Internet Websites May Be Vulnerable to Regulation by Foreign Countries

Commentary: International Websites: The Internet has been amazing tool; enabling even the smallest voice to reach people throughout the world. It has, in fact, breathed new life into many small businesses who now can reach millions of potential customers in mere keystrokes. Many companies elect not to, or do not think to, limit the reach of their website. As a result, it may be accessible to the international public, and the Company could be deemed to be offering its goods or services to customers throughout the world. Again, this may be beneficial from a business standpoint, but it presents some legal vulnerabilities. Quite simply, different countries have different rules and standards by which a website must operate.

By offering its goods or services to other countries’ residents, a foreign court could claim that it has jurisdiction over a US-based company. So, even if the company has lawfully established the website in the United States, and is complying with the Federal and State laws here but the website is accessible to residents in another country, that company could still be vulnerable to legal attack for failure to adhere to that country’s (or their state or provincial) laws.

The difference in international website standards was recently highlighted in the Beijing Olympics. A lot of press came out of the Olympic Games for China’s censorship of certain Internet content. There, the government merely banned access to certain websites. However, other countries may not be so proactive, and may instead allow access to the website but hold the website operator liable for illegalities on the site or in connection with the sale. The vulnerability regarding the international scope of websites also takes a prominent role in regard to the different definitions of “obscenity.” Other countries have different standards as to what is “obscene” as compared to the United States. Therefore, what might be acceptable here, and what might even be considered to be artwork here, may be banned as pornography elsewhere. Another example is that the European Union tends to generally have stricter rules when it comes to privacy regulations.

Unfortunately, this vulnerability is complicated in that there may be different standards in each locality in addition to those differing national standards. This is a challenge even within the United States. For instance, the Internet is not generally regulated at the Federal level. Rather, each state can have its own rules and regulations relating to the operation of an e-commerce company. For instance, California has an entire regime of laws relating to privacy protections and disclaimers that need to be on a website. Regardless from where a website is based, if it is marketing to California residents, it will arguably need to comply with those laws.

Accordingly, if a website is simply launched and offers services to everyone, there are numerous legal vulnerabilities given all of the levels of legal regulation to which it may be exposed. One of the best ways to manage this risk is to limit in some way the people to whom the company is offering its goods or services. This can be included in the website terms and conditions or other legal disclaimers, where a company can specifically require the user to indicate that they are a resident of a certain country or state. Moreover, a company could establish protocols to be sure that orders are not accepted from residents of certain states and territories. Therefore, a company can limit the reach of its offerings to those states and countries that it has evaluated with legal counsel to ensure that the website and its goods and services will not run afoul of the laws of those areas.

Comments/Questions: ljm@gdnlaw.com

© 2008 Nissenbaum Law Group, LLC