The Importance of Intellectual Property Rights Part #3 – Internet Laws

by Jeff Yelton on December 5, 2011

in Business


As the Internet has evolved, inevitably, so have the laws that govern websites and businesses. While many laws that apply to business practices and transactions in the brick and mortar world are also valid for the Internet, the nature of Internet technology has required modification of some laws and new statutes.  

There are new such laws for spam, email marketing, and blogging as well as new tests for existing laws for freedom of speech, trademark infringement, and slander.  

As aVAR, you need to be familiar with the laws that apply to your business and comply with Internet regulations. Violating laws on the Internet can be of greater risk because the nature of the web makes your actions highly visible. 

The Importance of Internet Laws

The law is not perfect in the bricks and mortar world and Internet law is no different. However the nature of law in most legal systems is to improve as cases are brought to court and laws are tried. The internet governing laws have evolved as the technology and needs have changed.

There is a need to protect consumers from fraud and identity theft. These protections encourage a healthy environment that is good for them and businesses including VARs.

There is also a need to protect businesses from fraud, trademark infringement, counterfeit goods, and slander. Some of these laws are in place and will continue to develop as more laws will be introduced.

How Internet Laws Affect Your Business

Advertising and Marketing on the Internet 

[1]The Internet is connecting advertisers and marketers to customers from Boston to Bali with text, interactive graphics, video and audio. If you’re thinking about advertising on the Internet, remember that many of the same rules that apply to other forms of advertising apply to electronic marketing. These rules and guidelines protect businesses and consumers – and help maintain the credibility of the Internet as an advertising medium. The Federal Trade Commission (FTC) has prepared this guide to give you an overview of some of the laws it enforces.

Advertising must tell the truth and not mislead consumers.
All claims must be substantiated.




General Offers and Claims: Products and Services

The Federal Trade Commission Act allows the FTC to act in the interest of all consumers to prevent deceptive and unfair acts or practices. In interpreting Section 5 of the Act, the Commission has determined that a representation, omission or practice is deceptive or unfair if it is likely:

  • to mislead consumers
  • to affect consumers’ behavior or decisions about the product or service.
  • the injury it causes, or is likely to cause, is substantial, not outweighed by other benefits and not reasonably avoidable.

The FTC Act prohibits unfair or deceptive advertising in any medium. That is, advertising must tell the truth and not mislead consumers. A claim can be misleading if relevant information is left out or if the claim implies something that’s not true. For example, a lease advertisement for an automobile that promotes “$0 Down” may be misleading if significant and undisclosed charges are due at lease signing.

In addition, claims must be substantiated, especially when they concern health, safety, or performance. The type of evidence may depend on the product, the claims, and what experts believe necessary. If your ad specifies a certain level of support for a claim – “tests show X” – you must have at least that level of support.

Sellers are responsible for claims they make about their products and services. Third parties – such as advertising agencies or website designers and catalog marketers – also may be liable for making or disseminating deceptive representations if they participate in the preparation or distribution of the advertising, or know about the deceptive claims.

  • Advertising agencies or website designers are responsible for reviewing the information used to substantiate ad claims. They may not simply rely on an advertiser’s assurance that the claims are substantiated. In determining whether an ad agency should be held liable, the FTC looks at the extent of the agency’s participation in the preparation of the challenged ad, and whether the agency knew or should have known that the ad included false or deceptive claims.
  • To protect themselves, catalog marketers should ask for material to back up claims rather than repeat what the manufacturer says about the product. If the manufacturer doesn’t come forward with proof or turns over proof that looks questionable, the catalog marketer should see a yellow “caution light” and proceed appropriately, especially when it comes to extravagant performance claims, health or weight loss promises, or earnings guarantees. In writing ad copy, catalogers should stick to claims that can be supported. Most important, catalog marketers should trust their instincts when a product sounds too good to be true.

Other points to consider:

  • Disclaimers and disclosures must be clear and conspicuous. That is, consumers must be able to notice, read or hear, and understand the information. Still, a disclaimer or disclosure alone usually is not enough to remedy a false or deceptive claim.
  • Demonstrations must show how the product will perform under normal use.
  • Refunds must be made to dissatisfied consumers – if you promised to make them.
  • Advertising directed to children raises special issues. That’s because children may have greater difficulty evaluating advertising claims and understanding the nature of the information you provide. Sellers should take special care not to misrepresent a product or its performance when advertising to children. The Children’s Advertising Review Unit (CARU) of the Council of Better Business Bureaus has published specific guidelines for children’s advertising that you may find helpful.

Protecting Consumers’ Privacy Online
The Internet provides unprecedented opportunities for the collection and sharing of information from and about consumers. But studies show that consumers have very strong concerns about the security and confidentiality of their personal information in the online marketplace. Many consumers also report being wary of engaging in online commerce, in part because they fear that their personal information can be misused.

These consumer concerns present an opportunity for you to build on consumer trust by implementing effective voluntary industry-wide practices to protect consumers’ information privacy. The FTC has held a number of workshops for industry, consumer groups and privacy advocates to explore industry guidelines to protect consumers’ privacy online.

You also need to understand the privacy issues and have a “Privacy Policy” posted on your website. For more information about consumer privacy on the Internet, visit the FTC’s website (

There are four principle fair information practices:

  1. Notify consumers of your website’s private information policy.
  2. Offer consumers a choice about how their personally identifying information is used.
  3. Give access to the information collected about individuals to them.
  4. Take measures to ensure the security of information collected.

Also be aware of the Children’s Online Privacy Protection Act. The law requires websites to obtain verifiable parental consent before collecting, using, or disclosing personal information from anyone under the age of eighteen.

 For more information about Internet laws and please download my ebook “A Var’s Guide to Legal Requirements for small to medium businesses” at


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