What's Next: Web of Lawyers
Ah, technology. It has brought vast seas of information to our fingertips, lowered the cost of doing business, created services unimagined a decade ago, and placed any company's products a mouse click away from customers around the world. Well, here's one more of technology's fruits, and one that's often overlooked: It has made it much easier for you to insult, frustrate, cross, infringe upon, transgress against, or just plain piss off individuals, businesses, and governments anywhere on the planet. In other words, new technology sets you up to be sued by almost anyone. Thanks to the simple act of putting up a website, you and your actionable offenses are just a Google (NASDAQ:GOOG) search away.
That's what Shane McKenzie, a.k.a. the Sunglass Man Online, found out last year when the legal eagles at fashion apparel company Burberry dropped him a line. McKenzie, who operates an online sunglass retailer and two other merchandising websites out of Sarasota, Florida, sells both genuine top-name sunglasses, including models from Burberry, and logoless, perfectly legal replica glasses in similar styles. After finding McKenzie's site via Google, Burberry demanded, for starters, that he turn over his stock of the replica Burberry glasses, as well as the name of his supplier. "I called them and tried to reason with them, but they wouldn't back down," says McKenzie. He eventually hired a lawyer to put an end to the threats and agreed to no longer use the Burberrian term "check print." Similarly, when MNSpeak.com, an independent, quirky website that covers goings-on in Minnesota, offered T-shirts parodying Garrison Keillor's A Prairie Home Companion radio show, Keillor turned out to be a good deal less appreciative of parody than one might have expected. His lawyers fired off a threatening letter and wouldn't relent even after the website informed them that its inventory consisted of about 10 T-shirts.
Have your employees launched blogs to give customers and others a window onto the company? Eric Goldman, director of Santa Clara University's High Tech Law Institute, notes that the contents of the dinky informal blog put up by Mel in shipping could end up being read back to you as evidence in a courtroom, especially if it includes negative comments about a person, business, or product. Or if the blog drops references to information that you later try to protect as a trade secret or with a patent. Or if customers decide your product or service is in any way less than implied on the blog. "Your liability can be the same as if you had taken out an ad with the same information," says Goldman. And if you're thinking about getting in on the social networking craze by encouraging people outside the company to post information to your website or blog, bear in mind that many website owners have been sued over defamatory comments posted by third parties. MySpace has been sued over the contents of its members' pages, and last year a Pittsburgh man sued the operators of DontDateHimGirl.com, a dating website for women, after users posted comments suggesting that he is gay and has a sexually transmitted disease.
Indeed, you might be surprised at the trouble your website can get you into. Posting photos on it can get you up close and personal with a threatening lawyer, even when you've paid for the photos. That's because the fine print in photography rights often excludes permission to post them online, and don't think the photographers won't notice: They frequently embed searchable code in the images that makes it a snap to police for improper usage.
If you want to play it safe, it's tempting to skip all content and offer nothing on your website but links to other webpages. Unfortunately, even that won't do it. Google itself has been sued more than once by companies that don't like the idea that Google makes money by providing access to their pages. And if you pay Google to display paid listings on searches of keyword phrases, you'd better make sure no one else has any claims on those phrases; that could be trademark infringement. You also can be sued simply for doing business on the Web under your own name. Country music star Keith Urban went after a visual artist named Keith Urban for selling his paintings at KeithUrban.com, a website the artist Urban had set up long before the singer Urban became well known.
Here are a few other Web-related activities that have led to lawsuits or threats thereof: blocking pop-up ads; misusing intellectual-property protection software; and posting a review of a software product from a company that prohibits product reviews in the fine print of its contracts. If you're doing business in multiple states--and it's hard not to when you're on the Web--you'd better study up on each state's wildly varying privacy laws, lest you get slapped for failing to store customer information in encrypted form, printing a customer's full credit card number on a receipt, e-mailing a customer who doesn't want to be e-mailed, or failing to notify customers that a hacker may have gotten a peek into your computers--all transgressions that have led to legal action. And if you think you've got the U.S. and state regulations satisfied, get ready to be sued by European government agencies, which enforce far stricter regulations, including a prohibition on comparing your product to that of a competitor.
You don't need to put up a website for the Web to bring out the worst in someone else's lawyers. Employees with Internet access can do it for you. We all know that an employee who openly surfs pornography sites can get a company sued for sexual harassment. Less commonly known is that getting rid of an employee who ignores warnings to stop viewing sexually explicit material on the Web may be an even better way to get sued. IBM (NYSE:IBM) learned that in February when it was hit with a $5 million lawsuit by a dismissed employee who claimed the company should have instead offered him treatment for being addicted to Internet sex. And forget the sex--just being addicted to plain old Web surfing will soon become the stuff of a new wave of employee lawsuits, predicts Gayle Porter, an associate professor at Rutgers Business School. "Many employees are becoming consumed with technology to the detriment of the rest of their lives," Porter says. "And some of them are going to turn around and say they have psychological or health problems because of it, and then they're going to look for someone to blame." Suing employers for enabling their harmful overattachment to computers, she says, is no more improbable than suing a tobacco company for promoting smoking or suing a fast-food company for encouraging unhealthful eating.
If all that has you thinking you might want to monitor employees' Web-surfing habits to watch for signs of addiction, make sure you don't extend the policy to any employees in Canada and Europe, where you can be slammed by regulations that limit electronically peering over an employee's shoulder. If you do end up firing an employee, try to get his or her name off your website in short order--failure to do so got a Connecticut business sued in 2005. And avoid giving employees the bad news over a cell phone while they're driving, given that at least a dozen companies have been sued over blabbing-while-driving accidents.
What can you do to lower your legal exposure in this lawsuit-happy world? A good start would be to run your website and Web-related employee policies past a lawyer who specializes in Internet law. Unfortunately, most lawyers aren't yet up to speed on this stuff. That's what Bob Reno, who chronicles the misadventures of athletes at his website BadJocks.com, discovered when he received an eight-page contract from a large corporation that wanted to buy a domain name from him. "My lawyer just shook his head and said he had no idea what to make of it," recalls Reno, who was ultimately warned off of signing the contract by Clarke Douglas Walton, a Las Vegas-based attorney whose practice is focused entirely on Internet-related law. Walton, who founded the popular casino poker information website AllVegasPoker.com while in law school (he still runs it and has yet to be sued by a casino), notes that many website owners fail to even take the basic step of throwing up a "terms of service" statement that specifies which state's courts would have jurisdiction over any related lawsuits.
But Walton also is fond of pointing out that Web law cuts both ways. "Usually when an entrepreneur first contacts me it's because he's received a threatening letter from a larger company," he says. "But given how fast Internet companies can grow, it's only a year or two before they're the ones sending the cease-and-desist letters to a smaller Web company." That's paying it forward in the Internet era.
Contributing editor David H. Freedman (email@example.com) is a Boston-based author of several books about business and technology.