Online Business
| Author | Jeffrey Wilson |
| Pages | 1049-1056 |
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At the beginning of the Internet revolution, many proclaimed the World Wide Web would "change everything." Although it was impossible for the Internet to live up to the dizzying expectations and frenzied hype it garnered at its inception, its contribution to the business world cannot be understated. The exponential explosion of the Internet in the mid-1990s spawned an entirely new creature: the online business. Whether one calls the wired business world the dot-coms, the new economy, or e-biz, the Internet has definitely made it easier and relatively inexpensive for these businesses—big or small, new or old, local or international—to reach out to a larger population and customer base.
Because of the ease and economics of the Internet, thousands of brand-new ventures have been created exclusively online and "old economy" businesses have branched out to form online extensions of their "brick-and-mortar" bases. The following projections and facts illustrate this trend.
Forrester Research projects that by 2003, business-to-consumer e-commerce revenues will total $108 billion in the United States while business-to-business revenues will total $1.3 trillion in the United States
International Data Corp. (IDC) projects that business-to-business purchases through e-commerce will total $4.3 trillion by 2005
Jupiter Media projects that there will be 120 million online buyers in the United States by 2005, an increase from 65 million buyers in 2001
Donaldson, Lufkin & Jenrette projects that by 2003, there will be 183 million worldwide online purchasers
Keenan Vision projects that total online purchase revenues will equal $1.4 trillion by 2004
According to IDC, nearly 75% (5 million) of small businesses with PCs are on the Internet; while 2 million small firms maintain their own homepage and Website
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IDC found that 725,000 small companies were actively selling online by 2001
With the influx of thousands of online businesses, legal issues that entrepreneurs and seasoned business executives never had to consider, or could have even imagined, just a few years ago are now crucial to starting and maintaining an online business. Obscure or even nonexistent to the traditional business, issues such as domain names, customer privacy, links, metatags, and digital signatures have become an everyday concern. Further, entirely new rules, statutes, laws, and the fresh application of old laws have been created or modified to fit the landscape of the emerging online business world. At the local, state, federal, and international levels, laws are being debated and passed every day, and these new enactments are being tested regularly in courts of law. The online business must know these latest legal rules and the ramifications of starting and doing business on the Net in order to survive and thrive.
One of the first tasks in starting an online business is to purchase a domain name, such as aol.com, amazon.com, and ebay.com. The top-level domain is the.com,.gov,.cc.,.net, etc., of a web address. The second-level domain can be a company name, trademark, or industry buzzword. Obviously, no two domain names are the same. Over 33,000,000 domain names have already been registered, so finding a unique and unused name may be more difficult than appears at first glance.
The legal problems surrounding the registration of domain names most often involve trademark and service mark violations. Trademarks and service marks are words, names, symbols, or devices used by businesses to identify their products and services. Even if one finds a domain name that has not yet been registered, that does not mean that it will not run afoul of trademark law. Typically, the first to register a domain name is entitled to keep it. However, if one registers a domain name that has been previously registered as a trademark, he or she may be in violation of the Anticybersquatting Consumer Protection Act (ACPA), which created a new cause of action under Section 43(d) of the Lanham Act, 15 U.S.C. ¤ 1125(d). The ACPA contains penalties for bad-faith use of another's trademark of up to $100,000 per domain-name violation. This law applies even if the trademark owner has not registered it as a domain name.
Similarly, if someone has used another person's trademark for a domain name, legal action may be necessary. All domain names registered after January 1, 2000 contain ICANN's (International Corporation for Assigned Names and Numbers) Uniform Domain Name Dispute Resolution Policy (UDNDRP), which requires all such disputes to be determined by an administrative panel. The only remedy under the UDNDRP for the bad faith use of another's trademark is transfer of the domain name to the trademark owner. Even after such a determination, though, one may still seek redress in a court of law.
Sound legal advice is for a new online business to protect its domain name by registering it as a trademark first. A trademark may be obtained electronically at the Patent and Trademark Office web site using the Trademark Electronic Application System. Once individuals obtain trademarks, they may also then want to monitor the Internet for cybersquatters improperly using their trademarks. There are fee-based firms that will monitor usage of your trademark in the United States. Trademark owners may also avoid costs associated with hiring such a firm by doing manual searches for trademarks using search engines. Whois.net will find all domain names that contain the string of words a person's wishes to check and may also provide the registrar's name, address, e-mail address, and other useful information that can be used to begin an investigation as to whether such entity is cybersquatting.
However, the holder of a trademark right is not automatically entitled to the same domain name that uses the trademark. In Strick Corp. v. Strickland (E.D.Pa. Aug. 27, 2001), 162 F.Supp.2d 372, Strick Corp., a provider of transportation equipment and trademark holder of the name, sued a provider of computer consulting services that had registered the domain name Strick.com. Strick Corp. claimed there was blurring and dilution of trademark occurring when Internet searches using "Strick" as a search term encountered the alleged diluter's web page and concluded that the trademark holder had no Internet presence. The federal court found that the use of Strick.com by the computer consulting company did not dilute the trademark and did not violate the Lanham Act or state law. The court determined that any initial confusion that arose from the defendant's
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use of the domain name was not substantial enough to be legally sufficient. The judge also found that there was not "dilution by blurring" because a reasonable consumer would not associate the two uses of the trademark in his or her own mind. The sensible practice to avoid an inevitable lawsuit for using another's trademark in a domain name is first either to hire an attorney to run a trademark search or check with the U. S. Patent and Trademark Office database at www.uspto.gov before registering the domain name.
Through their own analyses or the help of online advertising agencies, online businesses can track users' buying, what they look at, how long they look at it, what the referring site was, what other sites were visited, the time of day they browse, and where they live, not to mention the detailed information the browser supplies voluntarily through registration and purchases. Indeed, the browsing public knows the threat of websites gathering their...
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