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Some legal matters are almost part and parcel of owning an online business. This episode’s guest, business lawyer Heather Pearce Campbell, sheds light on some and how you can address them.
In her chat with James, Heather talks about how protection in business starts with enforcing the rights of your brand.
They discuss how to avoid falling victim to litigation trolls and friendly fraud.
And Heather delivers tips for protecting your IP and how to deal with chargebacks.
Table of contents
1. A couple of legal run-ins
2. Legal realities of owning a trademark
3. The matter of litigation trolls
4. Can we still decide who we want to work with?
5. Why people do chargebacks
6. The things you can do to protect yourself
7. When your stuff is out there for free
8. Checklists and policies that help
9. Disputes that cross international borders
10. The neutral process that is mediation
11. Arbitration as the next course of action
A couple of legal run-ins
When Ron Reich suggested chatting with Heather about legal matters, James was at first concerned. As he realized, however, how much she knew that was relevant to his audience, he saw it was a conversation well worth pursuing.
Heather quite understands. No normal human would like to be told to connect with a lawyer.
And James has had his share of law-based experiences. He once got a hefty cease and desist letter from a pharmaceutical company, for registering a domain that matched the exact formula of their patented cancer treatment.
That was scary, but James simply unregistered the domain, didn’t respond, and the matter ended.
It’s a common story, says Heather. One, such letters are not always sent appropriately, and two, they’re often meant to just intimidate people to take a certain action, which obviously James took.
On a related matter, James tells, someone once infringed his trademark. Turned out it was a student doing some school project.
James’s lawyer then wanted to go heavy-handed, to send the right message. James thought that was harsh, seeing as how it was inadvertent and the student was profusely apologetic.
What does Heather know to be best practice in such a case?
Heather loves the question. She feels very strongly that people should connect with legal counsel that are really representative of their own values.
Sometimes people tend to outsource the decision-making, and Heather believes they should take it back a bit, to partner with the legal professional on outreach.
Heather herself has a client whose ADHD management system has gained him a worldwide following. They’ve had to do a lot of outreach on differing levels – some stricter messaging for deliberate offenders, and a gentler approach for those who simply love the brand and have, for instance, used her client’s business name in their blog name.
Legal realities of owning a trademark
Another interesting point this raises is that, as the registered owner of a trademark, you cannot, unfortunately, sit back and do nothing about it. You must actively protect your business, and that can be a smack in the face for some.
That’s what James’s lawyer told him – if he did nothing about the infringement, he could be contested further down the track.
That’s true, says Heather. You could lose the rights to that trademark.
It doesn’t stop with getting a registered mark. You have to renew and show continued use of that trademark, to reapply and keep it alive – you’ve got the cost of getting it, the cost of defending it, the cost of renewing it, that’s if nobody infringes on it.
If someone does do something, you’ll then rack up fees in defending the brand. James had someone intentionally infringe on another of his brands, in which instance he had no qualms about being forceful and direct.
It’s really important that people have awareness about what it takes to build and enforce the rights of a brand, says Heather. One of the things she asks as part of that is, what’s your end strategy?
Most of her clients want a business through which to develop a personal mission, to do meaningful work. And a trademark registration can protect you on that path and allow you to build a thriving business that does these things.
Some of these folks, personal brand or not, are also working towards building a business or a collection of business assets that become sellable at the end of their business life. And that is where brand strategy, IP protection, really can play a central role.
The matter of litigation trolls
James knows of partners who developed and marketed a software service, and who received hostile correspondence from a big player claiming they copied said player’s usability process.
One of the first questions James asked is, are they right? Did you sit down and rip them off? Or did you come at this thing all by yourself? Or is there some middle ground where it was part of the research because they’re a big player, and you’ve emulated or modeled some of their process?
You’ve got to be very careful when you go out as an entrepreneur not to trigger landmines. One of these landmines is online and litigation trolls – in today’s cancel culture, you could be blithely doing your thing when someone comes at you, wholly unexpected.
Small businesses, says Heather – those making $3 million dollars a year or less – make up the overwhelming bulk of the marketplace. Yet many of them tend to underestimate themselves, and to minimize the amount of legal support they really need.
One of Heather’s jobs is to remind people that when you become an entrepreneur, it’s like driving down a US freeway – you’re presumed to know the law. So it’s become part of her mission to educate them on the many legal things they need to know when it comes to their business.
You don’t have to be an expert, she says, but you do need to be able to issue-spot. You need to be committed to your business enough to take care of it in the right ways, and that includes getting either legal support or legal education for entrepreneurs so that you can issue-spot.
What is the issue with litigation trolls that we can spot, asks James?
Pre-internet, says Heather, people did business face-to-face. In online business, that kind of contact has been mostly removed.
So you often don’t know who has eyeballs on your online real estate, your site, your business, etc. This makes it easy just from a numbers perspective to cross paths with shady characters wanting to gain some advantage or monetary gain.
It’s unfortunate, but a risk inherent in doing business, which people must be aware of.
Can we still decide who we want to work with?
James has seen fraud in just about every job he’s had, usually from external sources. And one of the mechanisms of protection he’s built against this is filtering who he works with.
He has a very clear exclusion on his website of who is not a good fit for his service, and who he can’t help. And supposedly that’s his right.
These days, however, there’s the company that refused to make a gay wedding celebration cake and copped major backlash. And there’s Twitter forced to reinstate a guy they banned from the platform.
Is it possible now that in your own business, you can’t even decide who you deal with?
It is possible, says Heather. Her advice to anybody is, if they have a developing scenario, if there is an option for a legal ramification related to it, quickly get location-specific advice – for example, the rules in Australia around a certain topic might be quite different than in the States.
When you have something that feels out of the ordinary, or like it could potentially be a red flag, one, trend towards inclusivity until you can figure it out. Do not turn somebody away or say something in writing or even verbally that could potentially cause you a problem until you’ve bought yourself the time to get an answer on whether or not it’s an actual legal issue.
This can really mean the difference between not having a problem, not creating a problem, or having a very expensive problem on your hands.
Why people do chargebacks
James wants to raise another related problem which often comes up – the chargeback. If someone’s not happy and feeling somewhat lazy, they may just do a chargeback rather than contact support.
When this is done with the specific intent to buy a product and charge it back, without allowing the seller to offer a remedy in any way – Heather uses the term, friendly fraud – it’s pretty unfair.
It’s a timely topic, says Heather, particularly for people in online business who do international business as well.
And while the process can be reversed, it’s a very slow machine – six or seven months.
At the very least, says James, it’s inconvenient. How can we protect ourselves against it?
The things you can do to protect yourself
It is very inconvenient, says Heather. And typically, on average, the chargeback process costs small businesses two to three times the amount of the original sale in lost time, productivity, having to refund it, even sometimes when they’re in the right. And often it’s over a service or a product that’s already been delivered.
One thing you can do in advance to support yourself is to plan for the process to happen, be ready for it, which will change the way that you handle certain processes in your business.
Having the terms of purchase in place is critical. And Heather wants to distinguish here between general website terms and conditions and terms of purchase that are specific to a sale.
You can have website terms and conditions in place that will apply to anybody who shows up to visit your website, whether they purchase or not. This is different from when they click through and are actually getting ready to give you their payment information – everyone’s familiar with the check-the-box style checkout, I have read and agree to these terms of purchase.
You need something that documents the fact that they were given notice that those terms apply before the sale, before they could actually give you any money. And you need to have that process not only display the terms, but track their consent.
So whether you’re using Infusionsoft or Kartra, or some other CRM to run your online business, make sure you’ve got a tracking mechanism that shows what the process is. And Heather also prefers that people take screenshots themselves of their whole checkout process when they’re setting up the sales page, the online sales funnel – save yourself the time, you’re already in the building process, just document it once it’s complete, save those screenshots by date, and the product or service title, so that you have really clean digital files.
Heather has a whole training when she delivers her website protection package for her businesses around not only having the right documents, but implementing them the right way. Again, it involves saving copies of the documents, or screenshots of the terms once you get them uploaded to your site, having them dated so that you can show to anybody that’s doing an audit, whether it’s a credit card company, a merchant account, here’s what was in place, here’s the process somebody goes through to checkout, here’s the terms that I had, here’s what the sales page looked like, here’s the box they have to check before they can even give me any money, it requires their consent – because so many people claim after the fact, oh, I never saw the terms, or I didn’t know about this, or I didn’t know about that, that’s why I need a refund.
People do get forgetful, says James. He has that little tick box on his site, the purchase terms and conditions, and it spells out everything for the dispute resolution process, who to contact, if they’re using a portion of a service, if there’s an admin, all that stuff’s spelled out, also for when he’s running events.
And this is particularly important for a lot of listeners. If you have in-person events, you may want to have something like – and James is definitely not giving advice, because he’s not a lawyer – a disclaimer form, a liability disclaimer making sure that people are aware of risks, and that it’s up to them, etc., etc., – That’s a tick box, no one can come to the event unless they agree to that.
And if you are submitting chargeback disputes from your side, you will definitely want to pull out whatever you can from Stripe or PayPal or your shopping cart or your email system – you want IP addresses, you want support tickets where the customer has interacted with you or access to your products and downloaded them. You can see all of that.
Some things people can think about when they’re setting up their process is talking with their payment processor, or their merchant account that runs all the payments, turn on IP tracking, turn on all of the ways that you obtain different levels of authorization, even including collecting people’s mailing addresses, zip codes – gathering more information than just the credit card and some basics.
When your stuff is out there for free
What about people who are simply taking your IP, accessing your hidden bucket on Amazon’s AWS server, or sharing it in forums, or taking it and giving it away themselves?
James gets asked this a lot: Hey, James, someone’s got my eBook, and they’re downloading it on these torrent sites. How concerned should I be and what can I do about it?
A couple of things, says Heather. Starting at the beginning, put your name, your copyright notice, like, your information on the content that you create. Because it’s harder for thieves to – say they’ve got your PDF – scrape that off of every page.
So from the start be aware that this is likely to happen to you. And the better you are at your topic of expertise, your business, the more likely it is to happen to you.
At one point, James’s friend, Dave Wooding, created a software for him that when someone purchased his PDF – he was selling an eBook at the time, it was around $79 – it would automatically take the customer’s detail and inject it into the document as a watermark diagonally across the page of every page, very subtly.
When the book turned up on a torrent site, the guy whose details were on it claimed his laptop had been hacked.
People do nefarious things, says Heather, and you can do certain things about a certain percentage of them – probably not all. It depends partly on where the person is based, what rules apply, and your willingness to really pursue them.
Awareness helps, and Heather initially will have people sign up for a service like Copyscape, at copyscape.net, a service that will scan the web for you and track certain pieces of your core content.
What to do once you have the results really can vary. You can get help from an attorney handling a certain number of those, especially if there are legitimate folks in the online space that are using it.
Heather has to, for her own business as well as many of her clients, issue takedown notices, or cease and desist type of communications.
Culturally, says James, there are places that are not as aware of copyright infringement. You may have to orient your overseas team, for instance, that you can’t just take a picture from Google images and stick it in your PDF.
For any number of small businesses where they have hired help, says Heather, say a virtual assistant or somebody who does some basic web design, but is just getting started, there are people who don’t know what they’re doing from a legal perspective online.
So build your business systems – know what your team is trained to do and not to do.
Checklists and policies that help
One thing James found when applying for business insurance is they have a handy checklist of questions like, do you have written agreements with your contractors? Do you have website terms and conditions? If you were to tick all the boxes that minimize their risk, you’re a good way along to not even needing them.
That’s a good start – find your local insurance broker and ask them for a policy. It will probably fall under IT or some service-provision thing, and the quote may make you fall off your chair.
But they might have a checklist of questions needed to submit the policy that would be a great guide.
James is sure Heather has some stuff at legalwebsitewarrior.com.
Absolutely, says Heather – she has a training she does, her free legal basics boot camp, and inside of it are a bunch of resources. But even understanding the framework gets people a long way towards understanding the categories of risks and where you should be looking for certain solutions.
Disputes that cross international borders
One thing James does get asked a lot is on international disputes.
A lot of Aussie businesses selling to the United States are concerned: do I need an insurance policy against the American market? What is my risk of them suing me and losing my home?
James also gets American customers selling to the Australian markets or wherever.
A lot of them have teams internationally. What is the risk profile of cross border – are they going to come and get you, or is it too difficult? What kind of situation are we dealing with?
It’s a great question, says Heather. A couple of things – is it difficult? Yes, it can be difficult to pursue people internationally.
But what are some things that you can do? One is having your contracts in place.
In the framework Heather teaches, the first bucket actually contains your business – this is partly how you help contain your risk, is actually having a formal legal entity.
In most countries, regardless of what the entity types are, you don’t separate your business liability from your personal assets unless it’s contained in its own legal entity. So start there.
The second bucket is contracts. This is where Heather spends a lot of time with people – make sure you’ve got proper documentation.
Heather is sure a huge number of James’s clients have high-dollar, one-on-one arrangements that involve international clients. These tend to be where the biggest problems come up.
Something goes wrong, somebody’s unhappy in the service, there’s enough value and dollars at stake that people are thinking, do I need to pursue this? How do I recover on this?
So have what’s called a governing law and jurisdiction clause that’s properly done, says Heather.
It’s basically, puts in James, who’s the governing place? Where will this be resolved, and which court will it be disputed in?
And the other thing Heather recommends, particularly for small businesses, is what’s called a multi-step dispute resolution clause, where you have the parties consent to mediation first, then arbitration. She’s sure James knows the difference between mediation, arbitration, and litigation.
The neutral process that is mediation
Mediation is a process that is neutral. Parties have to consent to it, but it’s basically a dispute of which the resolution is facilitated by a neutral third party.
It’s non-binding – people don’t have to agree, they can. But when you’re dealing with responsible parties who are of sound mind, it is effective 95 percent of the time.
It is, says James – he finds himself in that role a lot. 50:50 deals often go south, and he’s more often than not the mutually trusted person who can give the partners fair facilitation.
James even owns books on mediation. Mediation is great, if you can make it work.
The challenge is when people become illogical, super emotional, where no amount of reason will sort things out. That’s when you have to use other techniques – reframing things, and digging deeper to what’s really driving things.
The process of mediation, is like its own little world of being able to study human communication, says Heather. They’ve talked of buckets – entity, contracts, and the final bucket is dispute resolution, but really, it’s communication.
One of the things Heather coaches small businesses around is having an effective communication strategy that will serve in times where you’re facing disputes. And mediation really highlights the need for that and for understanding that skill in your business.
Arbitration as the next course of action
Then Heather usually includes an arbitration provision that follows mediation. If mediation doesn’t work, either party could elect arbitration, but it has to be elected.
You have to provide notice, and then go to arbitration. A couple things happen – one, arbitration is private, and keeps a small business from being dragged through a public process where everything is on display.
That’s important in instances where you’re up against somebody who just wants to wage economic warfare against the business. Arbitration there can really play a valuable role.
Arbitration is designed to be a less formal, less expensive version of litigation. That doesn’t mean, however, that it always is.
People also get that support and reassurance that they’re missing when they’re a solo combatant, right, asks James?
That’s right, Heather affirms, depending on how the mediation is done, because that can either be solo-represented, like you show up as yourself, or with the supportive counsel. But typically, the way she drafts those provisions for her clients is that they can allow for an online dispute resolution process.
So you want to be working with mediators who are comfortable with that, who have a system set up, which nowadays is so much more accessible than it used to be. And so you actually have a lot more options available to you now to support that process.
Usually, the only person who wins in a legal scenario is the lawyer, says James. There’s so much downside. It’s not worth doing if you possibly can avoid it, and a good lawyer will help coach their client through that preservation phase.
Heather sounds to James like a good one. He feels she’s offered some incredible insights on the call.
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