Most Internet entrepreneurs, when starting or running their business, tend to pay exclusive attention to putting their good ideas to work and generating revenues, leaving aside other considerations that may not initially seem so important or that they are simply not familiar with. Of course, commercial ideas and the way you put them in practice are a huge part of the cake of success. But the good entrepreneur must also understand that legal risks are also a key point to keep his/her business healthy and profitable. In this article we summarize some of the most important legal tips that every Internet entrepreneur should take into account for his/her business in Spain, and to explain the importance of such legal risks. This may not cover every single legal aspect applying to your business, but they are the basics of the many unexpected legal considerations that running a business on the Internet may present.
1. Never assume that, because others are doing it, then it must be legal
This is the most common error into which new Internet entrepreneurs fall. Just because somebody else is providing a service/content in Internet that doesn’t mean the service/content is legal, or at least, that there is no legal risk in providing it. Each activity is subject to different regulations which need to be complied with, and many of the various possible ways of performing such activity have different legal consequences that need to be assessed. Maybe the other services compared to are being provided in a slightly different way which makes them legal or less risky. Maybe such other websites have duly concluded all required agreements to use the content or provide their services. Or maybe they might just have obtained a risk assessment of their business from their lawyers and concluded they are prepared to run the risk implied. Do you really know what level of risk other website owners are willing to take and what they have to lose? What is the risk you are prepared to take?
2. Is it really better if you set up a company?
In Spain there are several legal options for running a business, and there is no single answer for all types of activity. Each organization has different compliance and management obligations, and costs that you will have to face. You may consider being a self-employed entrepreneur or maybe incorporating a private or public limited company, which can have various management and shareholding structures. The possibilities are multiple and will depend on your needs and your business plan. Get assistance from an expert lawyer who will advise on the pros and cons of each option.
3. Negotiate your contracts and put them in writing
Don't just sign the contracts that your providers or partners give to you. Negotiate every single agreement so that you ensure to get the best out of them and that your goals are clearly expressed. Keep contracts simple, but accurate in terms of what you are looking for (for example – and especially- in respect of the contract with your web developer, where you must also be careful regarding which party owns the rights in the resulting website). And always ensure that all your deals and agreements are confirmed in writing. Please note that anything that is agreed verbally is often very difficult to put into effect when problems arise. If you reach an agreement verbally, ask for - or send - a confirmation in writing.
4. Protect your intellectual and industrial property
In Spain industrial property stands for trademarks, trade names and patents, while intellectual property refers to any original intellectual work or creation. Each of them is subject to different regulations which offer different types of legal protection. In relation to industrial property, before using a new name for your service (in particular, don’t just assume that since a domain name is available you can use it as a trade name) or launching a new design or product, do a trademark search and in appropriate cases a patent search to avoid possible conflict with an existing product or patent. Get a trademark clearance from a qualified intellectual property attorney and once it is cleared, file for the trademark registration. In respect of intellectual property, think how important your website original content, creations and work are for your business. If they are, consider registering them and/or depositing them with a notary to ensure an enhanced protection.
5. “Secure” your systems
Some entrepreneurs give a lot importance to this point, some others don’t. Ask yourself how difficult it will be for someone to attack your systems and what legal liability may be implied in this for you (e.g. where you did not implement a measure that it was legally compulsory). In general, you must be aware that regulations set up a minimum level of security that you must implement in your systems to avoid non-authorized access or manipulation of your data. In particular, where you work with personal data of your users, the regulations detail the security measures you must implement depending of the type of data collected.
6. “Be water, my friend”
With your users, be clear and transparent as water. Consumer regulations establish this general principle with which very few Internet services comply. Give your users concise information on the relevant points of your service throughout your website: how does it work, what do users get, what do they have to pay and how, what related costs may they have, what can they do and what can they not do. Let your users contact you by different means, and be proactive in offering solutions to their problems. This will not only keep users satisfied, it will also reduce risk of claims or liability. Remember that a dissatisfied client can turn into a litigious client.
7. Draft website terms and conditions and a “User Service Agreement”
These two documents may come all in one or separately. Whatever the case, and following the previous tip, all websites in Spain providing a commercial service must provide certain minimum legal information and inform users about the conditions under which they can use your website and/or your service. Clarify what is your responsibility and where your users are responsible (e.g. where you allow your users to post comments or content, exclude your liability for defamation or breach of third party rights arising out of your users’ activity). Such terms/agreement will also help protect you against unfair or unreasonable claims. Think that, when contracting with consumers, you as the provider have the burden of proof on the application of a particular condition. Make sure all your customers are always aware of your terms and conditions, and that they agree to such terms/agreement each time an order is placed.
8. What are the issues with your users’ personal data that you collect?
9. Do market, don’t spam
Using your users’ personal data (e.g. email addresses) to send them commercial information about services or products is subject to specific regulations which you must take into account. Sometimes, provided you initially collected their personal data legally, you may be able to use it to inform your users about new features and updates in the service or product they have already purchased; but be careful if you are planning to send them information about other different products or services, whether yours or those of any third party. In Spain, in general, for sending a commercial communication via electronic means, you must always obtain the data subject’s authorization. Otherwise, it is classed as spam, and potentially subject to large fines. Also, be careful if you are hiring an advertising company or any third party for sending commercial emails. The applicable rules can make you personally liable for misconduct by your affiliates and contractors. Make sure that they sign a contract in this regard and that they comply with their obligations according to the law.
10. Audit your website
When starting your business, and regularly, have a full legal review performed on your website to identify any misleading or ambiguous advertising, determine how you should comply with personal data protection and privacy issues, analyze how you can protect against defamation or copyright infringement claims, underage access, and other regulatory and compliance issues. Consult an experienced Internet lawyer to understand the legal issues and pitfalls you face in running your business and make your lawyer keep you up to date with changes in the law that may affect your business.
Ten Legal Tips for your Internet Business in Spain
This article summarizes some of the most important legal tips that every Internet entrepreneur should take into account for their online businesses in Spain, and to help them understand such legal risks, a key point in keeping their business healthy and profitable.
ABOUT THE AUTHOR: Ignacio Herreros Margarit
Ignacio Herreros has throughout his entire career focused on IT and telecommunications law. He specialises in complex IT and telecommunications contracts, negotiation with regulatory authorities, intellectual and industrial property licensing and protection, electronic commerce and Internet legal issues, online criminal offences, privacy and data protection. Ignacio combines his legal advice with a sound knowledge of IT technical issues.
Ignacio holds a Master Degree in IT/IP Law. He is a lecturer at the LLM of ISDE-IEB Institute in Madrid, and he is one of the co-authors of the book “Manual de Derecho de las Telecomunicaciones”. He speaks fluent Spanish and English.
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Disclaimer: Every effort has been made to ensure the accuracy of this publication at the time it was written. It is not intended to provide legal advice or suggest a guaranteed outcome as individual situations will differ and the law may have changed since publication. Readers considering legal action should consult with an experienced lawyer to understand current laws and.how they may affect a case. For specific technical or legal advice on the information provided and related topics, please contact the author.