Trading on the Internet

12 July 2004
Trading on the Internet

The problem
There's a growing trend across a wide range of sectors, including the restaurant, hotel and pub trades, to use the web as a route to market. The total value of online sales in the UK exceeded £10b in 2003 and, even if you don't sell direct from your website, there's a good chance you'll use this medium to promote your company as part of an overall marketing strategy. So what are the key points to be aware of to be legal and effective?

The Law
- Discrimination: the primary legislation in the UK in respect of discrimination and websites is the Disability Discrimination Act 1995, which makes it unlawful to treat a disabled person (including, for example, someone who is visually impaired) less favourably than an able-bodied user. Your contract with the web designer must make it their responsibility to ensure that the site complies with all legislative requirements and any maintenance contract must also place this responsibility on the service provider.

  • Customer data: once you've received an online order, competition entry or similar, you're likely to be processing personal data. This must be handled in accordance with the Data Protection Act 1998, which gives rights to persons whose data is being processed and imposes obligations on the person or company processing the data.

  • Distance Selling Regulations: these apply to services provided at a distance by electronic means, covering most forms of online trading. The provider must give name, address and contact details; authorisation or trade registration details; and a VAT registration number. If the provider is contracting online, certain information relating to the contract must also be provided.

  • E-marketing: new regulations are now in force affecting any business conducting e-mail marketing campaigns. The key point is the need to obtain the prior consent of individuals before sending unsolicited e-mails, except in certain cases relating to existing customers.

Expert Advice
The starting point for trading online is the domain name or web address. In a market where branding is critical, you must ensure that you own domain names that are relevant to your brands. And if you're using a web design company you should make it clear in the development agreement who will own the name and who's responsible for registering it.

The intellectual property (IP) in a website potentially includes the programming code (which is protected by copyright), the database rights, and registerable designs, as well as the domain name. If there's no contract between you and your web designer to confirm ownership of IP, then the first owner of the copyright will be the author or creator (ie, the designer) rather than the person who commissioned it.

When a website has been developed in-house, the employer normally owns the IP as an employee will have created it in the course of their employment, although any agreement to the contrary will bind both the employer and the employee.

Online selling is subject to the same principles as normal selling, where under general law a binding contract is formed only when an offer is accepted. An offer by the purchaser can be accepted or rejected by the seller. You should assume that contracts can be concluded by e-mail (including autoreplies) and must ensure that your site's conditions of use provide proper protection for you.

Check list - Choose relevant web addresses or "domain names" and make sure you register them.

  • Clarify who owns the intellectual property (IP).
  • Familiarise yourself with the law and make sure you adhere to the Data Protection Act and the Disability Discrimination Act.
  • Don't send unsolicited e-mails.

If you fail to register your domain names then a competitor could obtain them instead. There are well-known cases of high-profile brand-name companies that have accidentally lost the registration of a domain name by either forgetting to pay the annual fee or allowing addresses to lapse for some other reason. And if you don't own the site's code, you could lose the rights to continue using the site if you decide to move it to a different host.

Dino Wilkinson, IT lawyer at Kimbells
Tel: 01908 668555

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