A primer on legally setting up your Internet-based business

The E-Business Legal Checklist
A primer on legally setting up your Internet-based business

by Michael A. Aczon

So, all those rags-to-riches stories you’ve heard have compelled you to start a company on the Internet. Before you leave the real world behind and launch your virtual company, take a step back and assess the various legal issues that await you. You need to devote some time and effort to making sure you cover all of your legal bases. As you probably know, the nature of online commerce changes almost daily, so you will also have to keep up with the new laws and legal rulings that will affect your business down the road.

To get you started, I have listed here several of the legal aspects of setting up an e-business. While this checklist is not exhaustive, it will make you aware of the major bodies of law that can affect an online entertainment-related business. These include intellectual property rights, personal property rights, and contract rights. Because every business is unique, you have to decide which legal issues require your attention.

The Right Rights
Copyrights, trademarks, and domain names are among the most hotly contested issues in the entertainment industry. For entrepreneurs in online entertainment, establishing ownership of these rights is especially important—in fact, it’s everything.

The Rights Stuff Check out the sites below for further information on copyrights, trademarks, domain name registration, and performance rights.
ASCAP	www.ascap.com
BMI	www.bmi.com
Internet Corporation for Assigned Names and Numbers (ICANN)	www.icann.org
SESAC	www.sesac.com
U.S. Copyright Office	www.lcweb.loc.gov/copyright
U.S. Patent and Trademark Office	www.uspto.gov

Trademark. In basic terms, a trademark tells the consumers the source of goods or services. Trademarks can take a number of forms, such as a name, a logo, or a phrase. For example, the Nike trademarks are “Nike,” the Nike “Swoosh” and the phrase “Just Do It.” Your first task is to decide exactly what you want to trademark.

Because an online business can cross state and international boundaries, you must seek federal trademark protection. The Web site of the U.S. Patent and Trademark Office (PTO) has very thorough and easy-to-follow instructions that walk you through the trademark-registration process online. (For the Web addresses of the PTO and other rights organizations, see the sidebar “The Rights Stuff.”) After you’ve determined that your proposed trademark is available for use, the PTO requires you to (1) submit the words, phrases, or artwork you want to protect, (2) describe the class of business in which you are establishing your company, and (3) pay a filing fee.

The PTO then reviews the validity of your submission, taking in account challenges from other parties who feel your submission infringes upon their preexisting trademarks. Depending on the review’s outcome, the PTO may register your trademark with the U.S. government. Once your trademark is registered, you may safely invest your time and money in making that name known to the public, armed with a good legal argument against anyone who claims to have owned it first.

Domain names. In e-business, your domain name is your calling card. It’s how people remember your business, and it’s what search engines pull up when people are searching for your type of product. Register your domain name at the same time you pursue your trademark protection. You should register it in as many configurations as possible and economically practical (for example, myname.com, my-name .com, myname.net, myname.org). Some online services can officially reserve a domain name for you. The Web site of the Internet Corporation for Assigned Names and Numbers lists all of the services that assign domain names.

Your desired domain name may already be registered by someone else, in which case you can either come up with a different name or purchase the domain name from the current owner. If you choose the latter option, be sure that the purchase contract spells out that you are the sole owner of the trademarks associated with the domain name. Also stipulate that the party selling you the name will not use or sell any domain name similar to or a variation of the name you just purchased.

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