Website Law

Many contracts, and the vast majority of professionally-drafted contracts, contain what is known as a “choice of law” clause. Choice of law clauses specify the law that will be used to interpret the contract.

Choice of law clauses and choice of jurisdiction clauses (sometimes called choice of forum clauses) must be distinguished. Whilst choice of law clauses relate to the law that will be used to interpret a contract, choice of jurisdiction clauses specify the courts (or other decision making bodies) that will resolve disputes arising under the contract. For example, a contract could specify that it should be interpreted in accordance with English law, whilst at the same time granting exclusive jurisdiction to the courts of Germany to resolve disputes arising under the contract.

Like many other kinds of contractual clause, choice of law clauses are subject to a certain amount of judicial interference.

This note focuses upon the ways in which the English courts will interfere with choice of law clauses.

Some types of law will regulate contractual relations before the English courts irrespective of an express choice of law. For example, the following pieces of legislation may apply in whole or part to contracts which relate to England and Wales but which expressly choose another governing law:

• Competition Act 1998
• Unfair Contracts Terms Act 1977
• Unfair Terms in Consumer Contracts Regulations 1999

The ways in which the English courts will interfere with a choice of law clause depend to an extent upon whether the contract is a consumer contract. For example, the Unfair Contract Terms Act 1977 (UCTA) will apply to contracts that are not governed by English law where it appears to the court that the choice of law clause has been used for the purpose of avoiding the effects of UCTA, or where one of the parties is a UK consumer who took the steps necessary to enter into the contract in the UK. Note, however, that the UCTA rules on excluding and limiting liability do not apply to international supply (of goods) contracts.

National consumer protection measures may also apply more generally by virtue of the Rome Convention (which has been incorporated into English law via the Contracts (Applicable Law) Act 1990). Article 5(2) of the Convention provides:

“a choice of law made by the parties shall not have the result of depriving the consumer of the protection afforded to him by the mandatory rules of the law of the country in which he has his habitual residence:

- if in that country the conclusion of the contract was preceded by a specific invitation addressed to him or by advertising, and he had taken in that country all the steps necessary on his part for the conclusion of the contract, or

- if the other party or his agent received the consumer’s order in that country, or

- if the contract is for the sale of goods and the consumer travelled from that country to another country and there gave his order, provided that the consumer’s journey was arranged by the seller for the purpose of inducing the consumer to buy.”

Where there is no express choice of law in a contract, the courts may still determine that there has been an implied choice of law if the circumstances warrant such a finding. For example, where a contract contains a choice of jurisdiction clause but no choice of law clause, then the law of the chosen jurisdiction may be deemed to apply. References to other national laws in a contract may also have an effect.

Where the courts are unable to identify and express or implied choice of law, the usual rule is that the governing law will be that law that is most closely connected to the contract. Article 4(2) of the Rome Convention provides:

“… it shall be presumed that the contract is most closely connected with the country where the party who is to effect the performance which is characteristic of the contract has, at the time of conclusion of the contract, his habitual residence, or, in the case of a body corporate or unincorporate, its central administration. However, if the contract is entered into in the course of that party’s trade or profession, that country shall be the country in which the principal place of business is situated or, where under the terms of the contract the performance is to be effected through a place of business other than the principal place of business, the country in which that other place of business is situated.”

Note, however, that there are a number of exceptions to this general rule.

The preponderance of the laws that regulate commercial conduct online are the same laws that regulate commercial conduct offline: contract law, the law of torts, commercial law, consumer law,  intellectual property law, and so on.

If you know a little (or a lot) about publishing law, you know a little (or a lot) about digital publishing law.

But doing business on the internet involves added complexity and added uncertainty.   Added complexity, because a new layer of laws veils the legal backcloth.  Added uncertainty, because the new and evolving technologies may not yet have been digested by the system of legal precedent - and by the time a recognisable body of jurisprudence about a technology has emerged, the technology may be obsolescent.

Complexity, uncertainty and evolution are three causes of widespread non-compliance with the law.

The extent of non-compliance should not be underestimated.  For example, the E-commerce Regulations demand, with the inevitable exceptions, that e-retailers must make available to their customers “appropriate, effective and accessible technical means” allowing the customer to identify and correct input errors before placing an order.  This may be dealt with by means of a “confirm your order” page: but anyone with a passing familiarity with online shopping will know that as often as not there is no pre-order correction procedure.

Some fairly common internet practices are outlawed. For instance, many websites will send marketing emails to users who do not opt-out – when in some cases they should only be sending the emails to users who opt-in.

One reason why online compliance is particularly important is that anyone can conduct an impromptu audit of your website – and potentially find you wanting.  This can be embarrassing.

For example, whilst writing this I visited the website of one of the most prestigious law firms in the world.   Under the Privacy and Electronic Communications (EC Directive) Regulations 2003, a person using a website that serves cookies should, amongst other things, be “provided with clear and comprehensive information” about the cookies.  (Cookies are sent by a web server to a web browser and then sent back to the server each time the browser accesses that server, enabling the server to recognise and track the browser.)

The law firm website uses site-wide session cookies and instructs Google to serve four persistent Google Analytics cookies to the user.  But the legal notice on the firm’s website says that the website doesn’t use cookies, other than session cookies in one particular part of the website.

I doubt whether the firm in question would welcome publicity about this kind of (albeit technical) non-compliance.

But there is more than just embarrassment at stake if you fail to comply with the laws relating to digital publishing.  Contracts of sale that can be rescinded at the option of your customers; Trading Standards investigations and prosecutions; investigations and adverse decisions of the Information Commissioner; and civil claims by customers: the risks are varied, and non-compliance can be expensive.

Because of regular changes in the law relating to the internet and the technologies from which it is built, digital publishers should ensure not only that they have the expertise to identify the issues, but that they regularly update that expertise and regularly audit their compliance.

Documented domain name management policies are exceptional. The rule is ad hoc registration of a range of domain names across a range of extensions, the domains being chosen by different people within an organisation at different times and for different purposes. The result: chaos.

If you have been asked to, or have decided to, formulate a domain name management policy for your organisation, this post should help. I have set out below details of what I consider to be the main principles and considerations which should inform any domain name management policy:

• Individually, domain names are not expensive (costing only a few pounds each per year).

• Providing domain names are all registered through an efficient domain name registrar or registration agent, managing even large portfolios should not be a significant administrative burden.

• There are usually many variations of any trade mark or name (including plurals, misspellings, derogatory variations, domains with common prefixes and suffixes, and hyphenations); and there are hundreds of possible domain name extensions (e.g. .com, .org, .de, .cn, .tv). For these reasons, there may be many thousands of domain names that are of (at least theoretical) interest to a trade mark owner.

• There are three main reasons for registering a domain name (or maintaining a domain name registration): first, because the registrant wants or may want to use the domain name to point to a website; second, because the registrant wants to stop others from registering or using the domain name; and third, as an investment.

• Domain names are typically registered for one or two or a few years at a time, and they lapse on a regular basis.

• It is possible to set up a watching service on domain names that “drop” off the register, so that they can be automatically registered when this happens. This practice is sometimes called “drop catching”.

• It is also possible to set up a watching service to monitor third party domain registrations that may trespass upon the watcher’s rights.

• Domain names purchased in the secondary market are much expensive than new registrations. During 2007, the average reported price of domains sold via Sedo (one of the main marketplaces for domain sales) was £1,253.

• Domain name arbitration proceedings are special contract-based administrative proceedings that can be used by trade mark owners to obtain domain names registered by others which trespass upon their rights.

• Domain name arbitration procedures are generally perceived to be complainant-friendly: around 70%-80% of complaints that go to a decision result in a transfer of the domain name to the complainant.

• Notifying a domain name owner in advance of commencing arbitration proceedings may lead to the owner taking actions which could prejudice those proceedings (e.g. transferring the domain to a new owner such that it becomes harder to prove that the domain was registered “in bad faith” (in UDRP proceedings)).

• Domain name arbitration proceedings are not inexpensive, but they are a lot less expensive than court proceedings. Typically, a complainant in a domain name arbitration involving one domain name might expect to pay between £800 and £900 in official fees, and (if professionally advised) £750 to £2,500 in professional fees.

• Domain name arbitration proceedings are much quicker than court proceedings, typically taking 7 to 9 weeks from start to finish.

• Shortly after the commencement of a domain name arbitration, the domain name will be “locked” so that it cannot be transferred by the owner during the course of the arbitration.

• In domain name arbitration proceedings, pre-complaint inter-party correspondence may be disclosed to the panel or expert decision maker – there is no equivalent to the “without prejudice” rule that applies in court.

• Where a trade mark owner purchases a domain on the secondary market in circumstances where that trade may have been able to recover the domain by means of domain name arbitration or or court proceedings, then that purchase may have the effect of encouraging others (professional cybersquatters and “domainers”) to register and use domain names which trespass upon the owner’s rights.

• Where a domain name is to be transferred, and the transferee is not entirely satisfied as to the bona fides of the transferor, then the consideration for the transfer will usually only be paid after the domain name is in the control of the transferor or (if this is not acceptable to the transferor) the domain or consideration will usually be held in escrow.

• UK litigation involving domain names will typically take the form of trade mark infringement and/or passing off proceedings. These kinds of proceedings call for specialist legal representation, and can be very expensive. It would not be uncommon for one party’s legal fees in a case taken all the way to trial to exceed £250,000 or even £500,000.

• In a trade mark infringement or passing off case, between 12 and 24 months may elapse between the date of issue of the proceedings and the trial (even longer in some cases).

• It is helpful to a complainant in domain name arbitration proceedings – and very helpful to a complainant in court proceedings – to be able to ground a complaint or claim in registered trade mark rights (rather than unregistered rights).

• One major advantage of litigation over domain name arbitration is that, in court proceedings, the successful party’s legal costs (or a portion of them) will usually be payable by the unsuccessful party. However, where domain name litigation is undertaken against individuals or companies without significant UK assets, recovering legal costs is likely to prove problematic.

There are of course other factors, but these seem to be to be the critical ones.