Internet Law Blog

February 20, 2012

Today is President's Day in the United States. For most citizens, it is a mundane holiday that simply means either they don't have to work on Monday or the traffic to and from the job is delightfully light. While it is easy to fall into this way of thinking, President's Day should actually be viewed in a more important light.

President's Day was created to celebrate key Presidents in our history. This is nice and all, but I would suggest you look at it a different way. Presidents really represent the most amazing thing about the democratic process. Think about it. A person who is arguably the most powerful person in the world voluntarily gives up that power after four or eight years depending on how long they are in office. More often than not, they usually hand over power to someone who has spent a year or two bashing them with no shame in the election process.

This is amazing and should be celebrated. 

Compare this situation to other major countries in the world. Russia is supposedly a democracy these days, but the continual seat hopping of Vladimir Putin makes this a laughable notion. China, another world power, is hardly the strict Communist state it once was, but power is held with a very tight reign by key politicians. Of the rising countries, only India can truly be said to be a democracy in its truest form, a fact for which it should receive credit. 

Whether you are sleeping in or driving home today in light traffic, I suggest you give some thought to the unique power structure in the United States. Despite all the vicious political maneuvers we see, it is a rather amazing system and one that should be celebrated. 

Why not do it on President's Day?

February 14, 2012

The search engine marketing share numbers are out for January. For those of you with online businesses, you should know that Google has a 66.02 market share followed by Bing at 15.2, Yahoo at 14.1, Ask at 3.0 and AOL at 1.6. This is why everyone markets with Google in mind and it is hard to see things changing much in the future. That being said, these numbers don't show the impact of Facebook and Twitter. 

Anyway, food for thought…

February 13, 2012

The internet is a tremendous information source because, well, it is so open. If you have an online business, you might be surprised to learn that not only are the days of the Wild Wild West over, but there are tons of regulations you must comply with these days. A good way to see how things are developing in real time is to watch what the FTC is up to. This is the primary government agency charged with enforcing matters on the web. If you can track what the agency is doing, you can get a feel for where the web enforcement areas are. 

So, how do you do this? The answer is simple. Click here and set up an alert for the search query "FTC". You may need to open a free Google account if you don't already have one. Once setup, Google will email you the top stories every day regarding the FTC. You can also set up a similar alert for you business name to see if anyone mentions you.

Ah, free tools!

February 5, 2012

The FTC recently busted a number of Acai Berry weight loss sites. The sites were making false claims regarding the weight loss characteristics of their products, but they were also doing something else that was maddening. They were making suggestions that celebrities such as Oprah had endorsed the products for weight loss. 

Do not do this unless you have a specific endorsement from the celebrity. Your chances of eventually getting sued are huge. They control the rights to their identity and you are just asking for a heap of trouble. On top of this, the FTC is focused on endorsement issues as we speak, so you are just asking for a ton of trouble.

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February 3, 2012

We've all seen the free things you can get on the web – docs, pictures, widgets, programs and the like. Legally, these items are provided to you under a no-royalty license. Having said that, they are intended solely for your use as an individual and, occasionally, as a business. 

Given the fact people are giving these things away, it would seem to naturally follow that you can give them away as well or make changes to them and resell them. Actually, this is rarely the case. You need to check with the original license to make sure that such use is allowed. If not, then you cannot do it and could face claims of copyright infringement. Be careful out there!

Richard

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January 31, 2012

March will see the issuance of a new business opportunity rule by the FTC. It is looking like it will be a real dozy, but we're still waiting for the final rule. Still, the parameters are clear at this point.

"Stuff envelopes at home and make $800 a day!" We've all seen these kinds of advertisements and promises. From vending machines to pay phones to envelopes, the business opportunity field is rife with scams and rip-offs. It is also one of the fields that the FTC gets the most complaints about, particularly with the proliferation of programs expanding on to the internet. 

In response, the FTC has revised its business opportunity rule to reflect the World Wide Web. The question is just how far will it go? There is no final rule at this moment, but what we do know indicates it will be an absolutely brutal rule. 

The first potential killer element will be a seven day waiting procedure. This means that when someone decides to buy into a new business opportunity, the vendor will issue them a document packed with warnings and disclaimers. The buyer then has to wait seven days before making the purchase. 

The second potential killer element is the vendor will have to list 10 people who have purchase the business opportunity system and had success with it. The list will include contact information so that the potential buyer can contact each of them. 

I'm all for getting rid of the business opportunity scams, but there is a real question about how far this will reach across the internet. For instance, what if I start a membership site where I show people the best method to do search engine optimization and provide continual updates on the latest changes with Google and Bing? Is this going to fall within the scope of the new rule? At this point, it simply isn't clear. 

Keep an eye on this blog. I'll be posting further answers as things move forward. 

January 25, 2012

If you allow people to post on your site via content submissions, blog comments or whatever, you need to be aware that if they post a copyrighted item from some other site, you could be held liable for it. Fortunately, the Digital Millennium Copyright Act ["DMCA"] provides safe harbor provisions if you comply with them. The problem is most sites don't!

The safe harbor provisions provide sites with a "safe harbor" from the storm of copyright liability claims that can occur. If you follow the requirements, any claim you receive will be passed through to the offending party. You will be immune from either party suing you, but only if you comply. 

One of the key problems is you must designate a DMCA Agent to receive copyright notifications. You then must register this agent with the Copyright Office. Most site owners fail to do this second step. It is a huge mistake. Failure to do so means that you are no longer protected from liability claims. 

Do it! 

If you have questions or need help, just let me know. 

January 17, 2002

The news is out this morning that the Stop Online Piracy Act ["SOPA"] is being tabled in Congress until a consensus can be arrived on it. Opponents of the law are claiming victory, but is it really one? I have my doubts.

SOPA

SOPA is an act that is designed to stop sites outside of the United States from using pirated content to make money. It sounds like a good idea up front and, frankly, it is one. It is fairly common practice for people to open offshore hosting accounts, scrape sites and then republish the content on them to make a quick buck through affiliate programs or Adsense.

The problem with SOPA is it brought a nuclear weapon to a situation where a hammer was needed. The Act would allow the government to take down domains, sites and slam advertisers on a whim. The provisions were so broad that one could argue that the government could shut down Facebook if some company claimed their content was being used on the social media network without permission. It really was overkill and made plenty of online companies very nervous. 

Tabled

SOPA really started to get seriously bad publicity in December of 2011. GoDaddy was boycotted for supporting it and major online players were soon getting involved. The announcement that Wikipedia and Reddit would take down their sites for a day as a means of protest brought an additional flood of attention to the issue. As is often the case in such situations, the politicians cowered and we learned this morning that SOPA had been tabled.

Opponents are claiming victory in this battle, but they really should not be. Tabling does not mean the bill has been abandoned. It clearly has not. What it does mean is that Congress is going to let all the bad publicity cool down first before revisiting the issue. My biggest concern is the politicians may well simply try to add the bill onto the back of another act as a rider. This is exactly what happened when Congress passed the Safe Harbor Act that had a rider that essentially shut down online poker by making it illegal for banks to wire funds to such sites. 

Whatever your view on SOPA, the important thing to understand is the battle is not over by a long shot. Even if SOPA is killed off, you can expect the old media companies to introduce a new act that does basically the same thing via a different approach. 

January 13, 2011

Google's bizarre decision to insert its Google Plus content posted by users into search results while excluding Facebook and Twitter results is definitely not in tune with its slogan to do no evil.

 

In this case, the "evil" is clear antitrust activities. Google is already in hot water with the FTC for miraculously having its services and programs appear at the top of its rankings all of the time. Now it has spit in investigators' faces and tried to essentially turn Google search results into its own captive playground.

 

You might think this is okay since, after all, it is Google's search engine. You would be correct if there were other search engines that had large shares of the market. There are not. Google controls a little less than 70 percent of all searches, which is very close to being a monopoly. When the company starts arbitrarily favoring its own products over those of competitors, it crosses a line that public policy generally frowns upon.

Google's response to all of this is Twitter and Facebook don't give it data pipelines. Well, so what? Google can still access their information through robots and has done so for years. Google's argument would be akin to stating that because sites don't use Google Analytics for their stats, they can't be in Google's search results. Lame indeed.

 

The real irony of this situation is Google is doing exactly what it accused Microsoft of doing with Windows. As you may remember, Microsoft set all the defaults in Windows to go to Microsoft products such as Explorer, while excluding those of its competitors. Google screamed bloody murder about it, but now seeks to do the same.

 

They say absolute power corrupts absolutely. One could argue this is what is happening at Google now that it is late to the game on social media with its lame Buzz products and what have you. With Plus, it is basically trying to turn back the clock. Yeah, that hasn't worked to well for other companies in the past. 

 

 

January 10, 2012

The online poker industry was incredibly popular until it was shut down. Now there is a legitimate question as to whether online poker will be legal again in 2012. 

How can this be? The Department of Justice has determined that its previous opinion on the Wire Act was wrong. Instead of applying to all online gambling, it now is interpreted as only applying to sports and horse racing betting. This is a rather major change in the restrictions on gaming online. 

So, will we see online poker being legal again in 2012? It is difficult to say. Actually, it is already legal. The laws that go after it merely work on the infrastructure elements such as barring the transfer of money to online poker sites. The reversal of the Wire Act beats down some, but not all, of these laws. In light of this, there is a view developing that online poker will reappear, but in a very different form.

Federal law requires some federal action for it to apply. In the case of poker, one idea that is starting to arise is that states will legalize online poker and lotteries, but only for citizens of their state. Thus, a person living in California would only be allowed to play a California lotto or California based poker site. Any cross-border transactions would be illegal. If this seems a bizarre approach, well, it is.

The true irony of all of this is that Nevada is already taking deposits from casinos to establish online gambling sites. This is rather humorous since it was Nevada that largely led the effort to get online poker and other games banned. They claimed moral outrage, but we can now see that it all came down to what it always does – money. The offshore entities are out of the game, and the states like Nevada reap the benefits. 

Let the games begin!

January 9, 2012

Just a quick update for those of you still reveling in the holiday season, 1099-MISC forms need to be sent out to recipients by January 31, 2012 for 2011 payments. 

The 1099-MISC form is what is known as an information return. You need to file it to alert the IRS to certain total payments you made to third parties last year. The general rule is any independent contractor you paid more than $600 to over the entire year, but there are other exceptions and requirements as well. 

Regardless, you need to be getting your information together and getting the forms. You cannot print these forms off the IRS website because you need the version with the three carbon pages if you do it on your own.

Also, keep in mind that the January deadline is just for service upon the parties you are reporting on. You have until February 28, 2012 to send in the original form to the IRS. Make sure to include a cover form, 1096 I believe. Yes, the IRS requires a form to be filed wherein you tell them you are filing another form. 

And the Agency wonders why people hate the IRS!

January 8, 2012

Funny joke of the day. Heard it on Pandora from Dave Attell, one of the great comedians in the world. He's very dirty, so beware if you give him a listen. Regardless, opened up his act by stating:

"I hate traveling. It's probably because my dad used to beat me with a globe." 

lol

January 5, 2012

I am obviously all for the rule of law since I am an attorney, but it often seems we are going more than a bit too far with all these laws. California is just about the least business friendly state in the nation. There are so many laws, that most people and businesses don't know if they are complying with the law or not.

Well, the madness is continuing in 2012. A whopping 760 new laws went into effect in California with the beginning of the new year. 760! There are laws that are good [anti-cyber lobbying], odd [new bullet trains that we can't afford] and strange [law banning stores from selling expired baby food – this wasn't already a law?]. 

We like to say we live in the land of the free. Every year, this seems to be less the case. The fact we now have a law as part of the military defense budget that allows for the holding of American citizens indefinitely without the right to trial is seriously disturbing. This is the type of law a dictator uses to stay in power. No, I'm not putting this on Obama. The Senate and House overwhelmingly passed the bill, one of the few Republicans and Democrats agreed upon in the last two years. 

The scary thing about such a law is not that it would allow Americans associated with "terrorists" to be held without trial, but that it will be the government who solely defines what a terrorist is. This is a very slippery slope. Keep in mind that Homeland Security defines some conservative groups as potential terrorists. On the other side of the belt, more than a few conservatives in Congress asserted that the Occupy Movement was a form of terrorism in the cities where things exploded like Oakland. This is the type of tool that whoever is in office could use to stifle free speech and political debate. That is not a good thing.

We all tend to have strong political views and I am certainly no different than anyone else. However, I don't believe many of the changes we see really are political. They are about control and we are giving the government far too much of it. Agree with me or not, I encourage you to get involved, read up on what is happening and make up your own mind. 

In the meantime, I'll be reading up on the 760 new California laws!

January 3, 2012

January is the month of new beginnings. Many people decided to make the leap and create a new business entity. There is usually a good move, but keep in mind that there can be delays in getting the filing done. 

The State of California has major budget problems. I'm sure you are already aware of this. The budget issues have led to major slashes in certain service areas. In the case of people trying to incorporate, the problems are found in the Secretary of State offices. Simply put, there are fewer offices than there used to be. The offices that took incorporation filings in San Francisco, San Diego and Los Angeles are now all closed. Everything goes through the main office in Sacramento and it doesn't seem like there are a lot of people working there. 

What does all this mean? It used to take 10 business days to get a corporation or LLC filed. Now it takes three to four weeks. If you are in a rush, there is a 24 hour service that actually takes about 72 hours. It'll run you an extra $500.

When filing, keep these time delays in mind. I can't tell you how many people have filed only to wait for months for the documents to come back.

Just a quick heads up for you.

December 29, 2011

They say the Mayan calendar predicts the world will end this year. I hope not. I just got my computer network to finally function after Y2K! Regardless, there are trends coming in 2012 that are clear when it comes to online business. The overriding trend is a crackdown on the web and websites. 

The federal government has been surprising lax when it comes to governing the web. Most efforts have focused on adapting traditional laws to the online world, a tortured process in most cases. The last few years, however, has seen the feds pick up the pace in legislating for the web and now things are getting serious. Legislation like the Stop Online Piracy Act is the stuff of horror for the web. This legislation is good in that you can use it to stop your content from being stolen, but it goes far beyond this basic function and really stifles even free speech on the web. 

As we head into 2012, you need to review the ins and outs of your site to make sure you have everything in legal compliance. Is your privacy policy statement up to date? How about your terms and conditions? Do you have proof that you own your own website design? How about the state of your copyright and trademark filings? Make sure you are up on the latest information so you don't get popped by a disgruntled visitor or government agency like the FTC. Trust me, a bit of work now will prevent a ton of it later on. 

And what about your offline business needs? Are your corporate minutes up to date? Do you have your 1099 tax filing information ready? The filing deadlines start in about a month. Have you met with your accountant to discuss the coming tax changes and how you can minimize their impact instead of being robbed blind by the government? Make sure your business entity is on solid ground. If you are making money on the web without being incorporated as either an LLC or corporation, you are nuts! Get something set up so you don't face a huge problem down the line when you inevitably run into a problem. 

In good news, many expect 2012 to be a much stronger year from a business perspective as the economy continues to claw its way out of the economic disaster that was the Great Recession. That should mean more money flowing on the web, so position yourself to get it. Remember – when entering business relationships with other parties, always get the agreement in writing to prevent problems later on and flush out whether they are the real deal or not. 

Now go watch some football and enjoy an adult beverage or two. Happy New Years!

December 28, 2011

The Stop Online Piracy Act, known as "SOPA", is being debated by Congress as I write this. This is one of those laws that seem like a good thing until you read the details and then realize what it means. Let's get into it.

To understand this bill, you need to understand the background of it. This is a bill introduced by older, traditional media and entertainment companies that are seeking to supposedly stop people from stealing and reposting their content online. The problem is this bill is so over the top that it effectively allows these corporate entities to shut down sites on the mere allegation that there might be an intellectual property violation. 

An example always helps with legislation of this type. Let's assume I am writing on this blog and I post a copy of an article out of a magazine on some travel destination along with the photos. I am clearly violating the copyright of the magazine, author and photographer. Under SOPA, they could get a "DNS takedown" and have my site taken down so nobody could access it. In truth, they can already do this without SOPA being passed, but this is a good starting point and nobody would probably argue the merits of the parties protecting their intellectual property.

Now assume I go ahead and post the same article and images on Facebook. The magazine could give notice to Facebook of a copyright violation and have the items taken down. Facebook would not be liable for anything under something known as safe harbor provisions, but I would for posting the offending content. This is how the law currently stands. 

Under SOPA, the law would be radically changed. Let's take the Facebook example. As written, the magazine would need to only make an allegation that I had violated its copyright. Upon doing so, it could seek a DNS takedown order for my posting or for Facebook as a whole. Think about that for a minute. They could take down the entire site…without a court order.

Okay, I know what you are thinking – "that would never happen." Well, it just did. A few weeks back, a site called mega upload was yanked off the web under such an allegation using the Digital Millennium Copyright Act as the basis. The site is back up, but all it took was an allegation. It can happen and it will happen. 

Moreover, any site online that lets users post information would be subject to attack. Consider YouTube. We all know people post copyrighted content on there without permission. Well, there is no way that YouTube can keep track of what is and what is not copyrighted. Under SOPA, the music publishers could have YouTube taken down if even a single user posted a single copyrighted song. Now that is overkill.

The truth is SOPA would more or less kill social media as we know it. Sites like Twitter, Facebook and YouTube would be getting DNS takedown notices practically every minute. In fact, any site that lets people post could run into the same problem. 

I am all for stopping online piracy. Trust me on this one. People swipe my articles all the time and it drives me nuts. Having said that, SOPA is a power grab unlike any we have seen in a long time and it should not be allowed to pass. The fact we have a bunch of 70 year olds who can't set up their own email debating it in Congress is not exactly reassuring. Contact your representative today to let your voice be heard!