Going Online Because of COVID-19? Here Are Important Legal Tips to Keep in Mind

April 20, 2020

By Catherine Lovrics and Amanda Branch

COVID-19 has brought with it a new way of life, and in light of our new reality, many companies that did not have an online presence have been rushing to get online. From retail, to dance and exercise classes, to publishers of children’s books and programming, the shift from the real world to the virtual is happening at a sweeping pace. While there are many services and platforms available to help you get online, it is up to the business itself to ensure that the online presence is legal. Legal considerations may not be top of mind during the mad rush to get online to survive; however, compliance and risk mitigation nevertheless remain important.

Many businesses with an established online presence are also impacted and adapting. The surge in consumers being online and increased demand for online shopping and virtual resources presents the opportunity to attract new customers, to consider new business models, and to interact with new and existing customers in a different way. For example, organizations are now making previously gated content available for free, are introducing subscription based models, trial periods, and ‘freemium’ offerings. Each of these business models implicate different consumer protection among other laws, and should be carefully executed.

Below are some considerations and tips to help with your legal compliance online:

  1. Brand Clearance and Protection. Once you go online, you are potentially exposing yourself to a bigger market, which creates both new opportunities and risks for your brand. If you haven’t already, before you go online, it is a good idea to clear your trademark, especially for new markets, and consider filing a trademark application. As smaller, localized businesses begin to move to a national or international platform, there may be a risk of confusion and disputes among brand owners. Anticipating these issues before the move online may help manage them.
     
  2. Domain Names & Social Media Handles. If you don’t already have one, getting the right domain name and social media handles to reflect your brand is important. Domain names and social media handles are registered on a first come, first served basis, subject to cybersquatting on trademark rights. Cybersquatting is registering, selling or using a domain name with the bad faith intent of profiting from the goodwill of someone else's trademark. If you believe someone is cybersquatting on your domain name, you may be able to bring a complaint under the Uniform Domain-Name Dispute-Resolution Policy or a similar policy for the applicable domain. And, in the immediate, you can get creative. There are many new generic domains that you can consider as an alternate, like .biz, .eco, .tech, .video and .store. Social media handles are also registered on a first come, first served basis, and platforms often have a policy to address that may help if someone scooped and is squatting on your name without any legitimate right or interest.
     
  3. Jurisdiction & Forum for Disputes. Your website has global reach, and it is important to turn your mind to any specific countries or regions you are targeting. For example, your Terms of Use (discussed below) should state where your website and company are located, who may access and use your website, which law will govern your website and where disputes will be handled. Factors that imply where your website is located include language and currency (your Terms of Use should also address these). It is important you turn your mind to these factors as they provide clarity and transparency to your customers and can also help to save time and money on litigation. 
     
  4. Terms of Use. Terms of use are an important contract between you and your customers. Unfortunately, studies have shown that consumers don’t always take the time to carefully read terms of use or privacy policies, so organizations should present critical information in a variety of user-friendly ways. Terms of use should set out jurisdiction and dispute resolution as outlined above, and should also address other key issues including disclaimers, warranties, indemnification and your limitation of liability. Terms should be tailored to your particular product, service and website. For example, if your website is interactive, and allows for public posting and social interaction, there should be an acceptable use policy. Likewise, if you invite user generated content, it is important your terms set the rules for what content is acceptable. While it may be tempting to copy terms of use from another site, doing so can carry material risks as the terms may not be appropriate for your product or service offering.
     
  5. Privacy Policy. It is equally important for your website to have a Privacy policy, along with notices to alert customers to the information you are collecting, and how it will be used.  With a new move online, how you handle your customers’ data will naturally change. In addition to potentially collection information you historically would not have had (e.g. customer name and address for deliveries), you will likely begin capturing data such as IP addresses and device IDs. Private sector organizations in Canada who collect, use or disclose personal information in the course of commercial activity must comply with applicable federal and provincial legislation and must be transparent with consumers about how they handle personal information. The privacy policy should set out what information is collected, how the information will be used, whether the information is shared with any third parties and any particular risks or considerations the customer should be aware of. Privacy policies can also help manage your customers expectations with respect to how their data is handled. Much like terms of use, privacy policies should be customized to reflect the organization’s actual data handling practices. Care should also be exercised in opting into ad networks, and the privacy implications.
     
  6. Reaching Customers & Spam. Before giving in to the temptation to send email blasts it is important to ensure you are complying with anti-spam laws. Canada has strict rules for when commercial emails may be sent, what must appear in emails, and unsubscribing to future emails. Generally, you must have consent, and the conditions for express and implied consent are strict. Other countries may also have their own rules to keep in mind.
     
  7. Marketing & Advertising. There are numerous advertising and marketing law considerations when selling products or services online. Here are a few topics to take into account. Generally speaking, advertisements should not be false or misleading and any claims must be able to be substantiated by adequate and proper testing (such substantiation must exist before the claim is made). There are also specific requirements for regulated products, such as foods, prescription drugs, natural health products, cannabis and alcohol. Organizations who want to run a contest should be aware of the associated requirements, including those applicable for contests held in Quebec. There are rules surrounding ‘sales’ and other price claims, as well as rules for different types of marketing campaigns, promotions and business models (e.g. subscription models, negative options and the like). Finally, as mentioned, Canada has strict anti-spam legislation which prescribes how commercial electronic messages must be sent, and they should be kept in mind not only when sending emails but when building your distribution lists.  For example, extra care should be exercised with ‘refer a friend’ campaigns.
     
  8. Online sales & Contracting. There are consumer protection and other rules that govern online contracting, and it is important to keep these in mind when you roll out online. Generally speaking, online contracts should follow the same contractual principles as other types of contracts, meaning there should be a clear description of the product and the terms of sale. Further, the terms of use must be presented clearly and accurately to help ensure your customer’s agreement to the contract is fully informed. You should also be aware of any jurisdiction specific legislative requirements. For example, in Ontario, the Consumer Protection Act applies if either the seller or the purchaser is located in the province during the sale, and sets rules for internet agreements which could impact enforceability.
     
  9. Delivery. While it may be tempting to open up to international delivery, shipping outside your jurisdiction of operation should be carefully considered. In addition to the risks from a jurisdictional perspective as noted above, also turn your mind to ensuring your products and services may be sold in the intended jurisdictions. For example, there may be prohibitions or restrictions on exportation, importation or sale of regulated products and there may be different packaging and labelling requirements as these can vary across jurisdictions. If you do go online, you should ensure your customers are notified of any applicable customs brokerage and duties and whether these charges are to be handled by the customer upon receipt of the product (this is especially important if you indicate prices in foreign currencies). Finally, in light of the current pandemic, it is important to ensure delivery guarantees are realistic, and also consider contactless delivery methods and abide by social distancing rules. 
     
  10. Content & Code Clearance. Everything on your website, from the underlying code to the written text to the photos, videos and logos must be cleared for use on your website. You can license stock photos and content from various websites, and can also look into creative commons or open-source licenses. If you are using open-source licenses ensure that the license is for commercial use, and be careful with any changes as modifications are often not permitted by the license. There may also be nuances to open source software licenses, and extra care should be exercised with respect to clearing code. With respect to content, in particular, consider:
    1. photos, videos & music – Unauthorized use of photos, videos and music carries significant risk. There are many image and video rights management companies that crawl the internet for unauthorized use of photos. The same is true for music. Whether you need glossy photos and editorial images for visitor appeal, product photos to list your inventory online for a new online retail store, or music to play in the background of your online dance classes, it is imperative you turn your mind to clearing right.

    2. look & feel – There have been several disputes over ‘copycat websites’, and copying the look and feel of a website may give rise to copyright and/or passing off or other trademark claims. It is important to ensure your website’s look and feel is original, appreciating of course, that certain placements are common and ok for all to use, as should be use of standard form templates, colours and icon schema.

Content shared on Bereskin & Parr’s website is for information purposes only. It should not be taken as legal or professional advice. To obtain such advice, please contact a Bereskin & Parr LLP professional. We will be pleased to help you.

Author(s):

Amanda Branch Amanda Branch
B.A. (Hons) Psych., J.D.
Associate
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