Archive for May, 2011

In our previous post we discussed how network data breaches can lead to cyber liability. In this post we explore liability that firms face from just having a presence on the web. Whether you are actually doing “business” with your web site is irrelevant. As this liability is similar to those found in the publishing industry they are frequently referred to as publishing or media exposures. Additionally, social media tools such as Facebook, blogs and Twitter can also expose a company to law suits to defend themselves from claims of injury from copyright or trademark infringement, defamation/libel or violation of privacy. We will delve into this more in a future post but be warned that a standard general liability policy will not cover any of these publishing claims if they stem from your use of the internet or web site to broadcast your message.

Most of these exposures can be avoided by having clear guidelines for your web developers and bloggers that mainly rely on common sense. First, you should always assume that content you obtain or link to on or from another web site is protected and always ask permission from the author to use his or her material before publishing unless you are certain that your use will be considered a fair use. Next, if you are notified that you are violating a copyright in most cases you simple need to take down the offending material. However, lately a new “business model” is emerging that attempts to profit from copyright violations by suing first and demanding large sums of money that typically are negotiated lower. One firm has even gone so far as to demand the ownership of the offender’s domain name be included as part of the settlement.

These “shadowy” firms are sometimes referred to as “Copyright or Patent Trolls” as they troll the net looking for clear cut and even not so clear cut violations and then they purchase the settlement rights from the injured party and pursue a settlement that they will earn their “profit” from. There are even “Do It Yourself” and “How To” web sites that outline how to sue someone for stealing content if you don’t want to use the services of a copyright troll. Clearly the legal landscape is changing as content providers are now providing warnings to content thieves on the web site.
(See http://www.denverpost.com/ci_16594528)

Representations and warranties on your web site regarding product or services that you offer are also sources of potential liability if you don’t exercise care in what you say or warrant as true. I have a client that warranted on their web site that all employees were screened with background checks. When this was later found to be partially untrue because of a theft by an employee the company was fined by a state regulatory agency for violating a state consumer protection statute. They ended up settling with a substantial payment to the state and they also were forced to take down the offending statement.

Another client was sued by a competitor for trademark infringement because their logos were similar and allegedly could cause confusion in the mind of their costumers. The offending company ultimately ended up changing their trademark and logo and ended up spending a considerable sum of money to change all of their marketing material. The take away here is that right or wrong, a company needs to defend themselves against a law suit and infringement of a trademark claims are excluded under most general liability policies. The internet clearly introduces a new risk for a business. While “Buyer beware” is still certainly good advice, the internet adds a new dimension with a new caution…Buyer and Seller beware!

For a good discussion of how to avoid publishing liability refer to this government web site on copyrights. http://www.copyright.gov/help/faq/faq-fairuse.html