SETTING UP AN ONLINE BUSINESS

If you are considering establishing an online business, it is not simply a matter of registering a business name, licensing a domain name and setting up an account with say Amazon or through Shopify.

There are various legal aspects you need to consider and steps that should be taken to ensure you are trading legally, not infringing other's rights and have put in place mechanisms to protect yourself and the Business.

Structure

Common business structures include:

  • sole trader,

  • partnerships,

  • companies and

  • trusts.

Each of these structures have different advantages and disadvantages in terms of liability protection, taxation and set up costs.

Although it is possible to change a business structure at any time, it is better to try and select the appropriate structure at the commencement (where possible).  

Contact Greyson Legal for help in deciding what business structure to adopt for your online Business.

Intellectual Property

There are different types of intellectual property, such as:

Whether one or all these forms of IP rights are applicable to your Business will vary depending on the nature of your Business and the products and services sold.

In our experience, IP rights in relation to copyright and trademarks have broadest application to most online businesses. For example:

  • Copyright – eg. copyright in the content of your website;

  • Trademarks – eg. in relation to your band name or logo.

If you want the ability to have exclusive use to the words associated with your brand and/or image-logo, then you would be best placed registering a trademark.

Contact us for assistance applying for a trade mark. 

Domain Names

A domain name is part of the “Domain Name System” (DNS) which provides people with an online address linked to an internet website. That address must be unique so computers know where to find each other.

Typically, it contains a name followed by an ending (or extension), such as “.com”

The .com extension is an example of a “Top Level Domain” or “gTLD”. Other top level domains include:

  • .org - charities and non-profit organisations

  • .net – open to any person or entity

  • .edu - schools and universities

  • .gov - federal, state or local government

 In Australia, a country code is applied to the top level domain to indicate it is an Australian domain name, such as: .com.au or .net.au

 The .au domain space is administered through the organisation called “au Domain Administration Ltd (auDA)”.

To register (ie. obtain a licence) in relation to a .com.au or .net.au extension and the like, registration is conducted through an “accredited registrar” as approved by auDA.

The length of a domain name registration in .au is 2 years. This period can be renewed as required in return for payment of a prescribed fee.

If a registered domain name is not renewed as per the auDA policy, it can be released to the public where others can seek to register the name.

It is also possible to transfer the domain name using a prescribed Transfer Form and payment of any relevant fee.

It is important to note that although you may register a domain name, that does not give you any proprietary ownership rights in that name.

In order to obtain such proprietary rights it is necessary to either show you have a common law trade mark or register a trade mark.

Contact us for information about protecting your brand by implementing appropriate IP strategies, such as trademarking. 

Protecting Trade Secrets | Confidentiality Agreements

Trade secrets, also referred to as know-how and other confidential or proprietary information have an important role in an online business.

Trade secrets are typically broadly defined and may include:

  • sales methods;

  • distribution systems;

  • customer databases;

  • advertising strategies;

  • supplier list;

  • manufacturing processes, etc.

An example of trade secret is the the combination of herbs and spices used in Kentucky Fried Chicken.

There is no formal registration process in respect of trade secrets.

As know-how is important to a business, it follows that appropriate mechanisms should be adopted to protect the business owner's trade secrets. A few options might include:

  • Only key personnel of the Business having access to the trade secrets;

  • Where access is given, the relevant receiver of the information has signed a Confidentiality or Non-Disclosure Agreement;

  • Checking whether the content of the trade secret might also fall into another category of intellectual property, eg. copyright.

When setting up an online business it is important to protect your trade secrets.

This can be accomplished through:

  • adopting appropriate clauses in your website terms and conditions;

  • utilising a Confidentiality Agreement - especially when discussing your project with other third parties;

  • checking your IP strategy is up to date and that effective steps have been taken to protect your IP rights.

Greyson Legal can:- prepare Confidentiality Agreements; conduct an IP audit; and advise you on an appropriate IP strategy.

Send us an email: info@greysonlegal.com.au

Supply Agreements

If you are using a 3rd party supplier to supply you with products that you on-sell through your online business, then you should:

  • ensure there is an appropriate Supply Agreement in place as between the supplier and yourself; and

  • ideally seek legal assistance in reviewing and advising you on the terms and conditions of supply.

The supply terms and conditions should include minimum provisions around:- how orders are made, delivery, costs, product warranties, defective product returns/refunds, title to and risk in the products, insurance, indemnities and limitation of liability, etc.

If you need Supply Agreement legal advice, contact Greyson Legal for further information.

Website

With any online business the Business's website will serve a critical role in relation to promotion of the Business and the sale of its products and services.

Depending on the complexity of the website that us required, issues to take into account from a legal perspective might include:

  • Website Terms of Use – ie. the rules and regulations by which people use your website;

  • Business terms and conditions – ie. provisions dealing with the  transactional aspect of the purchase/sale of the products or services, such as:- product price, payment procedures,warranties, etc

  • Disclaimer – ie. relates to legal liability

Greyson Legal are experienced in reviewing, advising and drafting website terms of use and website terms or trade. Contact us for more details on how we can assist you.

Privacy

In operating your business online it is likely you will be collecting personal information from website users, customers, suppliers and others.

Even if you are not subject to the privacy legislation (Privacy Act 1988 (Cth) and the Australian Privacy Principles (APPs)) that apply to larger businesses, it will still be prudent to put in place some form of Privacy Policy and have a link to that through your website.

Australian Consumer Law (ACL) and Other Laws

It will also be important to be aware of your obligations under the ACL. For example, not to act in a misleading and deceptive way in respect of the products or services you advertise and sell.

Depending on the nature of your Business and products and services being sold, there will be arange of other laws that require your compliance. 

Get in touch with Greyson Legal if you have any questions or need legal assistance starting or operating an online business.