Legal Considerations for Internet Startups

An Internet Startup can be much more complex than the startup of a typical business, such as a retail establishment, manufacturer or distributor. The myriad of additional complexities arise in part because of the number of laws covering internet sales and commerce, because you are doing business throughout the country or even internationally, because there are generally not going to be face-to-face negotiations and simple agreements, and as a result of the ever-changing and highly competitive market. All this, while internet law is just developing and rapidly changing. At the same time, the internet business you are starting is most likely expensive to start, develop and market.

The startup of an internet business involves all the steps necessary in a typical business startup. In addition, from a legal standpoint, below are some other initial aspects and steps that should be considered for an internet startup:

  • Choice of the appropriate entity for interstate commerce.
  • Review and negotiation of website design agreements, fulfillment agreements, hosting agreements, supplier and drop ship agreements, software development or licensing agreements.
  • Consideration of insurance coverage and appropriate types of insurances.
  • Consideration of trademark and copyright protection or potential infringement issues.
  • Consideration and preparation of employment, consultant, independent contractor, work for hire, non-competition, non disclosure, and outsourcing or joint venture agreements.
  • Consideration and preparation of website terms and conditions pages, with acceptance of use, limitations of liabilities, online fulfillment and other general terms and conditions clauses.
  • Consideration and preparation of website Privacy Policy pages and terms.
  • Consideration and preparation of online agreements, signature and confirmation methods.
  • Consideration and preparation of limitations of use for minors or other inappropriate or excluded audiences.
  • Consideration of potential link violation, framing violation, libel/defamation, hacker, spam, consumer protection issues.
  • Consideration of sales tax and collection issues on a state by state basis.
  • Choice of an accountant for interstate commerce and tax issues.
  • Choice of an attorney for corporate, intellectual property and online transactional business.

There may be many other issues or matters involved with your particular situation or internet business setup, but the issues above are typical in most new internet business setups. Understanding the issues that you may face and considering as many as possible in advance may help you avoid costly and time consuming mistakes.  A good way to start is to take the list above and start your own list of issues and questions.

Reprinted from