Chapter 2 - Why Legal Protection Is Needed:

Owners of web sites and Internet service providers (“ISP’s”) face numerous risks and operate in an extremely complex legal environment. These risks can be minimized by using common sense, having appropriate procedures in place and by employing proper legal protection including suitable contracts.

What are the risks? The major types of risks are:

• criminal code violations for obscene content
• criminal code violations for hate content
• criminal code violations for child pornography
• civil liability for copyright infringement
• civil liability for trade mark infringement
• civil liability for unfair competition
• civil liability for defamation, libel and harm to reputation
• civil liability for invasion of privacy
• civil liability for communication of erroneous information
• civil liability for misuse or failure to protect personal information
• civil liability for violation of secrecy
• online contracts not being enforceable
• privacy complaints via PIPEDA

Consider the following examples of risks facing various web site owners (including ISP’s):

• Web site owners face potential liability for professional advice given negligently over the Internet.
• Web site owners are potentially liable for copyright infringement where appropriate consents have not been obtained
• If you are doing business over the Internet such as selling software, the web site owner or ISP runs the risk of its contract not being enforceable.
• If you run a Usenet newsgroup, you run a risk that the content could be obscene or you could face a libel or slander law suit.
• An owner of a web site might be sued if there is inaccurate information on the web site that a user relies upon or if there is a breach of intellectual property laws ie. a trade mark infringement suit or a copyright infringement suit.
• Complicating the issue for web site owners is the issue of jurisdiction and the problem that your company could be sued in a litigious foreign jurisdiction (such as many American jurisdictions) and a jury could make an award of $20,000,000 U.S. for copyright infringement.
• The owner of a web site could be charged under the criminal code on the basis that the material on its site is obscene; that there is child pornography on its site; that there are hate messages on its site or for illegal gaming or that it violated the ban on polls before an election.
• A major potential problem facing web site owners is that their domain name may infringe the rights of a trade mark holder and loss of the domain name could occur.
• A site has to have appropriate security; otherwise, viruses may cause practical and legal problems.
• There may be problems with software license agreements.
• Another risk facing web site owners is that it may be sued for improper links or hyper links on its site.

It is very important for ISP’s and web site owners to consider and deal with potential risks and to have proper procedures in place to receive and deal effectively with allegations such as intellectual property infringement or that content is libelous such as the Canadian Association of Internet Providers’ Code of Conduct.

Web site owners will be directly responsible for the content on their web site over which they will have full control whereas ISP’s will argue that they do not control the content of the web pages of their end users or clients and hence are not liable; however, if they are informed by a complaint or otherwise, they would be advised to deal with it in an appropriate manner. In the United States, there is legislation which provides protection for ISP for content. In Canada, future case law such as the Tariff 22 case will determine the extent of ISP liability.

An important part of minimizing risks is to have appropriate contracts in place. In order to determine what legal contracts you need, ask yourself the following questions:

1. Do I develop web sites for companies and organizations? If so, you need a web site development agreement.
2. Do I Provide Access to the interest? If so, you need an Internet access agreement as well as terms of use which are properly brought to the users attention.
3. Do I host the web sites of others? If so, you need a web site hosting agreement as well as a terms of use agreement.
4. Do I have a web site? If so, you need a terms of use agreement.
5. Do I have a domain name? You should consider registering appropriate trade marks in appropriate jurisdictions to protect your domain name to protect against loss of your domain name.
6. Is someone designing a web site for me? If so, you would need a web site development agreement as well as a terms of use agreement.
7. Do I have links on my web pages? If so, you must ensure that there are no legal problems with them. Consider a linking agreement.

   In view of the foregoing, it is important for you to understand what risks your company is assuming depending upon what it is doing on the Internet ( ie. such as designing and developing a web site for others, hosting web sites, providing on line access, the owner of a web site, selling products online) and to take appropriate steps to protect yourself. You need to have the appropriate legal documents drafted. Also, it is important to have proper management procedures in place in order to prevent law suits and to keep the site legal.

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