Business Link - Legal_Issues

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Table of contents

Protecting intellectual property 3

Introduction 3

The importance of protecting intellectual

property 3

Intellectual property management - conducting

an audit 4

Getting legal protection for your intellectual

property 4

Assistance with intellectual property protection 5

Intellectual property rights and your

employees 6

Intellectual property and freelance contractors 7

Prevent intellectual property infringement 7

Protecting your business name and domainname 8

Respect other people's intellectual property 9

Helplines 9

Related guides on businesslink.gov.uk 10

Related web sites you might find useful 10

E-commerce and the law 12

Introduction 12

E-commerce Regulations 12

Tips for complying with the E-commerceRegulations 13

Regulations applying to telephone and fax

marketing 14

Legal Issues

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Privacy and Electronic Communications

Regulations 15

Tips for complying with the Privacy and

Electronic Communications Regulations 15

Distance Selling Regulations 16

Provision of Services Regulations 17



Trading online - understanding e-commerce

contracts 19

Introduction 19

Formation of online contracts 19

Essential terms of a contract 20

Issues to consider when selling online 21

Protecting consumers 22

Complying with the Distance Selling

Regulations 22

Resolving legal disputes 23Related guides on businesslink.gov.uk 24


Sample internet policies and notices 25

Introduction 25

Sample website usage terms and conditions 25

Sample privacy policy 26

Sample website disclaimer 28

Sample internet copyright notice & guidelines 29

Sample business email disclaimer 29Sample acceptable internet use policy 30

Sample acceptable email use policy 31



Legal Issues

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Subjects covered in this guide

Introduction

The importance of protecting intellectualproperty

Intellectual property management -conducting an audit

Getting legal protection for your intellectual

property

Assistance with intellectual propertyprotection

Intellectual property rights and youremployees

Intellectual property and freelancecontractors

Prevent intellectual property infringement

Protecting your business name and domainname

Respect other people's intellectual property

Helplines

Related guides on businesslink.gov.uk

Related web sites you might find useful

You can find this guide onhttp://www.businesslink.gov.uk/northeast bynavigating to:

Home > Exploit your ideas > Protecting yourintellectual property > Protecting intellectualproperty

Introduction

All businesses have intellectual property(IP), regardless of their size or sector. IPcan mean a brand, invention, design orother kind of creation, and it can be legallyowned.

Your IP is likely to be a valuable asset. Itcould include the name of your business,

the products or services you make orprovide, or the written or artistic material youcreate.

Securing and protecting it could be essentialto your business' future success, so it's vitalto understand your rights and how the lawcan help you.

This guide explains the importance ofconducting an audit of your business' IP. It

sets out the different kinds of legalprotection available for IP available(including patents, trade marks, designrights, registered designs and copyright) andexplains the range of things you can do toprotect and manage your IP rights.

The importance of protectingintellectual property

Intellectual property (IP) rights are valuableassets for your business - possibly amongthe most important it possesses.

Your IP can:

set your business apart fromcompetitors

be sold or licensed, providing animportant revenue stream

offer customers something new and

Protecting intellectual property



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different form an essential part of your

marketing or branding

You may be surprised at how many aspectsof your business can be protected - its nameand logo, designs, inventions, works ofcreative or intellectual effort or trade marksthat distinguish your business can all betypes of IP. You can find out about IP onthe Intellectual Property Office website -

Opens in a new window.

Some IP rights are automaticallysafeguarded by IP law, but there are alsoother types of legal protection you can applyfor.

To exploit your IP fully, it makes strongbusiness sense to do all you can to secureit. You can then:

protect it against infringement byothers and ultimately defend in thecourts your sole right to use, make,sell or import it

stop others using, making, selling orimporting it without your permission

earn royalties by licensing it exploit it through strategic alliances make money by selling it

Intellectual property management -conducting an audit

The first step to protecting and exploitingyour business' intellectual propertysuccessfully is carrying out a systematicintellectual property (IP) audit.

To carry out an audit, look closely at yourbusiness to:

identify where IP is used find out who owns the IP rights assess the value of the IP

This won't always be straightforward.Remember that your IP doesn't just reside inpatents you hold or trade marks you haveregistered. You also need to consider itemssuch as any bespoke software, writtenmaterial, domain names and customerdatabases.

Key questions an IP audit should raise:

Is my IP protected? Am I infringing anybody else's IP

rights? Am I fully exploiting my IP?

Using a logbook to manage your IP

It can be helpful to record all research,

notes, designs and meetings related to yourideas in a dated, tamper-proof logbook, withwitness signatures where appropriate. Thiscan serve as a powerful tool, helping youidentify and protect your IP later on.

Find out about IP on the IntellectualProperty Office website - Opens in a newwindow.

Getting legal protection for yourintellectual property

There are four main ways in which the lawprovides protection for your intellectualproperty.

Patents

Patents protect your inventions for a setperiod. You must apply to the IntellectualProperty Office for a patent. See our guide


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on how to get patent protection for yourbusiness.

You can only patent an invention if no onehas done so before you. To see if there isan existing patent you need to carry out apatent search. Find out about patentsearches on the British Library website -Opens in a new window.

Rules came into force in 2007 which, amongother things, introduced flexible anduser-friendly patent litigation procedures andalso simplified and updated administrativerequirements.

Find information on the patents rules onthe Intellectual Property Office website -Opens in a new window.

Trade marks

A trade mark is the distinctive way in whichyour business' goods or services arerepresented - in the form of slogans,symbols, words, logos, brand names orshapes, for example. See our guide on howto use trade marks in your business.

You can take legal action to preventsomeone else using your trade mark if youhave built up sufficient trading reputationand goodwill in it - but this can be difficult toprove. For added protection it's a good ideato use trade mark registration to safeguardyour trade mark. You can find out abouttrade marks on the Intellectual PropertyOffice website - Opens in a new window.

Design right and registered designs

Design right gives automatic but limitedprotection for the appearance ofthree-dimensional objects. A registered

design gives added protection and appliesto both two-dimensional andthree-dimensional objects. See our guide ondesign right and registration.

You can get information on design on theIntellectual Property Office website -Opens in a new window.

Copyright

This is the automatic protection the lawaffords original literary (including software),artistic or dramatic work and soundrecordings that are the result of intellectualeffort or creative skill. This could cover yourwebsite's content, technical drawings orinstruction manuals, for example. See ourguide on copyright for your business.

You can get information on copyright onthe Intellectual Property Office website -

Opens in a new window.

Assistance with intellectualproperty protection

Intellectual property (IP) protection can bean important part of ensuring your business'success, so it's essential that you get it right.Mistakes can be time-consuming andexpensive. They can even result in your

business' failure.

IP protection is a complex legal area andgetting help is often sensible.

Sources of IP law

The Trade Association Forum.Find your trade association on theTrade Association Forum website- Opens in a new window.


http://www.businesslink.gov.uk/bdotg/action/layer?topicId=1073938226&site=101&r.s=e&r.lc=enhttp://www.businesslink.gov.uk/bdotg/action/layer?topicId=1073938226&site=101&r.s=e&r.lc=enhttp://%20http//www.bl.uk/reshelp/findhelpsubject/socsci/intprop/ippatents/ippatdata/databases.htmlhttp://%20http//www.bl.uk/reshelp/findhelpsubject/socsci/intprop/ippatents/ippatdata/databases.htmlhttp://%20http//www.bl.uk/reshelp/findhelpsubject/socsci/intprop/ippatents/ippatdata/databases.htmlhttp://www.ipo.gov.uk/patent/p-decisionmaking/p-law/p-law-rules.htmhttp://www.ipo.gov.uk/patent/p-decisionmaking/p-law/p-law-rules.htmhttp://www.ipo.gov.uk/patent/p-decisionmaking/p-law/p-law-rules.htmhttp://www.businesslink.gov.uk/bdotg/action/layer?topicId=1073939611&site=101&r.s=e&r.lc=enhttp://www.ipo.gov.uk/tm.htmhttp://www.ipo.gov.uk/tm.htmhttp://www.ipo.gov.uk/tm.htmhttp://www.businesslink.gov.uk/bdotg/action/layer?topicId=1073940183&site=101&r.s=e&r.lc=enhttp://www.ipo.gov.uk/design.htmhttp://www.ipo.gov.uk/design.htmhttp://www.ipo.gov.uk/design.htmhttp://www.businesslink.gov.uk/bdotg/action/layer?topicId=1073942615&site=101&r.s=e&r.lc=enhttp://www.ipo.gov.uk/copy.htmhttp://www.ipo.gov.uk/copy.htmhttp://www.ipo.gov.uk/copy.htmhttp://www.taforum.org/http://www.taforum.org/http://www.taforum.org/http://www.taforum.org/http://www.taforum.org/http://www.taforum.org/http://www.ipo.gov.uk/copy.htmhttp://www.ipo.gov.uk/copy.htmhttp://www.ipo.gov.uk/copy.htmhttp://www.businesslink.gov.uk/bdotg/action/layer?topicId=1073942615&site=101&r.s=e&r.lc=enhttp://www.ipo.gov.uk/design.htmhttp://www.ipo.gov.uk/design.htmhttp://www.ipo.gov.uk/design.htmhttp://www.businesslink.gov.uk/bdotg/action/layer?topicId=1073940183&site=101&r.s=e&r.lc=enhttp://www.ipo.gov.uk/tm.htmhttp://www.ipo.gov.uk/tm.htmhttp://www.ipo.gov.uk/tm.htmhttp://www.businesslink.gov.uk/bdotg/action/layer?topicId=1073939611&site=101&r.s=e&r.lc=enhttp://www.ipo.gov.uk/patent/p-decisionmaking/p-law/p-law-rules.htmhttp://www.ipo.gov.uk/patent/p-decisionmaking/p-law/p-law-rules.htmhttp://www.ipo.gov.uk/patent/p-decisionmaking/p-law/p-law-rules.htmhttp://%20http//www.bl.uk/reshelp/findhelpsubject/socsci/intprop/ippatents/ippatdata/databases.htmlhttp://%20http//www.bl.uk/reshelp/findhelpsubject/socsci/intprop/ippatents/ippatdata/databases.htmlhttp://%20http//www.bl.uk/reshelp/findhelpsubject/socsci/intprop/ippatents/ippatdata/databases.htmlhttp://www.businesslink.gov.uk/bdotg/action/layer?topicId=1073938226&site=101&r.s=e&r.lc=enhttp://www.businesslink.gov.uk/bdotg/action/layer?topicId=1073938226&site=101&r.s=e&r.lc=en


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The Intellectual Property Office.Contact the Intellectual PropertyOffice Central Enquiry Unit on Tel08459 500 505 or find informationon IP protection on the IntellectualProperty Office website - Opens ina new window.

Specialist legal advice is also available.Patent attorneys are legally qualified in allaspects of patents, trade marks, design and

copyright law. They are representedprofessionally by the Chartered Institute ofPatent Attorneys (CIPA). Find furtheradvice on IP protection and the work ofpatent attorneys on the CIPA website -Opens in a new window.

Similarly, trade mark attorneys are legallyqualified in trade mark, design and copyrightissues. They are represented professionallyby the Institute of Trade Mark Attorneys

(ITMA). Find advice on trade markattorneys on the ITMA website - Opens ina new window.

Protecting your ideas overseas

IP protection is territorial, which means ifyou have registered protection in the UK itapplies only within the UK. However, themajority of countries have similar lawsrelating to intellectual property and you canseek protection in other countries. See our

guide on intellectual property protectionoverseas.

Intellectual property rights andyour employees

It's likely that your employees will creatework that carries intellectual property (IP)rights.

This does not just apply to those who aredeveloping inventions in a research anddevelopment department. Staff could alsobe creating potentially valuable IP if, forexample, they're compiling databases,writing marketing material or producingtraining brochures.

The good news is that rights to IP createdby employees generally belong to the

employer.

Showing that a member of staff has anemployment contract is usually enough toprove you own all IP rights. But it's a goodidea to state the position explicitly inseparate clauses of employees' contracts.

This prevents any confusion arising -perhaps over work created outside officehours or as a by-product of specified work.

You may also want to ask employees torecord information relating to any innovativework they do in a logbook.

Unless otherwise explicitly stated in theircontracts, employees will retain the moralrights to any literary, dramatic, musical orartistic works created as part of theiremployment.

This means they can object to distortions oftheir work and retain the right to be identifiedas its author, but have no economic rightsover it. If you want to obtain the moral rightsin your employees' work you must state thisclearly in employment contracts.

Your employees may also have access tosensitive information about IP. It can makegood business sense to includeconfidentiality clauses in your employment


http://www.ipo.gov.uk/crime-benefit.htmhttp://www.ipo.gov.uk/crime-benefit.htmhttp://www.ipo.gov.uk/crime-benefit.htmhttp://www.ipo.gov.uk/crime-benefit.htmhttp://www.cipa.org.uk/http://www.cipa.org.uk/http://www.cipa.org.uk/http://www.cipa.org.uk/http://www.itma.org.uk/intro/index.htmhttp://www.itma.org.uk/intro/index.htmhttp://www.itma.org.uk/intro/index.htmhttp://www.businesslink.gov.uk/bdotg/action/layer?topicId=1073948358&site=101&r.s=e&r.lc=enhttp://www.businesslink.gov.uk/bdotg/action/layer?topicId=1073948358&site=101&r.s=e&r.lc=enhttp://www.businesslink.gov.uk/bdotg/action/layer?topicId=1073948358&site=101&r.s=e&r.lc=enhttp://www.businesslink.gov.uk/bdotg/action/layer?topicId=1073948358&site=101&r.s=e&r.lc=enhttp://www.itma.org.uk/intro/index.htmhttp://www.itma.org.uk/intro/index.htmhttp://www.itma.org.uk/intro/index.htmhttp://www.cipa.org.uk/http://www.cipa.org.uk/http://www.cipa.org.uk/http://www.cipa.org.uk/http://www.ipo.gov.uk/crime-benefit.htmhttp://www.ipo.gov.uk/crime-benefit.htmhttp://www.ipo.gov.uk/crime-benefit.htmhttp://www.ipo.gov.uk/crime-benefit.htm


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contracts. See our guide on theemployment contract.

You may want to seek legal advice whendrawing up contracts. You can search for asolicitor on the Law Society website -Opens in a new window.

Intellectual property and freelance

contractorsYou should take steps to ensure yourbusiness owns any intellectual property (IP)rights in work created for you by freelancecontractors.

You have an implied legal right to use IPrights in work you have commissioned fromfreelance contractors for the purpose it wasoriginally intended for.

However, unless you take steps to assignthe IP rights to your business you willneither own them nor be able to makeadditional use of them.

For example, unless you take adequateprecautions you could find your businesswould be unable to use a successfuladvertising slogan across all its promotionalmaterial if the phrase in question was coinedby an agency that agreed to produce the

slogan for a one-off newspaper campaignonly.

You should therefore set out, in a writtenagreement, who will own, control and usethe IP rights of all work created before acontractor produces anything for yourbusiness.

A clause assigning moral rights to yourbusiness could also be beneficial. Unless

you do this, your contractors will retain theright to object to distortions of their work aswell as to be identified as the author.

Remember that IP rights may reside inpromotional material, bespoke software -such as databases and website contentmanagement systems - and other creativework which may be undertaken by freelancecontractors.

You may want to seek legal advice whendrawing up agreements with contractors.You can search for a solicitor on the LawSociety website - Opens in a newwindow.

Prevent intellectual propertyinfringement

If your ideas get into the wrong hands

before you have taken action to protectthem, you could find your intellectualproperty (IP) rights seriously compromised -or even lose them entirely. It's therefore veryimportant that all your business' material inwhich there are IP rights is kept secure.

This is essential before IP protection hasbeen applied for - or registered - as anydisclosure could jeopardise your claim tooriginality. For certain creative works it will

also be important afterwards becauseenforcing your intellectual property rightsagainst infringers can be time-consumingand expensive.

Basic steps you can take to avoid IPinfringement include:

asking employees - and third partiesto whom key information must bedisclosed - to sign confidentiality


http://www.businesslink.gov.uk/bdotg/action/layer?topicId=1073971494&site=101&r.s=e&r.lc=enhttp://www.businesslink.gov.uk/bdotg/action/layer?topicId=1073971494&site=101&r.s=e&r.lc=enhttp://www.lawsociety.org.uk/choosingandusing/findasolicitor.lawhttp://www.lawsociety.org.uk/choosingandusing/findasolicitor.lawhttp://www.lawsociety.org.uk/choosingandusing/findasolicitor.lawhttp://www.lawsociety.org.uk/choosingandusing/findasolicitor.lawhttp://www.lawsociety.org.uk/choosingandusing/findasolicitor.lawhttp://www.lawsociety.org.uk/choosingandusing/findasolicitor.lawhttp://www.lawsociety.org.uk/choosingandusing/findasolicitor.lawhttp://www.lawsociety.org.uk/choosingandusing/findasolicitor.lawhttp://www.lawsociety.org.uk/choosingandusing/findasolicitor.lawhttp://www.lawsociety.org.uk/choosingandusing/findasolicitor.lawhttp://www.businesslink.gov.uk/bdotg/action/layer?topicId=1073971494&site=101&r.s=e&r.lc=enhttp://www.businesslink.gov.uk/bdotg/action/layer?topicId=1073971494&site=101&r.s=e&r.lc=en


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agreements keeping important hard-copy

information locked up

Take special care when trying to sell orlicense an invention, idea or design to anagent, manufacturer or potential partner,even if registration is complete. Apart from aconfidentiality agreement, if you have notprotected your idea by applying for a patent,trade mark or design, post a dated copy of

your idea to yourself using recorded deliveryand lodge the unopened envelope andpostal record with your bank or solicitor.

Information stored electronically, particularlyon computers connected to the internet,needs protection from both lapses insecurity and IT disasters.

You should:

ensure sensitive information is kepton password-protected areas of yoursystem

install anti-virus software and keep itup to date

install firewalls to preventunauthorised users from hacking intoyour system and update themregularly

back up your work and ensureback-ups are stored securely

protect your system against powersurges and failures

For further information, see our guide onkeeping your systems and data secure.

Protecting your business nameand domain name

Your business name is the most basic

intellectual property asset you have. It couldalso be the most important. Your business'reputation is tied up with its name so youdon't want somebody else trading on it.

If the name of your business is distinctive tothe goods and services you provide, youmay be able to take legal action againstanyone using it in the same or a similar field.

You will get additional legal protection if youregister the name as a trade mark. Forfurther information, see our guide on how touse trade marks in your business.

Protect your name on the internet

If you want to set up a website for yourbusiness you will probably want to register adomain name incorporating your businessname, or any trade marks you have.

To register a domain name you first need tocheck whether it's available. You cansearch domain names ending in .uk onthe Nominet website - Opens in a newwindow. If you want a domain name endingin .com, you can search domain namesending in .com on the Verisign website -Opens in a new window. Many webhosting companies offer domain searchingand registration facilities.

However, having a trade mark doesn't giveyou an automatic right to a domain nameincorporating your trade mark. Someonemay have already registered the domainname you want for the same or differentgoods and services.

But you may be able to take legal action ifyou think:

someone is using a domain name to


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pass off their goods and services asyours

someone has taken out your trademark as a domain name just to sell itback to you

For further information, read the guide totrade marks and domain names on theIntellectual Property Office website -Opens in a new window.

Respect other people's intellectualproperty

You must make sure you respect otherpeople's intellectual property (IP). If youinfringe it the owner of the IP can take legalaction against you. This IP law infringementcan result in injunctions against you, alongwith orders to pay high costs and damages.

In some cases, infringers can even be foundguilty of a criminal offence and be given aprison sentence or an unlimited fine.

Intellectual property management -

carrying out searches

It's a good idea to carry out searches tocheck you're not committing IP infringement.

If you're planning to use a sign to distinguish

your business from competitors, you shouldalways carry out a full trade mark search -see our guide on how to use trade marksin your business.

You should also consider checking withCompanies House to ensure that no oneelse is using your proposed trade mark astheir company name. Use our interactivetool to search for an available companyname and trade mark.

Under the Trade Marks (Relative Grounds)Order 2007 the registrar can now register atrade mark that is the same as or similar toan existing trade mark, unless the owner ofthe earlier mark successfully opposes thenew application. However, it is still worthchecking that no one has registered thesame or a similar trade mark before youmake your application.

If you want to make, use, sell or importsomeone's invention, you should carry out afull patent search. You should also do asearch if you're considering applying foryour own patent. See our guide on how toget patent protection for your business.

If you want to make, sell, use or importgoods you should carry out a full designsearch. See our guide on design right andregistration. If you want to use originalcreative work you should find out whether itis covered by copyright. See our guide oncopyright for your business.

Making a mistake and infringing uponsomeone else's rights could be costly, so itis worth obtaining professional help. Youcan get help with your searches from apatent attorney or trade mark attorney.Search for a trade mark attorney on theInstitute of Trade Mark Attorneys (ITMA)website - Opens in a new window.

You can find a patent attorney on theChartered Institute of Patent Attorneys(CIPA) website - Opens in a new window.

Helplines

Intellectual Property Office Central

Enquiry Unit

08459 500 505


http://www.ipo.gov.uk/t-domain.htmhttp://www.ipo.gov.uk/t-domain.htmhttp://www.ipo.gov.uk/t-domain.htmhttp://www.ipo.gov.uk/t-domain.htmhttp://www.businesslink.gov.uk/bdotg/action/layer?topicId=1073939611&site=101&r.s=e&r.lc=enhttp://www.businesslink.gov.uk/bdotg/action/layer?topicId=1073939611&site=101&r.s=e&r.lc=enhttp://online.businesslink.gov.uk/bdotg/action/cntc?site=101&r.s=e&r.lc=enhttp://online.businesslink.gov.uk/bdotg/action/cntc?site=101&r.s=e&r.lc=enhttp://online.businesslink.gov.uk/bdotg/action/cntc?site=101&r.s=e&r.lc=enhttp://www.businesslink.gov.uk/bdotg/action/layer?topicId=1073938226&site=101&r.s=e&r.lc=enhttp://www.businesslink.gov.uk/bdotg/action/layer?topicId=1073940183&site=101&r.s=e&r.lc=enhttp://www.businesslink.gov.uk/bdotg/action/layer?topicId=1073940183&site=101&r.s=e&r.lc=enhttp://www.businesslink.gov.uk/bdotg/action/layer?topicId=1073942615&site=101&r.s=e&r.lc=enhttp://www.itma.org.uk/http://www.itma.org.uk/http://www.itma.org.uk/http://www.cipa.org.uk/members/directory/default.asp?dir=2http://www.cipa.org.uk/members/directory/default.asp?dir=2http://www.cipa.org.uk/members/directory/default.asp?dir=2http://www.cipa.org.uk/members/directory/default.asp?dir=2http://www.cipa.org.uk/members/directory/default.asp?dir=2http://www.cipa.org.uk/members/directory/default.asp?dir=2http://www.itma.org.uk/http://www.itma.org.uk/http://www.itma.org.uk/http://www.businesslink.gov.uk/bdotg/action/layer?topicId=1073942615&site=101&r.s=e&r.lc=enhttp://www.businesslink.gov.uk/bdotg/action/layer?topicId=1073940183&site=101&r.s=e&r.lc=enhttp://www.businesslink.gov.uk/bdotg/action/layer?topicId=1073940183&site=101&r.s=e&r.lc=enhttp://www.businesslink.gov.uk/bdotg/action/layer?topicId=1073938226&site=101&r.s=e&r.lc=enhttp://online.businesslink.gov.uk/bdotg/action/cntc?site=101&r.s=e&r.lc=enhttp://online.businesslink.gov.uk/bdotg/action/cntc?site=101&r.s=e&r.lc=enhttp://online.businesslink.gov.uk/bdotg/action/cntc?site=101&r.s=e&r.lc=enhttp://www.businesslink.gov.uk/bdotg/action/layer?topicId=1073939611&site=101&r.s=e&r.lc=enhttp://www.businesslink.gov.uk/bdotg/action/layer?topicId=1073939611&site=101&r.s=e&r.lc=enhttp://www.ipo.gov.uk/t-domain.htmhttp://www.ipo.gov.uk/t-domain.htmhttp://www.ipo.gov.uk/t-domain.htmhttp://www.ipo.gov.uk/t-domain.htm


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Related guides onbusinesslink.gov.uk

Manage your personal list of starting-uptasks with our Business start-uporganiser | Get patent protection for yourbusiness | Copyright for your business |Use trade marks in your business |Design right and registration | Intellectualproperty protection overseas | Search forexisting trade marks on the IntellectualProperty Office website | Trade markregistration on the Intellectual PropertyOffice website | Non-disclosureagreements | The employment contract |Introduce an internet and email policy |Using contractors and subcontractors |Keeping your systems and data secure |Privacy and data protection in directmarketing | Security and crimeprevention | Use our interactive tool to

search for an available company nameand trade mark | Choose the right namefor your business |

Related web sites you might finduseful

IP advice on the Intellectual PropertyOffice website - Opens in a new window

IP healthcheck tool on the IntellectualProperty Office website (registrationrequired) - Opens in a new window

Patent search service information on theBritish Library website - Opens in a newwindow

Patent rules explained on the IntellectualProperty Office (IPO) website - Opens ina new window

Trade mark guidance on the IntellectualProperty Office website - Opens in a newwindow

Design database on the IntellectualProperty Office website - Opens in a newwindow

Copyright information on the IntellectualProperty Office website - Opens in a new

window

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Introduction

E-commerce Regulations

Tips for complying with the E-commerceRegulations

Regulations applying to telephone and faxmarketing

Privacy and Electronic CommunicationsRegulations

Tips for complying with the Privacy andElectronic Communications Regulations

Distance Selling Regulations

Provision of Services Regulations




Home > IT & e-commerce > E-commerce >E-commerce and the law

Introduction

E-commerce is all about selling goods andservices via the internet. The trader andcustomer are not face to face at any point,with business conducted remotely,regardless of location. This can pose anumber of challenges to the formation andenforcement of contracts.

A number of legislative initiatives affectbusiness conducted online - they can becomplex and change regularly.

As far as e-commerce transactions areconcerned, the legislation is primarilyintended to ensure that online contracts arelegally binding.

The ways in which electronic marketing canbe undertaken to promote the services of

e-commerce providers are also regulated.

This guide introduces you to the variousregulations and provides practical advice onhow to ensure that you comply with yourlegal requirements. However, it is not asubstitute for professional legal advice.

E-commerce Regulations

The E-commerce Regulations came intoforce in August 2002. They implement theEuropean E-Commerce Directive into UKlaw and one of their main aims is to ensurethat electronic contracts are legally bindingand enforceable throughout Europe.

The Regulations apply to businesses that:

sell goods or services to businessesor consumers on the internet, or by

E-commerce and the law



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email or Standard MessagingService (SMS) ie text messages

advertise on the internet, or by emailor SMS

convey or store electronic content forcustomers, or provide access to acommunications network

They do not cover direct marketing byphone or fax.

Information requirements

The E-commerce Regulations identifyspecific information about your business thatyou must provide to recipients of onlineservices, and set down guidelines regardingadvertising and promotions.

Contracting online

If you form a contract online by electronicmeans, your customer should be able to

print and store a copy of the terms andconditions. To find out about whatinformation you must give the customer andother practical advice on how to comply, seethe page in this guide on tips forcomplying with the E-commerceRegulations.

Advertising

If you intend to advertise on the internet, orby email or SMS, the Regulations stipulatethat "commercial communications" must beclearly recognisable as such. They mustclearly identify the person on whose behalfthe marketing communication is sent,together with any promotional offer.

The Regulations also cover "unsolicitedcommercial communications", commonlyreferred to as spam. They require that thesecommunications are identifiable from thesubject line of the email, without the need to

read the rest of the message. SMSmessages are not covered for thesepurposes.

Tips for complying with theE-commerce Regulations

To comply with the general informationrequirements of the E-commerceRegulations 2002 you must give recipients

of your online services:

your business' name, geographicaddress and other contact detailsincluding your email address

details of any publicly availableregister in which you are entered,together with your registrationnumber or equivalent

the particulars of the supervisorybody if the service is subject to an

authorisation scheme details of any professional body withwhich you are registered

your VAT registration number

If your website refers to prices, these mustbe clear and indicate whether they includetax and delivery costs.

You must also ensure your websitecomplies with part of the Companies Act

2006. From 1 January 2007 all companies inthe UK must clearly state the companyregistration number, place of registration,registered office address and, if thecompany is being wound up, that fact, on allof their websites. A common place to putthis information is in the 'About us' or 'Legalinfo' page of the site - it does not have toappear on every page. This rule also appliesto any electronic communications sent outby your company, such as emails.


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How to comply when contracting online

If your business forms contracts online youmust provide your customers withinformation about:

all technical steps required toconclude the contract, eg 'click thisbox'

whether the concluded contract willbe filed by you and whether it will be

accessible the languages offered for the

conclusion of the contract any relevant codes of conduct to

which you subscribe, and informationon how these can be consultedelectronically

You must make sure that your websiteallows customers to go back and correct anymistakes made in their order before the

order is placed.

Once a customer has placed an orderelectronically, you must acknowledgereceipt without undue delay.

Regulations applying to telephoneand fax marketing

Businesses frequently promote their

services via telephone and fax. There are anumber of regulations that apply to this areaand it is important that your business isaware of them. This will ensure that you areacting legally if you undertake a marketingcampaign using these media.

The Telecommunications (Data Protectionand Privacy) Regulations regulated directmarketing by telephone and fax. Both theTelephone Preference Service (TPS) and

the Fax Preference Service (FPS) wereestablished as a result of these regulationsand are monitored by the InformationCommissioner. These regulations weresuperseded by the Privacy and ElectronicCommunications Regulations 2003 inDecember 2003. For more information, seethe page in this guide on the Privacy andElectronic Communications Regulations.

TPS and CTPS

Initially the regulations only gave individualsthe right to opt out of direct marketing byregistering with the TPS.

However, in June 2004 the CorporateTelephone Preference Service (CTPS) waslaunched. This is the central opt-out registerthat enables corporate subscribers toregister their wishes not to receiveunsolicited sales and marketing telephonecalls to any of their organisation's telephonenumbers.

A corporate subscriber includes corporatebodies such as a limited company in the UK,a limited liability partnership in England,Wales and Northern Ireland, or anypartnership in Scotland. It also includesschools, government departments andagencies, hospitals, public limitedcompanies and other public bodies.

FPS

The FPS includes a requirement to obtainindividual consent prior to direct marketingby fax. It also offers an 'opt-out' forcorporate bodies who register with the FPS.

So, if you are already engaged in, orplanning to undertake direct marketing viaphone or fax then you must make regularchecks with the TPS, CTPS and FPS, or risk


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committing an offence.

Privacy and ElectronicCommunications Regulations

E-marketing activities are regulated by thePrivacy and Electronic CommunicationsRegulations that came into force inDecember 2003. The Privacy and Electronic

Communications Regulations supersededthe Telecommunications (Data Protectionand Privacy) Regulations. The newregulations include additional rules whichlegislate against unsolicited emails orStandard Messaging Service (SMS) ie textmessages, commonly referred to as spam.

They prohibit sending direct marketingcommunications by email where the identityof the person who sent it is disguised orconcealed. They also prohibit marketingemails that do not provide the recipient witha valid address they can use to requestsuch communications cease.

Addressing the problem of spam

The Privacy and Electronic CommunicationsRegulations require that an individual'sconsent is obtained prior to sending themunsolicited advertising by email unless theyhave already 'opted-in' or expressly

consented to the receipt of such emails.

Existing customers can be sent unsolicitedadvertising, on the condition that the directmarketing relates to products and servicessimilar to those they have alreadypurchased. However, the recipient shouldalso be given the option to 'opt-out' ofreceiving such emails.

Under the Privacy and Electronic

Communications Regulations, corporatebodies may also opt-out of receiving suchemails, but there is no 'opt-in' requirement.

It is important to remember that it is also arequirement of the Regulations thatunsolicited advertising emails must containboth the identity and the contact details ofthe sender.

Cookies

The Privacy and Electronic CommunicationsRegulations also cover the use of 'cookies'.These are files downloaded from a webserver to the website visitor's computer.They can provide the owner of the websitewith personal details about the visitor suchas what purchases were made from the site,what files were downloaded and theinformation viewed.

The aim of the regulations is to allow thevisitor to choose whether they want cookieson their computer. In practice this is likely toinvolve providing them with informationabout cookies, and how to disable themshould they wish to do so.

Tips for complying with the Privacyand Electronic Communications

RegulationsThe Privacy and Electronic CommunicationsRegulations are enforced by the InformationCommissioner's Office (ICO). If theInformation Commissioner finds a businessto be in breach of the Regulations anInformation Notice requesting furtherinformation, or an Enforcement Notice willbe issued. A fine may be imposed forbreach of an Enforcement Notice. Criminalsanctions may also be imposed.




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All of these actions can damage thereputation of your business and adverselyaffect the goodwill of your customers. So, ifyou use electronic communications as amarketing tool, you should ensure that eachcommunication is clearly identifiable asrelating to the advertising or marketing of aproduct.

This means that any commercial

communication sent by email or textmessage should be clearly identifiable assuch through its header - other requiredinformation can then be set out in the mainbody of the communication.

Electronic communications as a marketingtool should also:

identify the person on whose behalf itis sent

clearly identify any promotional offer- including any discount, premium orgift - and any conditions that must bemet to qualify for it (these must beeasily accessible, clear andunambiguous)

provide the recipient with 'opt-out'rights

You should obtain prior individual consentfrom your customer through them 'opting in',though there are some limited exceptions forexisting customers.

Distance Selling Regulations

The Distance Selling Regulations 2000 aredesigned to protect customers who are notphysically present with the seller at the timeof purchase. They cover purchases madevia email and the internet, together withtelephone and mail order.

They only apply to transactions betweenbusinesses and consumers (individualsacting outside the course of their business)and do not include business-to-businesscontracts and auctions.

Under the Regulations, consumers have theright to:

details in writing about the supplier

and the terms of the transaction written confirmation of their orders further information, including a notice

of cancellation rights, the complaintsprocedure, after-sales services andguarantees

delivery within 30 days unlessotherwise agreed

Consumers have a cooling-off period ofseven working days in which to cancel the

contract, starting from when the goods arereceived, without having to give a reason. Ifno details of the cooling-off period havebeen given by the supplier to the consumer,it is extended to three months.

The right to withdraw can be exercised bythe consumer even after the goods havebeen delivered, or the services have beenprovided. The consumer is entitled toreceive a full refund for a cancelled contractwithin 30 days.

There are some exceptions to these rightsof cancellation, including:

contracts for the provision ofaccommodation, transport, cateringor leisure services, where theseservices are supplied on a specificdate or for a specific period

the sale of customised goods orperishable goods




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sealed audio or video recordings, orsoftware, which has been opened

sales by auction

Provision of Services Regulations

The Provision of Services Regulations2009 removed many of the barriers to theinternational trade in services with the aim ofmaking it easier for individuals andbusinesses to provide services to, or from,anywhere in the European Economic Area(EEA).

UK and EEA authorities can no longer makethe access to, or the carrying out of, aservice subject to an authorisation schemeor requirement unless it can be objectively

justified. Businesses can also access a'Point of Single Contact' in each EEAcountry where they can securely apply for

any authorisations they require in order totrade in that country.

Under the regulations almost all serviceproviders offering services in the UK(including those from other EEA countries)are required to provide certain information tothe recipients of their services. For example,you must provide:

your business name, legal status and

form your business and email address details of any UK or EEA

authorisation schemes orprofessional and regulatory bodiesyou are regulated by or must belongto (if applicable)

details of any trade or other similarpublic registration (if applicable)

your VAT number, if the service issubject to VAT

details of any terms, conditions and

after-sales guarantees the price (where it is pre-determined)

and details of the service to beprovided

details of any professional indemnityinsurance and contact details for theinsurance company (if applicable)

If requested, you may be required to providefurther information such as information onyour complaints and dispute resolutions

procedures. For detailed information on theprovisions, download a guide to theProvision of Services Regulations fromthe Department for Business, Innovation& Skills (BIS) website (PDF, 814K) -Opens in a new window.

You must also make sure you do notdiscriminate on the grounds of nationality orlocation when providing services, unless itcan be justified by 'objective criteria'. For

example, increased costs due to the extradistance involved when providing a serviceinternationally.


Manage your personal list of starting-uptasks with our Business start-uporganiser | Planning for e-commerce |Trading online - understandinge-commerce contracts | Create an onlineshop | Privacy and data protection indirect marketing | Develop ane-marketing plan | Generate businessfrom your e-marketing plan | Manageyour personal list of starting-up taskswith our Business start-up organiser |



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Introduction

Formation of online contracts

Essential terms of a contract

Issues to consider when selling online

Protecting consumers

Complying with the Distance SellingRegulations

Resolving legal disputes




Home > IT & e-commerce > Legal issues >Trading online - understanding e-commercecontracts

Introduction

In UK law certain elements must be presentfor contracts to be legally binding. Theseelements are an offer, an acceptance,consideration and an intention to createlegal relations.

Although trading over the internet is oftenseen as a more informal way of doing

business, the same rules apply as with theformation of other types of contract. Theissue can be confused by the fact that ine-commerce the trader and customer arenever face to face and are sometimes indifferent countries.

Recent e-commerce regulations areintended to ensure that electronic contractsare binding and enforceable throughoutEurope.

This guide will explain the essential terms ofonline contracts and provide advice on themain issues to consider when selling goodsonline. However, it is not a substitute forprofessional legal advice.

Formation of online contracts

If you allow customers to place orders

online, you should ensure that the terms andconditions of the contract are set out on thewebsite and can be downloaded. Evenwhere the website is simply used as anadvertising tool, it is still advisable to clearlyset out your terms and conditions.

Are online contracts legally binding?

Contracts that are formed via the internetare legally binding and enforceableproviding that the following conditions are

Trading online - understanding e-commerce contracts



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satisfied:

offer - one party must contract withthe other, eg offer to buy goods

acceptance - the other party mustexpressly accept the offer

intention to create legal relations -both parties to the contract mustintend the contract to be legallybinding

consideration - in England andNorthern Ireland there should besome consideration being exchangedbetween the parties, eg money paidfor goods

You should note that there is no generalrequirement for contracts to be in writing orfor the parties to actually sign a contract.

When is the contract formed?

Generally an advertisement on a websitewill not constitute a formal offer to contract(although care should still be taken whendesigning an advertisement). A contractwould be formed once a customer makes anoffer by placing an order and the supplieraccepts this offer.

The terms and conditions about when thecontract is formed should be clear - forexample when the supplier sends back a

confirmation email. This will help to avoidsituations where you are unable to meet thecustomer's expectations for any reason, ifcommercial circumstances change.

However, automatically generatedconfirmations of orders can potentiallycause confusion about when the contract isformed. So you should ensure that you wordthem in such a way that they are not legallyan acceptance of a customer's offer.

Essential terms of a contract

Any terms and conditions that you useshould be tailored to the needs of yourbusiness. Generally any contract for goodsor services should address:

the description of goods or servicesbeing supplied

the price and payment structure

the delivery details, including thetime, place and who is responsiblefor delivery

the rights of either party to terminatethe contract

limitation of liability provisions confidentiality provisions, particularly

if the contract is of a sensitive nature confirmation of which country's laws

applies to the contract

Consumer protection legislation

Consumer protection legislation, includingthe Unfair Terms and Consumer ContractsRegulations 1999 and the ConsumerProtection from Unfair Trading Regulations2008, extends to cover goods sold over theinternet. Find out about unfair contracts inour guide to buyers' terms and conditionsand unfair contract terms.

Under the Consumer Protection from Unfair

Trading Regulations 2008, it's an offence togive consumers misleading price informationabout goods, services, immoveableproperty, rights and obligations. Downloadthe guide on pricing practices from theDepartment for Business, Innovation &Skills (BIS) website (PDF, 134K) - Opensin a new window.

Limitation of liability clauses

Clauses limiting one or both parties' liability


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are usually the most contentious. There arerestrictions on the ability of businesses tolimit their liability. Generally, clauses limitingliability need to be reasonable in order to beenforceable.

There are stricter rules for businessesdealing with consumers, so that it is moredifficult for businesses to impose exclusionof liability clauses.

Dealing with consumers and business

customers

For some businesses dealing with bothconsumers and other business customers, itis usually better to have two sets of termsand conditions - one to use in connectionwith sales to consumers and the other fordealing with other businesses. Businesscustomers also have similar protections toconsumers from misleading advertising

under the Business Protection fromMisleading Marketing Regulations 2008.

Issues to consider when sellingonline

There is a range of legislation that you areobliged to comply with when transactingonline. The rules are designed to protect thepurchasers' rights and to make it clear when

a contract between buyer and sellerbecomes binding.

Contract formation - ensure thatterms and conditions areincorporated at the time the contractis concluded. Click-wrap agreements- made by pointing and clickingonline to indicate acceptance - are agood idea.

Distance Selling Regulations - youshould ensure that you comply with

this legislation, which covers allcontracts conducted online withconsumers. See the page in thisguide on complying with theDistance Selling Regulations.

Data Protection Act - you shouldcomply with this legislation, whichimposes conditions on both dataprocessors and controllers.

Intellectual property - issues suchas copyright and trade marks should

be considered, not just for itemsdisplayed on your site, but also withinany metatags.

Consumer protection legislation -legislation such as the UnfairContract Terms Act 1977, the UnfairTerms and Consumer ContractsRegulations 1999 and the ConsumerProtection from Unfair TradingRegulations 2008 apply equally togoods sold over the internet. Someof this protection is also extended to

business purchasers under theBusiness Protection from MisleadingMarketing Regulations 2008.

Security - be aware that sellingonline will necessitate the passing ofsensitive data and paymentinstructions. An online vendor couldbe liable for breaches of security ontheir site.

Exclusions on restricted goods -some types of goods which are legalto sell in one jurisdiction may beprohibited in other jurisdictions.

Specific regulation - specificindustries may be regulated. This isparticularly the case withpremium-rate internet sites or thoseaimed at children. There may also beimplications as a consequence ofcompetition law. Check eachpotential market sector carefully.

Access agreement - it is importantto have terms and conditions


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governing the use of your website.These must be set out prior to thecustomer proceeding to purchase -commonly the customer must clickon an 'I agree' button to proceed,indicating acceptance of the termsand conditions.

Protecting consumers

Consumers in the European Union (EU)benefit from an increasing range of laws andregulations concerning sales and servicescontracted face to face or remotely.

Selling goods to consumers

The EU has established a minimum level ofconsumer protection for the purchase ofgoods in the single market.

This legislation stipulates that the supplier

must sell goods that comply with theirdescription, match the quality of samples ormodels, have the same quality andperformance characteristics of such goods,and are fit for any purpose accepted by thesupplier.

The consumer has two years from thedelivery date to seek redress for faultsdemonstrably present at the time of delivery,in goods which should have lasted for this

length of time.

Distance selling

Distance Selling Regulations apply tocontracts concluded when the supplier andpurchaser are not physically present in thesame place at the same time. This coversemail and internet contracts, as well ascontracts resulting from pressadvertisements, mail order catalogues orthose made by telephone.

The legislation gives the consumer acooling-off period of seven working days tocancel the contract. See our guide one-commerce and the law.

Financial services

Retail financial services sold at a distanceare regulated by the Distance SellingDirective for Financial Services.

'Financial services' are defined as banking,insurance, investment or payment services.

Consumer purchasers must receiveinformation about the service. They have acooling-off period of up to 30 days,depending upon the individual memberstate's laws, according to the financialservice.

The right of withdrawal does not extend tofinancial services which could involvespeculation, such as foreign exchange,collective investment schemes, transferablesecurities, futures, options, and exchangeand interest rate instruments.

Complying with the DistanceSelling Regulations

To comply with the Distance SellingRegulations you must provide consumerswith the following information before theyenter the contract:

supplier name and, where paymentis required in advance, the supplier'saddress

a description of the maincharacteristics of the goods orservices

the price - including all taxes


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delivery costs, where applicable arrangements for payment, delivery

and performance the right to cancel within a certain

time period how long the offer or price remain

valid the minimum duration of the contract,

where the contract is to be performedpermanently or recurrently

whether the supplier will provide

substitute goods and services if theordered goods are unavailable, and ifthe consumer then cancels, whetherthe supplier will pay for the return ofthe substitute goods

Regulation 8 of the Distance SellingRegulations also requires certaininformation to be provided to the customereither before the conclusion of the contractor, 'thereafter, in good time and in any event- (i) during the performance of the contractin the case of services and (ii) at the latestat the time of delivery where goods not fordelivery to third parties are concerned.'

The customer must also be provided with:

information about the conditions andprocedures for cancelling the order

the address of the supplier to whomthe customer may addresscomplaints

information about any after-salesservice and guarantees

the conditions for exercising thecontractual right to cancel a contractwhen the contract is indefinite orlasts for longer than one year

This information must be provided in writing,or in another durable medium which isavailable and accessible to the consumer.

Resolving legal disputes

Once an online contract is madedisagreements can arise about the terms ofthe contract or whether obligations havebeen properly performed.

This guide gives an overview of the issuesthat will be important. However, in the eventof a legal dispute you should seek legal

advice. See our guide on how to chooseand manage a solicitor.

If there is an international element, toresolve the dispute you must determinewhat law applies and which country's courtshave jurisdiction. There are significantexceptions in favour of consumers.

European Union (EU) jurisdiction

In the European Economic Area, parties canchoose the governing law and the forum fordispute resolution - eg courts of a particularcountry, arbitration etc. The RomeConvention rules decide which law applies,although certain mandatory rules in apurchaser's country will always apply, forexample for financial services or consumerprotection.

Similarly, in the EU jurisdiction of disputes is

determined by the Brussels Regulation. Ifthe parties have not agreed jurisdiction, thebasic rule is that a defendant may be suedwhere they live, or where the contractualobligation was performed.

Consumer protection laws

Consumers may invoke consumerprotection laws either in their home

jurisdiction or the supplier's jurisdiction, butalmost always may only be sued in their


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home jurisdiction. Therefore onlinebusinesses dealing with consumers must beprepared to comply with consumerprotection regulations in each market towhich they sell.

Reducing uncertainty

To reduce uncertainty in the event of adispute, e-commerce providers shouldspecify in their terms and conditions the

governing law and jurisdiction for disputes.English law is the popular choice forinternational trade and is often chosen byparties with no other connection to the UK.


Assess and minimise the IT risks facingyour business with our IT risk

assessment tool | E-commerce and thelaw | Create an online shop | Acceptingonline payments | Planning fore-commerce | E-commerce and the law |Create an online shop | Planning fore-commerce | Buyers' terms andconditions and unfair contract terms |


Online selling regulations guidance onthe Office of Fair Trading website -Opens in a new window

Find updates on legal issues relating toonline contracts and e-commerce ingeneral on the Eversheds website -Opens in a new window

Download a pricing code of practice from

the BIS website (PDF, 134K) - Opens in anew window

Download a Distance Selling Regulationsguide from the Office of Fair Tradingwebsite (PDF, 127K) - Opens in a newwindow

Distance Selling Regulations summaryon the Department for Business,

Innovation & Skills website - Opens in anew window

Distance selling of financial servicesdirective on the euroITcounsel website -Opens in a new window

Model contracts on the Centre forEffective Dispute Resolution website -Opens in a new window


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