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Home E-Commerce Business Owners: Three Legal Terms You Should Know About

E-Commerce Business Owners: Three Legal Terms You Should Know About

23Nov, 2015

Whether you are a new e-commerce business owner or have been running your online business for a while, it’s important to understand a few key legal terms. Knowing these legal terms can help you stay legal and out of trouble.

Why Incorporate?

Incorporation means that your company is a separate legal and financial entity from yourself.  When you incorporate you get a Federal Tax ID. Incorporating will help limit your personal liability so that your personal assets are not at risk for debts incurred by your corporation. For instance, if your incorporated company is a defendant in a law suit and you lost the suit, the winner could not take your personal car, home, property, etc.

Additionally, incorporating your business makes you look more professional and can help with your taxes. Keep in mind that while incorporation protects you in many situations, it does not protect you from any criminal charges by you or the corporation.

Trademark Protection

The trademark act or the Lanham Act is intended to ensure that consumers can correctly identify the sources of goods or services. What is a trademark? A trademark is a word, phrase, symbol or design, or combination of words, phrases, symbols or designs, which identifies and distinguishes the source of particular goods. Just like a trademark a service mark identifies and distinguishes the source of a service rather than a product.

As your domain name is part of your branding is valuable, you should consider trademark registration. Although this can be done later as your revenue increases, it is important to consider it upfront in choosing your domain name or company name.

When deciding if you’ve picked a good name, ask yourself whether a customer would confuse your name with another business. Be sure to not use another one’s trademark because they can sue you to stop your use, including taking the domain name. It’s best to run a trademark search for the names you’re considering.  Keep in mind that as the database can be up to a year behind so few or no results do not mean that you’re in the clear. However, doing a search will lower your risk.

Copyright: Protection for your Content

The owner of a copyright has the exclusive right to copy, modify, distribute, perform and display the work. You do not have to register works to have copyright protection, however if you do register your materials, you preserve the fact that they are yours as of the date of registration. This will help you gain more rights under Copyright law, such as being able to win attorneys’ fees.

When you buy content for your e-commerce site, get a warranty from the seller or licensor stating that the seller owns all the rights in it and agrees to reimburse you if someone else sues you for using the content. Most large, and many small, content providers are willing to do this.

Final note: Readers are cautioned not to rely on this article as legal advice. Contact an attorney for a consultation. The law varies and changes based on jurisdiction and time.

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