Troutman Sanders LLP: Avoiding Legal Problems Created by Your Company Website (Part I)

Troutman Sanders LLP: Avoiding Legal Problems Created by Your Company Website (Part I)

In today's technology-focused age, commercial websites are ever more sophisticated and interactive, allowing customers to do far more than view and purchase a company's products. More and more businesses use social media outlets such as Facebook and Twitter to reach consumers and build brand loyalty. Many companies also now host blogs in order to better connect with their customers. It is also becoming common for businesses to subsidize the operation of their website by including advertisements for non-competing companies selling related products, and in many cases these advertisements are personalized to the website visitor.

While these improvements in technology allow businesses to deepen their relationships with customers and potential customers, they also raise many new legal issues for website owners, particularly about the use of intellectual property. Those issues fall generally into two categories: (1) the proper use and protection of website content; and (2) compliance with legal requirements for using personal information gathered from website visitors. Below we address questions that arise in the first category. In Part II, we will look at the laws and practices governing how a website owner may collect and use personal information from its visitors.

  • How do you use website content created by others?

One of the most common mistakes made by commercial website owners is failing to ensure that they have the legal rights to use content posted on their website. Companies should first carefully review contracts with website design and hosting vendors to ensure that the company owns all the rights to the design of their website and any content created for their website.

Website owners must also ensure that they have the appropriate rights under copyright law to use and display the content on their website. Copyright law covers all forms of creative content, including written works, visual art, sound recordings and moving images. Pretty much any original work is protected by copyright as soon as it is created or put in a fixed medium, without any need to register or even publish the work.

The rights of a copyright owner include the "right to publicly display" the copyrighted work, and so a website owner must make sure it has permission to use images and other content on its website. A website operator should also make sure that a user who provides website material has the right to use that content. For example, a photographer may own the copyright on a photograph but items that appear in the photograph, such as the design of clothing, furniture or other work, may be subject to a separate copyright.

The law provides what is called "strict liability" for copyright infringement and so innocent or unknowing infringement is no defense. The simplest way to avoid copyright infringement is by obtaining permission to use copyrighted works. Website owners should carefully "clear" use of their website content and understand any limitations on use of that content.

  • Do you compare your products to competitor's products?

Comparative advertising raises issues of possible copyright, trademark and trade dress infringement. A trademark, in short, is the brand name of a product or service. It is something that identifies a seller's products or services and distinguishes them from goods or services sold by others. Trademarks include product names, logos, slogans and can even include sounds, colors and motions. Website owners should minimize the use of other companies' trademarks in any competitive advertising and should ensure that any comparison to a competitor's product is service is well documented and carefully worded to avoid claims of false advertising.

  • Do you use endorsements or testimonials on your website?

All persons have the inherent right to control the commercial use of his identity. Celebrities, in particular, have enforceable rights in their image, identity and persona and can prohibit others from using any aspect of that persona. The protection of a person's identity continues after death and so, for example, advertisements that evoke Elvis, Humphrey Bogart or other stars of the past can easily draw complaints of improper commercial exploitation. The best way to deal with such reputational rights or rights of privacy is through releases, waivers or blurred images of individuals appearing in images where necessary.

Online testimonials are also governed by Federal Trade Commission (FTC) regulations. The FTC looks closely at on-line endorsements where the connection between the endorser and the advertiser may not be obvious to a consumer. The FTC's rationale is that reviewers in more traditional media such as television or newspapers review goods and services for free and are more likely to have an unbiased editorial review.

  • Do you allow website visitors to post content on your website?

"User-generated content" is becoming increasingly common on the Internet. Many websites allow visitors to post comments on blogs or message boards or upload photographs, clip art, videos or other content to the website. Similarly, social media sites, such as a company's Facebook or Twitter page, allow visitors to add content that is displayed on the site.

It is important for website owners to have systems in place to monitor what website visitors post on their website. Blog or message board comments should be reviewed before they are published to remove any disparaging or defamatory remarks. Any content submitted or uploaded for a website should be checked for copyright (©) or trademark (TM or ®) symbols. Also, content that is typically protected, such as logos, product names or slogans, should be carefully reviewed.

  • Do you have procedures to respond to claims of copyright or trademark infringement?

The easiest and most efficient way to minimize liability for website copyright infringement is to follow the notice and takedown procedures in the Digital Millennium Copyright Act (DMCA). The DMCA establishes a "safe harbor" for online service providers that establish procedures for removing infringing website content. In short, after receiving a complaint of copyright infringement, the website operator must promptly remove the offending content and, if the content was posted by a third party, inform that party of the complaint. The party whose content has been blocked may respond by stating the content is non-infringing and which point the complaining party has ten days to file a lawsuit in federal court. In most cases, however, whether content is subject to copyright is readily apparent and disputes are settled quickly without the need for litigation.

While the DMCA only applies to copyright infringement, a similar process can be set forth in a website's Terms and Conditions for dealing with claims of trademark infringement. The Terms and Conditions can provide that by posting content to a website, a user agrees to removal of infringing content upon complaint by a third party. By quickly removing offending content, a website operator can often avoid legal action and the accompanying costs.

  • Do keep your website Terms of Use up to date?

Most websites contain links to the site's "Terms of Use" or "Terms and Conditions," but few website visitors, or even website owners, ever actually read a website's Terms of Use. You may be surprised to learn that you are bound by a website's Terms of Use simply by visiting a website. Courts have generally held that website Terms of Use are enforceable, even when a user does not click on an "I Agree" or "I Accept" button. As a result, Terms of Use are an important tool for website operators to use to establish the rules and policies for use of its website and to limit its liability for misuse of website services by users.

  • How do you protect your company's unique website content and other intellectual property?

The flip side to avoiding infringement of others' copyrighted or trademarked property is for a company to make sure it is protecting its own brands and creative works, including the unique design of its website. While a work receives copyright protection upon its creation, a copyright owner must generally register the copyright to enforce the copyright or to obtain damages. Likewise, trade names, logos and slogans that help consumers identify the source or origin of your products or services should be registered as trademarks. If you have built up goodwill in your brand name or product name or a slogan or product packaging, you want to prevent a competitor from using a similar mark on inferior goods and services that may damage your reputation and business.

The foregoing is only a high-level summary of the many legal issues raised by hosting an interactive commercial website. If a business establishes strong guidelines and policies for reviewing website content and changing its website practices when necessary, it can anticipate and address most legal issues before they become a significant problem.

Contributors: Dabney Carr and Robert Angle, Troutman Sanders Intellectual Property Practice Group

For questions and/or comments, please contact Bryan Haynes, Troutman Sanders Tobacco Law Team Co-Leader, at 804.697.1420 or by email

­­­­­­­­­­­­­­­­­­­­About Troutman Sanders

Troutman Sanders is an international law firm with offices in North America, Europe and Asia. Founded in 1897, the firm's heritage of extensive experience, exceptional responsiveness and an unwavering commitment to service has garnered strong, long-standing relationships with clients across the globe. These clients range from multinational corporations to individual entrepreneurs, federal and state agencies to foreign governments, and non-profit organizations to businesses representing virtually every sector and industry.

Troutman Sanders lawyers provide counsel and advice in practically every aspect of civil and commercial law related to the firm's core practice areas: Corporate, Finance, Litigation, Public Law and Real Estate. With more than 50 practice groups focused on specific aspects of these areas, the firm is defined by its considerable knowledge base and proactive approach to addressing legal and business challenges.

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