When developing a new website, entrepreneurs and technologists usually focus on the following kinds of questions. Is the interface attractive and easy to use? Are we offering something different from our competitors? How can we generate revenue? These questions are indeed important. However, the success and profitability of an online business can also depend on effectively dealing with a number of legal issues. Entrepreneurs and technologists should consider asking themselves the following questions at the beginning of their projects.

Are we collecting and managing the personal information of our users in accordance with the law?

The key term in this question is “personal information”, which is any information about an identifiable individual. Canadian privacy law requires that personal information only be collected, used, or disclosed with the knowledge and consent of the individual, that the personal information collected be limited to what is necessary for the purposes identified, and that personal information be collected by fair and lawful means. Websites use privacy policies to ensure they are in compliance with the law. In part, what a privacy policy does is disclose to the website’s users the nature of the personal information that will be collected and the purposes for which it will be collected. In the context of a website, it is relevant to discuss cookies and how personal information will be collected automatically from the user’s web browser. Privacy policies also typically describe the security measures that the website uses to protect personal information and provide a procedure to enable users to access and correct their personal information.

Have we mitigated our risks with respect to our users and third parties?

The main tool for controlling risk with a website is the terms of use, which form an agreement between the website owner and the user. The terms can include all the standard contractual risk-management provisions, such as indemnifications, representations and warranties, and limitations of liability. For example, the terms of use may require the user to indemnify the website owner against losses resulting from the user’s use of the site. If users can contribute content to the site, it may make sense to include a representation by the users that they possess all the intellectual property (IP) rights required to allow them to upload and share their content.

Do we have the right to use and commercialize the intellectual property on which our business depends?

Typically, the assets of an online business are predominantly IP. It can therefore be crucial that you have clear title to your IP assets. For example, if you hire an independent software developer or web designer, make sure they assign in writing all the IP rights in their work product over to you. Also, a website can use its terms of use to clarify that it retains ownership of the IP rights in the materials on the site, and that the users only have a limited licence to use these materials. Finally, be careful about incorporating open source software into your website. Some open source licences require you to make your software open source under the same licence if you copy the open source code into your own code. This undermines your ownership of your software by putting it in the public domain and can prevent you from commercializing your product. It can also cause problems when selling your company or seeking investment, as the problem is usually discovered during due diligence.

Have we taken the necessary steps to protect our patentable inventions?

In general, it is not possible to get a patent on an invention that has already been publicly disclosed. In some countries, such as Canada and the United States, there is a grace period of one year if the invention has been publicly disclosed by the inventor. That is, if the inventor publicly discloses the invention, he/she still has one year from the date of disclosure to file a patent application. Most countries, however, do not have this grace period. In these countries that have an absolute novelty requirement, once the inventor has publicly disclosed the invention it is no longer possible to get a patent on it.

To protect your ability to patent your inventions avoid discussing them, presenting them, or otherwise disclosing them to people outside your company before you file a patent application. Sometimes it is necessary to discuss the invention with people outside the company before you can file a patent. For example, you may need to talk to investors to raise money to further develop the invention. In such cases, you can prevent the discussion from counting as a public disclosure by signing a simple non-disclosure agreement.

Conclusion

It is surprisingly easy when first starting to develop a new website to make small mistakes (e.g., incorporating open source software into your source code or publicly disclosing a patentable invention) that can lead to big problems down the road and undermine your ability to commercialize your product or service. It is always worth the relatively small cost of dealing with these issues early on to ensure that your company is built on a solid legal foundation.