5 Legal Considerations For Your Online Business

The future is here. The future is in online business. According to a recent article by the Economist, “responding to COVID-19 has seen many people and companies realise that IT had more to offer them than they had realised.” Indeed, most tech or online companies are reaping big in spite of the pandemic. Therefore, it makes sense to consider starting or moving your business online.

This article considers some of the legal aspects relevant to online businesses.

1. Domain Names

Domain names, also known as web addresses or uniform resource allocators (URLs), are equivalent to physical addresses in the sense that they enable internet users to find websites that they wish to visit. For example, the domain name for this blog is www.venturelawkenya.com. Apart from that, some popular well-known domain names include google.com; facebook.com; twitter.com, cnn.com, bbc.com, and amazon.com.

A domain typically has two components:

  • Top-Level Domain (“TLD”) – TLD’s signify the nature of the website and they exist in two main forms. First, we have Generic Top Level Domains (gTLDs) such as .com, used mostly for commercial websites. Other variants include .org (commonly used by non-profit organisations); .edu(used by colleges and universities), .ac (used by academic/learning institutions)etc. In addition to gTLDs, countries around the world have country code top-level domains (ccTLDs). For instance .ke (Kenya) .ug (Uganda), .uk(United Kingdom).
  • Second Level Domain – These are unique names that identify the owner of the website. e.g. Google; Microsoft, twitter, Safaricom, and so on.

The Internet Corporation for Assigned Names and Numbers (ICANN) is an international body responsible for global technical management of the Domain Names System. ICANN accredits various gTLD registrars to carry out gTLD registrations. On the other hand, ccTLDs are managed by country-specific registration authorities. For instance, Kenya’s ccTLD (.ke) is administered by the Kenya Network Information Center.

How to choose a Domain Name

Most legal issues relating to domains center on gTLDs. You must, therefore, exercise caution in choosing your business names. Here are some guidelines on choosing your gTLD:-

  • Choose a name that is unique and easy to remember.
  • Do not choose an existing or well-known trademark. In domain naming parlance, this practice is also known as “cybersquatting“. Essentially, it arises where one purchases domain names of an existing company with the intention of selling the names to that business or uses the name in bad faith . ICANN has the mandate to adjudicate upon legal disputes relating to Cybersquatting and may impose several remedies including damages or cancellation of the domain. (See: Kenya Airways vs Caroline Kariemu [ICANN Case No: AF0313])

Apart from the above, it is also important to seek trademark protection for your chosen domain name and the website logo.

2. Data Protection

As an online business owner operating in Kenya, you must adhere to Data Protection requirements set out in the Data Protection Act. In particular, if your site or apps shall gather any type of Personal Data, then you will need a website Privacy Policy. A Privacy Policy is used to inform website/app users the types of Personal Data that will be collected by the website, how the personal data shall be used, and how the information is protected. In a sense, the Privacy Policy is tantamount to a disclosure statement. It reveals to your site users the extent and manner of protection of their personal information.

A few best practices on privacy policies.

Privacy policies should be clear and easy to understand (avoid using too much legalese on the statement). In addition, ensure that your stated policies and practices:

  • define the purposes for which personal information is collected and used;
  • provide an opportunity to the users to consent prior to the collection of their personal information;
  • limit the collection of information to that which is necessary and relevant for the identified purposes;
  • provide adequate safeguards for the handling of personal information;
  • provide dispute resolution and complaints mechanisms;
  • demonstrate your transparency and openness at all times. For example, if you make changes to your Policy, inform the users of the changes, and provide access to the updated policies.

3. Consumer Protection

Consumer Protection rights are entrenched in the Constitution of Kenya. Under Article 46, consumers have the right to (i)goods and services of reasonable quality, (ii)the information necessary for them to gain full benefit from goods and services, (iii)protection of their health, safety and economic interests and (iv) compensation for loss or injury arising from defects in goods and services. Apart from the Constitution, there are various other legislations geared at consumer protection. They include (but not limited to):

  • The Consumer Protection Act
  • the Competition Act
  • Kenya Information and Communication Act
  • Anti-counterfeit Act
  • Standards Act
  • Weights and Measures Act

In addition to the above, consumer protection remedies exist in contract and tort law. In essence, online traders must safeguard their consumers’ rights when carrying out online trade. Although the law is not very prescriptive on the exact measures that you need to put in place, you must demonstrate that you have put adequate safeguards and protection against unfair practices.

Some Practical Consumer Protection Tips

  • Display standard terms and conditions for online sales. Stipulate matters such as your registered business name and contact details, ordering process, delivery terms, after-sale services, the return of goods policy, customer complaints handling etc.
  • Display information that aids in the purchase process For instance:
  • description of goods and services offered;
  • price (including all applicable taxes), the process for placing an order and the payment options;
  • delivery including delivery options, costs of delivery, and period of time within which deliveries will be made.
  • Upon completion of a sale, provide an itemised e-receipt with all information relating to the purchase e.g. quantity, price (including tax), delivery cost, etc
  • provide adequate security mechanisms for online payments.
  • ensure that your goods and services are of satisfactory quality and fit for purpose as described on the site.

4. Respect Copyright

Kenya Copyright law protects all copyright that exists in literary, musical, artistic works, audio-visual works, sound recordings, and broadcasts. For such protection to apply, the works under consideration should have an original character. Additionally. the work should exist in some tangible form e.g. written or recorded.

As an online business owner, you need to review your site and ensure that the works are attributable to you or you have user rights from a third party. For example, you cannot copy text, videos, or images from other websites without user permission.

A few copyright pointers

  • only use licensed or copyright-free works such as photos, music, logos, artwork, cartoons, etc
  • if you use content that is not created or purchased by your company, attribute the copyright to the owner.
  • remind your users that the content on your site is protected. For instance, include the copyright symbol © or word copyright and the year that your work was first published. Alternatively, you may use a digital time stamp that shows the state of your content at any given time. You can also use specialised software that restricts the copying of content on the site.
  • if your website is developed by a third party, ensure that you have adequate contractual safeguards relating to the ownership of the copyright. In other words, the developer should assign/transfer all rights to you once the web development has been finalised.

5. Terms and Conditions of Use

Online trading establishes a legal relationship between the business owner and his customers. To protect yourself and limit your legal liability, you should have “Terms and Conditions” displayed on your site. Terms and Conditions are legally enforceable agreements governing the use of your site, products or services. In addition to legal liability protection, through Terms, you can define your sale and after-sale processes, product refund policies, product information, dispute resolution processes, warranties, etc. You can also stipulate terms of use of your intellectual property.

Key points to note on Terms

  • Mutual Assent: in order to use your site, users should have an opportunity to read and confirm acceptance of the Terms and Conditions.
  • Material Terms: Material terms should be clear and conspicuous. Consider using language at the beginning of the Terms putting the user on notice of the material terms.
  • E-Commerce Terms: including terms governing transactions i.e. from the placement of an order to after-sales, liability, disclaimers, governing law, dispute resolution, etc
  • Indemnification: provide that users shall indemnify you for any third party claims arising out of the use of the site;
  • Modification or Amendment: reserve rights to unilaterally change terms with or without notice.

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