Top Legal E-Commerce Concerns (Part II)

npe e-commerceIn the first part of this series of articles, you learned about various legal issues that can affect your e-commerce business. An additional four tips have been added here to help you avoid legal problems that may affect the success of your e-commerce venture.

6. Hosting Hassles Hindsight

A successful, high traffic e-commerce site probably cannot be hosted in-house, you will probably use a third-party host for your e-commerce site. Hosting raises a number of difficult questions, so you will want to be sure that the hosting arrangements address your performance, security and privacy concerns. Mainly you want to:

  • Determine the method in which you will receive copies of your e-commerce site data.
  • Have a hosting contract that will include written specifications and performance warranties.
  • Establish an exit strategy should you want or need to choose another host for your site for any reason.

7. Customer Privacy

Your customers are genuinely concerned about the protection and privacy of their personal and financial information. E-commerce sites must have privacy policies that are available on the site, particularly any site that targets a children’s audience.

Through partnering arrangements, it is possible for third parties to have access to the data of your customers. Your contracts should specifically cover the handling of customer data and its permitted use, if any, by third parties. Usage of customer data must be done carefully as customers will blame you for any privacy issues. It’s also important to review your site’s privacy policy for two main reasons: 1) make sure that the posted policy accurately reflects your practices and 2) that you are following its provisions.

8. Clickthrough Contracts

Most e-commerce sites and e-commerce transactions are governed by “click through” contracts posted on the e-commerce site. These contracts typically give the customer the option to “take it or leave it” after viewing the contract terms, and then click “I accept.” E-commerce business owners need to pay careful attention to getting their contract in order and placed on their site in a way that helps ensure that it will be valid and enforceable under the law.

9. Business Method Patents

E-commerce site owners have two concerns regarding patents. The first is using a method that is the subject of a patent that you might keep from using that method for your site. A prime example is the Amazon.com one-click patent. During the 1999 holiday season, Amazon.com was able to prevent its competitor, Barnes and Noble, from using a similar “one-click” process by asserting its patent rights. The second concern is whether you can patent the unique features you have developed for your e-commerce site and take advantage of these patents. Be sure that you, not the developer, are the owner of the patent.

A Final Note

It is also wiser to deal with issues directly in a contract than to leave them to the determination of a judge or jury after years of litigation. As in e-commerce itself, success will go to those with innovative and well-crafted e-commerce sites and agreements.