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IT STRATEGY REVIEW – Legal? Decent? Honest? Everywhere?

If your company advertises on the Internet, it could be breaking the law in Albuquerque or Kuala Lumpur or even Ulan Bator. Do you know and, more to the point, do you care?

Philip Atkinson, an intellectual property lawyer with Manchester solicitors Lawson, Coppock and Hart, believes this is a matter that ought to be on the agenda of every FD whose company has a Web site. Merely publishing information on the Web could constitute an advertisement, says Atkinson.

And once an advertisement is published it becomes liable to the laws of every country where it can be read. With the Web, that effectively means the whole world.

Nor is this merely a nice legal point, of little interest to anyone but m’learned friends. In 1995, airline Virgin Atlantic came a cropper when it inadvertently published the wrong prices for some air fares, accessible by the world’s toughest web surfers – the Californians. The advertisement broke the laws of the Commonwealth of California and Virgin Atlantic picked up a fine.

If it can happen to that nice Mr Branson, it can happen to anybody. Recently, an Italian company called Playmen (don’t ask) has incurred the wrath of the US courts for publishing its wares on the Web despite an injunction from that all-American corporation, Playboy. Playmen is subject to a $1,000-a-day fine for as long as it keeps its Web site running, even though the US court that imposed it has no means of collecting. Playmen has no assets in the US. “People are delighted that the Internet gives them access to the world. Unfortunately, it follows that you have also got access to all the rules and regulations of the world,” warns Atkinson. To illustrate how burdensome that can be, consider publishing an ordinary newspaper ad in the UK. It could be subject to as many as 40 separate statutory and governmental regulations, Atkinson says. Now multiply that by all the countries your Web site appears in and you have some idea of the legal problem. Admittedly, not all countries have regulatory regimes as sophisticated as the UK. But some, like the US, have more complex systems – with the fact that each of the 50 states has different rules compounding the confusion.

One of the main problems is publishing misleading information – even inadvertently.

But that’s not the only issue. Material acceptable in some countries might be deemed pornographic in others. And we’re not only talking about (don’t bother, I made it up). Even a racy ad for exotic shampoo or luxury melting ice-cream might be too hot to handle in some countries of the cover-all-women Middle East.

Atkinson admits that ensuring your material complies with every rule in every country is effectively impossible. “There is an incredible cost in taking advice everywhere – and I would have thought an unsustainable cost,” he says.

Faced with this, some companies have frankly ignored the problem figuring they have no assets in many countries where they might run into trouble, so why worry? As Atkinson points out, this is rather missing the point.

If the aim is to use the Internet to build global business, then your company might start to acquire assets in some of these jurisdictions.

One solution is to make a separate company responsible for the Internet site and some firms have taken this route. But Atkinson acknowledges that this is not suitable for a large well-known name. He advises targeting certain markets and making it clear on the Web site that you are soliciting business only from those markets. It means, of course, that you must turn away business from countries outside those you have targeted.

Atkinson admits that he is not certain even this could avoid all problems – the law in this area is still developing – but it would probably mitigate damages in the event of a prosecution. “There isn’t a lawyer in the world who can tell you what the rules are everywhere so it’s impossible to make generalisations about what is legal everywhere.”

And a final sobering thought from Atkinson: “I remind people that your competitors will be looking at your site. If you make mistakes they will want to report you.”

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