Gavin Law Offices is pleased to announce, Pamela Gavin has been recognized for the eighth time in the Virginia Business Magazine among Virginia’s Legal Elite for 2017. Each year, the honor of Virginia Legal Elite recognizes the top Virginia lawyers as voted by their peers and in cooperation with the Virginia Bar Association.
This is truly an honor!
The Consumer Review Fairness Act (the “Act”) became effective in March 2017 and has significant implications for most companies offering consumer products or services, especially for those with interactive websites. The Act limits what companies can include in their standard contracts, including the terms and conditions of some websites. Beginning on December 14, 2017, the Federal Trade Commission (the “FTC”) and state attorneys general will treat the use of contracts violating the Act as an unfair and deceptive trade practice, making it subject to potential financial penalties or other enforcement.
What Does the Act Do?
The definitions included in the Act are fairly technical, but in short, the Act protects consumer reviews of products and services when a purchase is made under a non-negotiated form contract. To accomplish this, the Act prohibits the use of “form contracts” lacking meaningful negotiation and containing terms that (i) prohibit or restrict reviews of the seller’s products/services, (ii) impose a penalty or fee for such reviews, or (iii) transfer certain intellectual property rights in reviews. The Act also voids the provisions of any “form contracts” that do any of the foregoing. However, the contracts can still prohibit the posting of certain content, such as trade secrets, confidential information, certain personal information, offensive language, and computer viruses, to name a few.
What Does the Act Apply to?
The Act applies to all “form contracts” used in the course of a sale to consumers that cannot reasonably be negotiated. The Act never defines “goods and services,” so the Act has no real limitation on what type of seller it applies to. It would seem to include websites that provide an interactive service for which they charge a fee as well as traditional sellers and service providers. The Act also neglects to specify exactly what situations fall within the Act’s reach. It could include only contracts for sale, or it could also include terms of use for a website that advertises products or services. While this is unclear from the Act itself, it would be safer to assume maximum applicability until we see how the Act is actually enforced.
Does the Act Prohibit Deletion of Social Media Posts or Other Reviews?
The Act never actually states that it is unlawful to remove reviews, but rather that it is unlawful to have “form contracts” restricting reviews in the manner described. However, the FTC states on its website that the Act applies to social media (at www.ftc.gov/tips-advice/business-center/guidance/consumer-review-fairness-act-what-businesses-need-know). The terms described in the Act do clearly seem to include posts on social media accounts. Still, because there is no blanket restriction in the Act from removing reviews, the Act seems only to prevent companies from including terms in their “form contracts” that limit social media posts (or any other reviews described in the Act). None of this seems to limit a company’s ability to actually delete social media posts, so long as none of the company’s “form contracts” restrict or prohibit covered communications. However, it should be noted that the FTC may attempt to enforce this Act broadly, and courts have not yet had significant opportunity to interpret its reach.
Important Notes:
How Do I Comply with the Act?
Contact us for more information on the Act or to get specific advice on how to comply. — Collin Atkins
One of the trickier questions of business law is the characterization of an individual as an independent contractor or an employee. Many business owners wonder whether they are categorizing their workforce correctly or exposing themselves to potential liability for unpaid employment taxes to the IRS by mischaracterizing employees as independent contractors. The determination of whether an individual is an employee or an independent contractor depends on the particular facts of each situation. However, there are some general factors the courts look to in making this determination.
Although not exhaustive, some of the main factors used to determine whether an individual is an employee or an independent contractor are:
While none of these factors is the exclusive determining consideration, the single most important consideration is the business’s right to control the work performed by the individual and, to a lesser extent, the degree of control actually exercised. The more control the business has over how the individual completes his or her work, the more likely the individual is to be deemed an employee. This makes sense if you consider it on a larger scale. If you hire an outside company (rather than an individual) to perform a service, your primary focus is on the results of that service. You likely have very little control over how the company’s workers dress, what they say, their methods and techniques, their timeliness (or lack thereof) each day, or any other individual aspect of how they do the job.
The courts think much the same way when determining an individual’s status. If the company has the right to control the details of how an individual’s work is done, even if the company doesn’t feel the need to stringently exercise that control, the individual looks much more like an employee than an independent contractor. Conversely, if the company has no right to determine or control the individual’s methods, the individual seems far more independent. In the end, the courts try to determine, considering the situation as a whole, which label more truly describes the relationship.
In many situations, the desired relationship is truly that of employer/employee and it should be characterized as such. However, parties that intend to form an independent contractor relationship often take actions that inadvertently change the analysis. In these situations, a written contract is extremely important. A formal agreement may only be one factor in the analysis of the courts, but using a written contract can go a long way in helping you meet the other relevant factors. Not only can a contract clearly state the intention of the parties, it can also define the roles and the rights of each party, bringing more clarity to the overall analysis. The factors considered by the courts can be addressed in a contract, declaring from the outset what the rights and obligations of each party are.
Although greatly helpful in clarifying the relationship, a contract cannot overshadow the actual conduct of the parties. If the parties act as employer/employee, the courts will characterize the relationship as such, no matter what the parties claim. However, a contract can help define the relationship for both the courts and the parties. Equally important, it can guide the parties’ conduct to avoid actions that unintentionally create an employer/employee relationship.
— Collin Atkins
(This is not intended as legal advice. Contact a lawyer for assistance in your particular situation.)
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Listen to Pamela Gavin’s new podcast on the EVB P.O.W.E.R website for some great insights on how to protect your business!
http://evbpower.com/podcast/intellectual-property-rights-and-risks-for-small-businesses/
The U.S. Copyright Office has developed a new electronic system for registering your designated agent under the Digital Millennium Copyright Act (“DMCA”). As of December 2016, the U.S. Copyright Office has begun transitioning to an online registration system which allows online service providers to register a designated DMCA agent in a centralized public directory. Any new registrations must be completed through this online system. Most importantly, even if a service provider has previously registered its designated DMCA agent with the Copyright Office through the previous paper filing system, the service provider must re-register through the Copyright Office’s new online system before December 31, 2017.
Registering and maintaining a designated agent with the Copyright Office for copyright infringement takedown requests is necessary to obtain safe harbor protection under the DMCA. Safe harbor protection can help shelter online service providers from potential copyright liability for any third party content posted on or transmitted via their websites. In order to qualify for safe harbor protection under the DMCA, any online service provider that has a website or application which allows users to post, share, transmit, or comment on content must designate a Copyright agent. To designate an agent, an online service provider must not only provide the contact information for the agent to the Copyright Office as part of its online public directory, but also make the contact information for the agent available to the public on the online service provider’s website so that users can notify the service provider of allegedly infringing material.
On the Copyright Office’s online registration system, online service providers must create an account and provide all necessary information regarding the service provider itself, the designated agent, and the associated websites. Registration costs $6 per online service provider submission.
While the registration forms seem relatively simple, they raise additional issues that need to be considered carefully. For example, related companies that are separate legal entities (parents, subsidiaries, etc.) and own related but separate websites must register separately. An online service provider must also provide all alternate names under which the service provider is doing business, such as any of its associated website names and/or domains, software application names, or any other commonly used name that the public would be likely to use to search for the service provider’s designated agent. In many cases a website owner can submit multiple websites/alternate names in one submission, but it depends on the specific circumstances. The DMCA must be strictly complied with in order to receive full safe harbor protection, so it is essential that the registration forms are properly and fully completed.
Once the DMCA agent has been designated through the Copyright Office’s online system, online service providers must ensure that all of the registered information remains up to date. Any failure to maintain accuracy in this information could result in losing the protection of the DMCA safe harbor provisions. For example, if an online service provider’s designated agent changes, the service provider must make sure that the agent registration information is updated not only with the Copyright Office, but also in all places on the service provider’s website where the designated agent is identified.
Online service providers can amend their registrations at any time for an additional $6 per submission. Additionally, the Copyright Offices requires online service providers to renew their agent designation at least every 3 years. To do this, service providers must resubmit their registration before it expires, either with the same information if still accurate or with any updated information. Renewals are also $6 per submission. Any amendment filed will begin a new 3-year period before a renewal is due.
All online service providers should carefully review their current DMCA policies and materials and determine whether they may need assistance with drafting online DMCA policies for consumers, establishing and maintaining a designated agent with the Copyright Office, and/or drafting internal policies and procedures on reviewing and addressing DMCA takedown notices. Online service providers do not want to miss out on compliance with the DMCA’s safe harbor provisions and potentially face copyright infringement liability for user content. — Rina Van Orden
