Thursday, February 8, 2018

FTC Affiliate Disclosure Requirements & Samples for Blogs, Websites

The FTC Endorsement Guides require any affiliate who uses reviews, rankings or testimonials for product promotion to clearly disclose the fact that they receive compensation for doing so. The FTC usually focuses its attention “on advertisers or their ad agencies and public relations firms,” not so much on individual endorsers such as bloggers. The FTC says it does not generally monitor bloggers but, nevertheless, may take action against a blogger who was reported to the FTC but fails “to make required disclosures despite warnings.” So, it's better to be safe than sorry.

When exactly do you have to disclose?
You have to disclose if you:

- received money or anything of value (discounts, credit, special access, affiliate commissions etc.) to promote a product.

- received the product for free with the expectation that you will review it.

Friday, February 2, 2018

What's the Difference Between Trademark, Patent and Copyright?


Trademark protects the words, phrases and logos used to identify the source of goods or services. Patent protects inventions. Copyright protects literary and artistic works of authorship. We will discuss all three in more detail below.

Trademark is a brand name. You can register your business name, logo, and your product names. For example, McDonald's, the double arched "M" symbol, and Big Mac are all trademarks. Trademark/service mark may include words, names, symbols used, or intended to be used, in commerce to distinguish your goods or services from goods or services of others. The terms “trademark” and “service marks” are often used interchangeably, and both offer the same protections. If you use your trademark or service mark in interstate commerce (you do business with customers in other states or internationally) you can register your mark both at the federal and state level. If you do business exclusively within your state, you can register at the state level.

In US, trademark rights come from actual use in commerce and do not have to be registered to be valid. "Common law" trademark rights can last forever - as long as you continue to use the TM in commerce to indicate the source of services or goods. A trademark registration can also last forever as well - as long as you file specific documents and pay fees at regular intervals.

Wednesday, January 31, 2018

Australia's New Mandatory Data Breach Notification Law

On February 22, the mandatory data breach notification law comes into effect in Australia. It applies to private entities subject to the Australian Privacy Act including entities with an annual turnover of more than $3 million, businesses that provide a health service, disclose personal information as well as federal government agencies and those that contract with them.

Company that suspects it may have suffered a data breach capable of causing "serious harm" to any relevant data subjects will have 30 days to investigate and conclude whether in fact an eligible data breach occurred. The law does not define "serious harm" but we can assume it involves a degree of significant emotional, physical, reputational or financial damage.

The new law requires the notification statement to be prepared as soon as practicable and delivered to the Privacy Commissioner, as well as the individuals to whom the relevant information relates or who are at risk from the breach. If individual notification is not practicable, the statement must be posted on the organisation's website and its content must be publicised. Agencies and organisations can lodge their statement about an eligible data breach to the Commissioner via the Notifiable Data Breach statement — Form. Here is a  flowchart that lists the steps to take following a potential data breach. 

US already has a data breach notification law on books. The GDPR will implement it across the EU in May 2018.

Friday, January 26, 2018

Russia's New Bill on Regulating Cryptocurrencies

On Thursday, the Russian Finance Ministry has published on its official website a new draft law "On Digital Financial Assets." It is a legislative proposal to strictly regulate cryptocurrencies and ICOs. The main points are:

- all trading to be done only via cryptocurrency exchanges that are registered in Russia.

- cryptocurrencies cannot be used as means of payment for goods or services.They can only be converted into money or other digital assets.

- no anonymity.

- smart contracts will be recognized as being legally binding and Initial Coin Offerings (ICOs) will be strictly controlled with only businesses registered in Russia allowed to issue them.

- individual unaccredited investors cannot purchase more than 50,000 rubles ($898) worth of ICO tokens per each issue.

- digital wallets are subject to registration in the real name of their respective owners in accordance with the federal law against money laundering.

Thursday, January 25, 2018

Expanding Overseas: Indonesia

Why Indonesia?

There is a lot of room for growth in Indonesia due to it still being in the early stages of the digital economy implementation. Here is why Indonesia can be an attractive market to expand to:

- The largest economy in Southeast Asia, USD 1 trillion GDP.
- Population 261 million People – 4th largest in the world, 40% of Southeast Asia.
- 173 million mobile phone users, 87% of households.

What entity type?

Representative office or a limited liability company are the two main structures that allow foreign participation. Generally speaking, a representative office is a good temporary solution to “test the waters.” Serious and more permanent solution would be to form a limited liability company, PT PMA.

Monday, January 22, 2018

Expanding Overseas: Legal Issues

The main international business structures are: direct exporting, local sales rep (distributor), branch office, subsidiary company and joint venture. Here are the basic advantages and disadvantages, legal issues of the main forms of doing business overseas.

Direct Exporting

Advantages: Full control over your product. Minimum initial investment. Local tax can be avoided, unless it is a permanent establishment.

Disadvantages: No local presence can result in substandard customer service, hurt competitiveness and expose you to liabilities of which you are not aware of due to lack of understanding of local laws and customs.

Verdict: good way to “test the waters” in the new market and see if your product is in demand. If it is, a more significant local presence is better.

Sunday, January 21, 2018

Alleviating Legal Risks of Dropshipping

Dropshipping has become a popular low-cost entry point to eCommerce for many small businesses. When dropshipper sells a product, dropshipper then buys it from a supplier who sends it directly to the customer. Your warehouse costs are zero and orders can be processed with minimum staff. It sounds like a great model but, with many advantages of dropshipping, there are significant risks. 

Dropshippers often compete on price and sell the same product that they do not themselves produce or even see. Suppose, you dropshipped to the U.S. a cheap toy manufactured in China but the toy causes a child to have rashes all over. Parents will sue you, not the Chinese supplier. That's because they purchased from you, which means they have a contract with you, not the supplier. They don't even know the Chinese supplier exists. Or, let's say you dropshipped products that turned out to be counterfeit or infringing on somebody else's trademark. Unwillingly, you have become a frontman for a factory of fake goods. Rightful IP owner starts sending you aggressive cease and desist letters that threaten to sue.

What to do? To shield dropshipping business from unnecessary liability and other risks:

- Include a disclaimer that consumers have to agree to before they can purchase anything. The disclaimer should state that you are not the manufacturer and that you disclaim all warranties for the products sold. 

- Your website Terms of Use should include the aforementioned disclaimer and more clauses that protect you from unnecessary liability to the maximum extent allowed by law.

- Incorporate, consider offshore jurisdictions, especially if you do not have physical presence in the market you are selling to. If you are selling as an individual sole proprietor, you will be personally liable with your personal assets for any problems that the dropshipped products may cause. If you have a company, customers can only sue that company for up to whatever it's worth (which could be minimal). If that company is incorporated somewhere remote (e.g. the British Virgin Islands), that will discourage potential plaintiffs even more.

- Buy a product liability insurance.

- Have a good dropshipping contract which includes indemnity clause and other guarantees that shift liability away from you.

- Screen suppliers (and products) carefully. Your business reputation is in their hands.

- Adopt a return policy. It can be difficult to get  a supplier to accept a return, although some allow exchanges.

- Consider only selling products with Minimum Advertised Price (MAP) Policy to alleviate downward pressure on pricing from large retailers and have better control of margins. With dropshipping, you can lose bulk purchase discounts, and the shipping costs will be higher. That's because the supplier will have to pack and ship each product individually.

Talk to a competent eCommerce lawyer before you start receiving aggressive cease and desist letters and calls from angry customers. The aforementioned protections are unlikely to protect you completely, especially in jurisdictions where strong consumer law will override them.

Thursday, January 18, 2018

LA YouTuber Settles Landmark Revenge Porn Lawsuit

Chrissy Chambers
Photo: Chrissy Chambers

Chrissy Chambers is a co-owner of one of the most popular lesbian YouTube channels, with 750K followers. On Wednesday she has settled a first-of-its kind lawsuit that stems from her ex boyfriend filming her without her consent or knowledge and uploading the videos to pornographic websites using her real name and age (18 at the time) in titles. Her British ex-boyfriend filmed their sexual encounter in 2009 with his face obscured. He then uploaded some clips in 2011 and 2012. Chrissy Chambers only found out about that a couple of years later after her online followers told her, after mistakenly assuming she had made the videos on purpose.

Crypto Market Will Rebound

South Korea, a hotbed of cryptocurrency trading, considers shutting down domestic cryptocurrency exchanges. Bitcoin fell 50%. Many news sources report it as a "plunge" of cruptocurrency that can cause the Bitcoin bubble to finally burst. I don't think so. Here is why.

1. It would not be easy to ban cryptocurrency in South Korea

South Korean gov't regulators announced their intention to ban cryptocurrency trading on exchanges. For that bill to become law, it would have to overcome huge resistance from public and pass through parliament. That will take months. 

2. Even if the ban is implemented, it will be easy to circumvent

Cryptocurrency is decentralized, anonymous and electronic. It's practically impossible to ban it without global consensus. There is no global consensus and in fact some nearby countries (e.g. Singapore, Hong Kong, Japan) welcome cryptocurrency trading. Investors can go abroad, use virtual private networks (VPNs) and offline wallets the size of a USB stick.  Decentralized exchanges, such as Shapeshift or Stellar Dex, do not require identification and can be accessed from anywhere. Cryptocurrency wallets such as Exodus and Jaxx are linked to such exchanges, so trading and storing the assets can still be anonymous. VPNs easily allow hiding trader's real IP address and substituting it with the IP address of another country, without any specialized technical skills. In other words, if somebody is tech savvy enough to trade cryptocurrency in the first place, they can easily circumvent the unlikely ban.

3. South Korea's importance in the crypto market is overstated

South Korea accounts for between 5 and 15 percent of daily Bitcoin trading. Sure, that's a lot for a small country. But, even if the local exchanges are banned, those traders will not all vanish. Many will just go trade somewhere else.

4. Volatility is in the cryptocurrency's nature

We have already witnessed crypto drops of over 50%. Most recently, China's shutdown of local exchanges in September caused a 50 percent drop in Bitcoin, but prices rebounded eight-fold to almost $20,000 in December. That's just the nature of the crypto trading game.  Even the US SEC, Europol, China and a number of other major influencers could not "burst the bubble" with their warnings and bans. Even with the latest 50% price drop, Bitcoin is still worth 10 times more than it did a year ago today.

Wednesday, January 17, 2018

How to Comply with EU's New ePrivacy Law, GDPR

What is GDPR?

The EU's General Data Protection Regulation (GDPR) takes effect on May 25, 2018 in all of the EU's member states. It imposes stringent compliance requirements on virtually all businesses that collect personal information from individuals in the EU. There are hefty fines for non-compliance.

It's a regulation, not a directive. That means that it will apply automatically and simultaneously to all member states on May 25, 2018 without the need for ratification. The regulation also applies to organizations based outside the European Union if they collect or process personal data of EU residents. Data can only be processed if there is "lawful basis for processing."

What is "lawful basis for processing"?
Data can only be processed if there is at least one lawful basis to do so. The lawful bases for processing data are: