internet usage policy.
Web Site Considerations and Policies
The use of a Web site is an easy and inexpensive way for a company to provide information to customers and potential customers and achieve national and even global recognition. Even if a company does not sell goods or services through its Web site but merely uses the site as an information and marketing tool, a number of legal considerations are involved, and the company's Web site should be reviewed periodically to ensure that it does not infringe the rights of others.
The following tips can help companies ensure that their Web site increases business rather than liability.
Ownership of Web Site Content
Make sure your company owns its Web site content. If a company engages another to create its Web site, appropriate language should be included in the contracting documents to ensure that the company will own the finished product and all content. Otherwise, the party who created the site may own the content, and the commissioning company will not be able to revise the content because such would violate the creator's rights to create derivative works. Moreover, the contract should provide that the designer will use only original material and will indemnify the company if a claim is made that the company's Web site infringes material owned by another. If the company's Web site has already been created, the company should confirm that the company owns the content and, if necessary, obtain an assignment of copyright from the Web site creator. See Figure 10-2 for a sample copyright assignment form.
| The following policy applies both to the Company's internal network and electronic mail (e-mail) system and to that of any electronic communication provider, such as America Online, to which the Company affords access (''Systems''). |
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Use of a Copyright Notice
Because the material on a company's Web site can be protected by copyright, a copyright notice should be displayed prominently on the home page of the company's Web site. Although copyright registration affords a number of benefits, registration may be impractical for companies whose Web sites change continually and include new material, which would then necessitate repeated copyright applications. The use of a notice, though not required, will defeat a claim of innocent infringement, so companies should place the notice prominently on their Web sites. Such a notice should take the following form: ©2000 Alliance Consulting, Inc.
Linking to Others' Sites
As discussed in Chapter 7, linking to others' sites can be risky. To eliminate risk, ask permission before linking to another's Web site. At a minimum, use only narrative instruction (for example, ''Further information can be obtained at ABC Inc.'s Web site at www.xxx.com'') and refrain from using another company's trademarks or logos. Deeplinking, which bypasses another's home page to information deep within the site, is perhaps the most risky conduct of all and should be avoided. To further reduce risk, appoint one individual who has the sole authority to make changes to the company's Web site.
Terms and Conditions Sections
Most companies provide a link on their home pages to their terms and conditions, privacy policies, legal terms, or disclaimer sections. Most users probably will not read these in depth, if at all, but such policies can protect a company by allowing it to assert that it adequately notified users of company policies, and a user is thus liable for actions violating such policies. To review sample terms and conditions, check the legal disclaimers used on the Web sites of large companies such as www.ibm.com, www.ford.com, and www.microsoft.com.
At a minimum, the terms and conditions should include the following:
A statement that use of the Web site is deemed to be an agreement to the Web site owner's terms and conditions and that if a user does not agree to the terms and conditions, the user should not continue to use the site
A reminder that the Web site design, text, and illustrations are owned by the company and that material from the site cannot be copied, reproduced, republished, uploaded, posted, transmitted, modified, or distributed in any way
A statement that links to another's site are not endorsements or approvals of those sites or of products or services offered at those sites and are provided only for the user's convenience
A statement that material posted or transmitted to the site will be treated as nonconfidential and that users who transmit materials to the company's site agree that the company may use the material for any purpose, including reproduction, publication, transmission, and posting
A disclaimer that the materials on the site are provided as-is, without warranties of any kind, and that the Web site owner will not be liable for any damages arising out of or in connection with use of the site, including losses caused by viruses, communications delays, or failures
A statement that by accessing the site, users agree that jurisdiction for any disputes arising between the parties will be where the company has its principal place of business
A notice that any trademarks of the company shown on the site are owned by the company and cannot be used by others without prior written consent
A copyright notice
Doing Business on the Web
Although conducting business on the Web presents enormous opportunities to reach customers, doing business on the Internet also entails some risks for most companies. The most significant areas of concern are as follows:
Jurisdiction. Injuries and damages based on electronic transactions and communications can subject the sender of the information to jurisdiction in venues in which the sender does not physically do business. Generally, the more interactive a Web site, the more likely that a court will require the sender to submit to jurisdiction in the locale where the message is received. If a Web site is passive, merely presenting text and information, the sender probably will not be subject to jurisdiction in the locale where the message was received. Web sites at which customers can order goods and services and interact with the sender typically have resulted in jurisdiction being imposed on the sender in any location where the message is received, even though the sender maintains no physical presence or office at that location. Although it is uncertain whether such a technique will be successful, companies should post a statement on their Web sites that parties doing business with the company automatically agree that venue will be in the state where the company's principal offices are located.
Contracts. If a company does business on the Internet and accepts orders and business, the contracts used should be as nearly identical as possible to the ones used by the company for conventional paper transactions (assuming that such contracts have been approved by legal counsel). Because online contracts generally are held to be just as valid as conventional paper contracts, the use of similar or identical documents helps a company ensure that its contracts are enforceable. Customers can be asked to review the contract and click an ''I accept'' bar. Under new legislation passed in 2000, such a click-through is a signature as valid as a signature on a paper document.
Linking. Courts are divided as to whether linking to a page with defamatory or illegal material subjects the linker to liability. In some cases it has been held that intentionally sending a person to a site offering pirated software constitutes contributory copyright infringement. The safest course of action is to routinely monitor the pages and sites to which a company links to review the sites for offensive, harassing, defamatory, or illegal material. If such material is present, immediately remove the link. Typically, Internet service providers such as America Online have a safe harbor such that they are not liable for harmful material sent through their systems unless they know of the material and refuse to stop it. Using such a policy as an analogy to linking by businesses suggests that innocent linking may be a defense. Linking to sites containing known pirated information is considerably more risky.
Metatags. The use of metatags (hidden codes that allow search engines to find a Web site) to divert traffic to one's Web site probably is unlawful where another party's trademark is used.
Licenses. The licenses required to operate a brick-and-mortar business apply with equal force to cyberbusinesses. Thus, if the sale of wine requires a license in a jurisdiction, offering the wine for sale over the Internet requires compliance with licensing regulations. Similarly, conducting contests over the Internet is highly regulated.
Privacy issues Sending unsolicited advertisements (spamming) is subject to intense scrutiny, and at least one company that sent such advertisements was found guilty of trespass. The Interactive Services Association provides information about marketing through unsolicited e-mails at its Web site at www.isa.net. Similarly, tracking, collecting, and using information gained from customers using a Web site raises privacy concerns. The Terms and Conditions section of the Web site could indicate that users have no expectation of privacy and that the Web site owner can use the information submitted for any purposes it likes. Because such policies are objectionable to most consumers, many companies state that the only information collected and stored for normal Web site use is the identity of the Internet service provider, the Web site that referred the user, the pages requested, and the time and date of that request. Most companies also state that for normal Web site usage, personally identifiable information such as name, mailing address, phone number, e-mail address, and social security number are not collected, stored, or passed along to any other company and that such information is collected only when needed to fulfill a customer's request. The Federal Trade Commission offers a variety of information and publications about ensuring Internet privacy on its Web site at www.ftc.gov. Although there is no legal requirement that a company adopt a privacy policy, such policies often provide reassurance to consumers.