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6th May 2020

Coronavirus : What are the issues when moving a business online?


6th May 2020

Coronavirus : What are the issues when moving a business online?

Thinking about moving a business online? With the Coronavirus forcing businesses to close their doors as governments around the world have either banned or limited social contact, many businesses, freelancers and self-employed people are focusing on turning their businesses online. As the business landscape changes for so many and uncertainties turn into new realities, businesses will recognise that a strong digital presence is even more crucial in your communications now that the world is at home. But what are the legal considerations in this new digital environment?

Legal considerations when moving a business online or enhancing your digital presence

We set out below 8 of the common legal considerations you need to think about if you are planning on moving a business on line or wanting to enhance your already digital presence.

1. Your brand name

The beauty of the internet is that it knows no boundaries – your customer base is not limited to those who are physically able to wander into your shop. However, one of the difficulties with online trading is also that it knows no boundaries – your online website is available internationally, to consumers and businesses in multiple geographical locations.

This throws up various trade mark concerns as trade marks are territorial. There are two key issues here: protection and infringement. Whilst your own brand name may be protected in the UK through the registration system at the Intellectual Property Office, (read our Trade Mark FAQ sheet) it may not be protected in the EU or other key trading territories. If you are actively selling abroad, then you should consider international protection. Conversely, you will also need to ensure that by making your trading presence international, you are not stepping on the toes of any third party trade mark registrations which are identical or confusingly similar to your own name. Basic freedom to operate searches should be carried out before trading internationally.

2. Your website content

Website content is protected by all sorts of layers of copyright: there is copyright in images, in the text and in the architectural structure behind the site – in the coding and in the CMS. Copyright is owned by someone – either an individual or a company and therefore cannot be used without permission. You need to ensure that the copyright in your website is owned by you – usually this is done in the website build contract but if the contract is silent on ownership, it can be assigned in writing separately. You should ensure that such assignment contains warranty from the designer that the copyright in the site does not infringe the rights of any third party.

Be careful with taking images off Google and assuming that they are not protected just because they are in the public domain. This is not accurate and all images are owned by someone – that person or company may choose to license them at no cost but most licences for commercial use have a cost attached. Please licence images properly and safely.

3. Tax

It is perhaps simplistic to say, but you must be aware that every country has different expectations and standards when it comes to taxes. You may be familiar with the UK system at HMRC, but it is important to understand your target market and its position with regard to tax. For example, some countries will require you to display pricing inclusive of tax, and others will require it exclusive of tax. If you are selling to consumers rather than B2B, then it is essential that you are compliant with any domestic consumer facing tax laws.

4. Payment gateways

If you are selling online, you will need a payment system which enables customers to pay for goods and services securely. The Payment Card Industry Data Security Standard (PCI DSS) refers to payment security standards that ensure all sellers safely and securely accept, store, process, and transmit cardholder data (also known as your customers’ credit card information) during a credit card transaction. Any merchant with a merchant ID that accepts payment cards must follow these PCI-compliance regulations to protect against data breaches. The requirements range from establishing data security policies for your business and employees to removing card data from your processing system and payment terminals.

Originally created by Visa, MasterCard, Discover, and American Express in 2004, the PCI DSS has evolved over the years to ensure that online sellers have the systems and processes in place to prevent a data breach and to protect customers.

5. Shopping restrictions

Make sure that the goods or services that you are selling are legally permitted to be sold online and shipped to the destination country, as this may vary between the UK and the destination country, particularly if you are selling regulated products such as medical devices or perishables.

Most shipping companies clearly note their restricted items, so do check their terms and conditions. Items such as: aerosols, alcoholic beverages, ammunition, animals, cigarettes, fresh fruits and vegetables, hazardous materials and perishables may require special transport permits.

6. Age restrictions

You will need to be aware of any age restrictions that apply either to the goods or services that you are selling online; or to any data that you are collecting through the website (including cookies). Our Data Protection Act 2018 makes it illegal to collect personal information about a child under the age of 13 without any valid parental consent. If your business sells products or services tailored specifically for a young audience, then you will need to be very aware of your legal compliance and review the ICO’s code of conduct relating to children very carefully.

As far as age verification requirements for ecommerce stores selling age-restricted items, you will need to be aware of the specific regulations of the country into which you are selling your goods and services. For instance, sites selling items like vapes or alcohol need to have age verification tools before checkout in order to be legally sold.

7. Business insurance

There are multiple types of business insurance products, including general liability, product liability, professional liability, commercial liability, and home-based insurance. You will need to discuss your specific needs with your insurance provider to find out which type would be best for your business and location.

During your vetting process, it’s a good idea to at least take a look at product liability insurance. It’s intended for companies that manufacture, wholesale, distribute, and retail a product and may be liable for its safety. This is especially important if you plan on selling products that are considered high-risk.

Also look into professional liability insurance (also known as errors and omissions insurance), which protects your business against malpractice, error, and negligence.

8. Legal compliance

This should probably come at the top of the list, but works well as a conclusion. Trading online comes with its own set of legal obligations in addition to the usual regulatory and legal compliance issues for high street retailers.

In particular, your website must comply with several different Acts and legal Regulations. Your website must display appropriate terms of use, a privacy notice, cookie consent (and marketing consent where applicable), VAT details and information on pricing and delivery costs where applicable, full corporate name and registered office address (and if not a limited company, clear details of the person or entity with whom the customer is trading). When selling to individual consumers (rather than other businesses) at a distance, you must comply with the Consumer Contracts Regulations. In addition, if you sell using electronic means – for example, by email or through your website – you must also comply with the E-Commerce Regulations, regardless of whether your customers are individuals or businesses. Any business selling goods or services, including digital content, to customers must also comply with the Consumer Rights Act.

Where you are collecting any form of personal data – be that a name, or address or email address, then you must also comply with the GDPR and our Data Protection Act 2018 and ensure that you are compliant with the Data Protection Principles and can identify your legal basis for processing such information. If you are marketing by electronic means (eg by email or text or automated telephone call) then you must also abide by the Privacy and Electronic Communications Regs and ensure that you have proper consent to market in this way.

This blog provides a very basic summary of issues to consider when transacting online. Whether the Coronavirus will change the way we spend, shop and invest our money in the future is yet to be seen. Will we abandon city centre offices, with many more permanently working from home? Or will we return to all our past practices once lockdown is lifted? Personally, I hope that this is the long overdue change that we all need, but which ever way we decide to go, online trading will remain as important as ever. Let’s try and get it right.

If you are thinking of moving your business online or want to check that your already digital presence is protected and adhering to the various acts and regulations please contact a member of the Intellectual Property team.

We have a page “Coronavirus – Legal advice and guidance” which is continually being updated as new/updated guidance comes through from the government and other regulatory bodies on all Coronavirus related issues. If you would like to receive email notification as and when this page is updated or new guidance added just complete the simple registration form on the page.

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