Over the course of the past 30 years, the invention and widespread adoption of the Internet has fundamentally changed how companies and businesses are able to carry out their trade. While in days gone by most new consumer-facing businesses would establish a brick and mortar location for clients or customers, a physical location is – for many businesses – no longer an absolute necessity. Providers of professional services – accountants, lawyers, counselors, and consultants – may interact with clients entirely online. They can meet face-to-face over Skype or other video conferencing software and exchange documents securely using cloud software. Likewise, retailers and sellers of goods also find a reduced reliance on a physical location. Customers can buy and sell products from anywhere in the world through the business’ virtual store front.

The Internet opens new opportunities and new markets to businesses located in New Jersey and those located throughout the world but using the Internet to do business in New Jersey. New Jersey companies must prepare for legal concerns that can exist due to carrying out business on a national or global scale. Likewise, businesses located in other states or in foreign nations that benefit from selling to New Jersey’s markets should also have a thorough understanding of the laws and consumer protection laws in effect in the state. The Jayson Law Group can assist your ecommerce or Internet business with these legal concerns.

Business Formation and Guidance Regarding Corporate Structure and Growth

If you are starting you internet business in the state of New Jersey, or in any jurisdiction, it is essential to understand that the legal form your entity takes can greatly impact the level of liability you may be responsible for should commercial litigation arise.  In New Jersey, if you fail to incorporate or otherwise take action regarding the form of your business you will be deemed to have formed, by default, a sole proprietorship.

While a sole proprietorship has the advantage of being incredibly easy to establish, the form of organization does have major drawbacks. Perhaps the most concerning problem regarding a sole proprietorship is that the form does not protect personal assets against business liabilities. That is, your home, vehicles and personal assets can be put in jeopardy if an accident, product defect or some other event gives rise to excessive amounts of damages and legal liability. Other organizational forms can provide protections that insulate your personal assets from business losses you may incur. These include:

  • limited liability company (LLC) – An LLC is advantageous in that it can protect the personal assets of its members without requiring the level of management and oversight a corporation requires.
  • limited liability partnership (LLP) – A LLP is managed similarly to a traditional partnership. The difference is that the LLP permits the partners to take on varying levels of risk.
  • S Corporation – A S Corporation is owned by its shareholders – up to a maximum of 100 – and also protects its shareholders’ assets. A corporation, however, does require more management including board meetings, shareholder meetings and other corporate formalities.

The foregoing represents only a summary of the forms of organization available and their benefits and drawbacks. Our dedicated business attorneys will always discuss your needs and goals prior to recommending a form of organization.

Contractual drafting and review for your business services

All businesses rely on trust. You rust your employees to perform the job they were hired for, you trust your clients to pay on time and you trust your vendors and suppliers to provide the product that you paid for within a reasonable timeframe. Unfortunately many businesses do not consider what they will do if this this trust breaks down until it is already too late and the business owner is mired in damage control.

Establishing a strong relationship with an experienced commercial lawyer at the outset of your business venture can save your company time and money. An experienced lawyer can review the terms of use for your internet business’ web site. Depending on the circumstances and your business, the use agreement or conditions for sale could include an arbitration agreement or a choice of law clause. These important legal considerations can help your newly formed company better manage its level of risk.

Copyright Registration

Copyrights protect the expression of an idea. That can be anything from the words used in a website to its colors, graphics and pictures. The firm prepares and files copyrights with the United States Patent and Trademark Office to provide them with national protection.

Trademark and Service mark Registration

A trademark applies legal protection to the words or picture associated with a given manufacturer or source of a product, and a service mark protects the words or picture associated with a service. A good example is a logo that is stamped on a product or a name used to identify the product or service in commerce. The firm routinely files trademark and service mark applications with the United States Patent and Trademark Office. It also addresses objections to the application by the Federal government and seeks to obtain registration for its clients, notwithstanding those objections. It also represents clients in litigation and enforcement pertaining to online infringement of trademarks and service marks.

Computer Hardware and Software Sale, Lease and License Agreements

The firm has formed many companies that create, sell and/or license software. It has negotiated such agreements for both the buyer and the seller (in different transactions). Its practice also involves reviewing and preparing terms and conditions for the purchase of computer hardware and software. Contrary to popular belief, there is no such thing as a “standard” software license agreement. Each contract must be drafted with the unique aspects of that transaction in mind. The firm endeavors to treat each such representation as unique.

E-Commerce

The firm is fully familiar with the various laws and statutes that govern e-commerce, and what is needed to help protect and run an online business. In fact, some of its clients conduct transactions solely over the Internet. The firm advises clients as to the development of online purchase order terms and conditions, privacy policies, website advertising and online content.

Website Disclaimer Drafting

Every website should include some level of disclaimer language. This is important for such things as preventing the owner of the website from submitting to the jurisdiction of other States and subjecting itself to liability for representations made on the website. We have very affordable web site disclaimers that we can be tailored for the needs of our clients.

Cybersquatting Law 

The Federal Cybersquatting Law, 15 U.S.C. Section 1125, seeks to prevent people from utilizing Internet domains that dilute or otherwise infringe on the intellectual property of others. We can help its clients comply with that law, and also bring claims on behalf of its clients against people who do not comply with those requirements.

General Data Protection Regulation (GDPR) Privacy Policy Protections and Corresponding U.S. State Statutes

 As of May 25, 2018, the European Union enacted the General Data Protection Regulation (GDPR). It contains a number of enhanced protections to protect those EU members who access websites, from having their personal information gathered and used without their consent. Likewise, on June 28, 2018, California enacted a digital privacy law that contains a number of protections for consumers who utilize the Internet. Users have the right to control how a website collects their data and shares it. There also are remedies that will allow the users to require their information to be deleted and not tracked in the first place. The California law goes into effect in January of 2020. The firm is available to advise clients with respect to digital privacy law.

Child Protection and Obscenity Enforcement Act

(18 U.S.C. Section 2257 and 28 C.F.R. 75) This law was originally struck down as unconstitutional by the United States Supreme Court. It was rewritten by Congress to address the problems in the original version, and in 2005, it became binding law. It requires any person that posts an adult website to take precautions to ensure that it does not depict an underage person. The requirements of the law are complex. For example, it mandates that certain identifying information be maintained with a custodian of records. 

Federal Trade Commission Guide Concerning the Use of Endorsements and Testimonials in Advertising

The Federal Trade Commission (“FTC”) Guides Concerning the Use of Endorsements and Testimonials in Advertising regulates advertisers, including websites, that provide testimonials and representations about products or services. For example, “Mommy blogs” and Açaí berry sites (and their affiliate sites) are affected to the extent that they contain reviews or endorsements of products or services. The regulations can be accessed at 16 CFR Section 255.2 and the applicable statute is 15 USC Section 55. The regulations are divided into the following categories: Consumer Endorsements 255.2, Expert endorsements 255.3, Endorsements by organizations 255.4 and Disclosure of Material Connections 255.5.

The old regulations have changed so that simply providing a disclaimer is not sufficient to provide a safe harbor preventing the site from being deemed to have violated them. Now, the content of the endorsement or testimonial needs to be inherently non-misleading, regardless of whether a disclaimer is included. Simply stating “results not typical” will not prevent liability. Material connections and paid endorsements must be disclosed. Celebrity and expert endorsements are particularly important since they have a higher capacity to mislead the public. We anticipate that the regulations will highlight the need for changes to terms and conditions and privacy policies; upgraded affiliate agreements; website disclaimers; and indemnification provisions for celebrity or expert endorsement agreements.

PLG’s Law practice in the Internet and high technology areas includes:

  • Formation of online businesses such as limited liability companies, corporations and non-profit companies;
  • Legal disclaimers for websites, including terms and conditions, privacy policies and online sale or license agreements;
  • Domain registration disputes;
  • Intellectual property filings to protect a website, including copyright registration and trademark/trade dress registration for protectable aspects of the website;
  • Custom software development and licensing agreements;
  • Legal aspects of online marketing;
  • Privacy law consulting, including drafting privacy policies; evaluating privacy protocols; and assisting in a data breach response;
  • Issues related to the Communications Decency Act and the Digital Millennium Copyright Act;
  • Online copyright and trademark infringement;
  • Online defamation and First Amendment rights;
  • Compliance with 18 U.S.C. 2257 and 28 C.F.R. 75;
  • Technology joint venture agreements;
  • Software consulting agreements;
  • Intellectual property filings to protect software, including the underlying source code; and
  • Purchase, sale or license of proprietary technology.