(Source: Shopify) ecommerce legal guide united states of america

Ecommerce Legal Guide: United States

DISCLAIMER: These guides are for informational purposes only, and do not constitute professional legal advice. Please consult independent legal advice for information specific to your country and circumstances. Shopify is not liable to you in any way for your use or reliance on these guides.

Whether you're starting a brand new business or you're an established retailer, taking your business online is a fantastic and exciting growth opportunity. In fact, there has never been a better time to start an ecommerce business. The internet has connected the world and tools like Shopify now make it possible for anyone to get started, regardless of technical skill.

However, with all of these advantages come some complex legal issues. Different countries have different laws and knowing which ones apply to you is critical. In addition to the large variety of laws to take into account, you must remember that the law is fluid and subject to change. In order to reap the rewards that a successful online store can bring, you must stay informed and protect yourself and your business.

And that's exactly why we created this guide.

We want to make you aware of all the important implications that come with conducting business online so you can prepare yourself and carry out all the necessary steps to ensure everything you're doing meets the legal requirements for an online business operating in the United States.

Having said that, this guide is not meant to be taken as official legal advice. Rather, it's simply meant to point you in the right direction and it's always best to seek professional legal counsel if you have questions about your specific situation.

Let's dive in.

Trademark Registration

DISCLAIMER: These guides are for informational purposes only, and do not constitute professional legal advice. Please consult independent legal advice for information specific to your country and circumstances. Shopify is not liable to you in any way for your use or reliance on these guides.

Trademark Definition A trademark or service mark includes any word, name, symbol, device, or any combination, used or intended to be used to identify and distinguish the goods/services of one seller or provider, and to indicate the source of the goods or services. —U.S. Patent & Trademark Office In the competitive and constantly changing digital marketplace, a trademark is a very valuable asset. It differentiates your business and the quality of your products from those of your competitors. Your trademark carries your reputation with it, and reinforces

long-term relationships with your buyers. It’s important to be aware of trademarks not only to protect your rights but also to ensure that you’re not infringing on the rights of others when creating one.

The United States Patent and Trademark Office (USPTO) is responsible for registering and enforcing your rights as a mark holder. They're a resource you can access to gather information, ask questions, check the registry of current marks and begin the registration process.

In the United States, you have the option to register your trademark at either the state or federal level. A state registered trademark only protects your mark from infringement within that state. A federally registered trademark provides protection across the entire country, but is only available if you do business with other states or internationally. If your ecommerce platform provider can show transactions that span beyond state borders, you can gain the beneficial protection of a federally registered mark.

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State-registered (i) Protects your mark within state lines. (ii) Available when you only do businesses within your state. (iii) Does not offer protection in other states. (iv) Does not help register in other states.

Federally-registered (i) Protects your mark throughout the U.S. (ii) Available when you do business with different states or internationally.

(iii) Provides a presumption of the mark's ownership.

There’s no legal requirement for you to register your trademark, but there are benefits for your brand if you do. Registering your mark gives you the exclusive right to use it in either your state or the whole of the U.S. In the event that someone does use your mark, it’s easier for you to take legal action.

When you register your trademark, it’s presumed to be your property. Having to prove use and ownership of an unregistered mark, however, can be difficult and expensive. A trademark is an asset to your business that’s worth protecting, and registering your mark is the best way to do that.

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Registered (i) Place the ® symbol near your mark (ii) Provides the presumption of the mark’s ownership, which makes litigation easier (iii) Mark is property that can be sold or licensed

Unregistered (i) Place the ™ symbol after your mark (ii) Must show use on website, emails, invoices and packing slips (iii) In a dispute, the first party to have used the mark will be successful When deciding whether or not to trademark your brand, the first thing to consider is whether your mark will be approved. The USPTO does not allow the registration of marks that are generic, descriptive or likely to cause confusion with existing trademarks.

Your mark can’t be a word or phrase used commonly in the industry or similar to another company’s mark. Trademarks are an important part of your brand, and insuring they are compliant is the first step to creating an indefinable and effective mark.

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Registration Five Steps (i) Ensure your mark can be trademarked (ii) Check the registry (iii) Identify your unregistered mark (iv) Seek legal advise (v) Register the mark Check the registry of existing marks to see if yours is unique. When this process is underway, begin identifying your unregistered mark. This means placing the TM symbol near your mark on your ecommerce store. Completing this step is the beginning of getting some degree of protection.

The final step is to go through the actual trademark registration process. This includes completing forms, providing drawings of your mark and listing its wares and services.

Be patient – this stage can take up to six months to complete. Registering your mark isn’t overly complicated, but you should still seek legal council if possible.

Although trademarks are an established area of the legal system, the law is fluid and you should remain informed about changes relevant to you and your business.

The USPTO is a good resource for keeping up to date and ensuring that your rights are maintained. Trademarks are valuable assets, but it’s up to you to capitalize on and protect this aspect of your brand.

Privacy — Anti Spam

DISCLAIMER: These guides are for informational purposes only, and do not constitute professional legal advice. Please consult independent legal advice for information specific to your country and circumstances. Shopify is not liable to you in any way for your use or reliance on these guides.

Spam Defined You cannot send any electronic mail message the primary purpose of which is the commercial advertisement or promotion of a commercial product or service. —CAN–SPAM Act As a shop owner, you often have the opportunity to collect and use your customers’ email addresses whether it's through a purchase they made or by joining your email newsletter.

In fact, when it comes to driving sales, email marketing is still one of highest converting sales channels.

Having said that, when it comes to email you must be sure to exercise caution when sending sales messages to your customers. By passing the CAN-SPAM Act, the U.S. government has made it an offense to "spam," and the monetary penalties are high.

Sending email to customers is a great way to keep them informed about your products and offers.

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Avoid Spamming Our Recommendations (i) Unsubscribe — Every commercial message must have a clearly placed link or other address allowing the receiver to unsubscribe from future messages. These messages must be promptly honored. (ii) Labeling — Every message must be clearly labeled as advertising. (ii) Content Requirements — The subject field and header must not mislead the reader, and the message must contain a valid postal address.

These communications are defined as "Commercial Messages."

Potentially problematic messages range from emails telling customers about a new sale to offering unsolicited business opportunities.

The law doesn’t ban these sorts of messages, but does require the sender to follow certain requirements.

Complying with this law will allow you to maximize your mailing list as a means of marketing, while ensuring that your communications are legal.

Business Structures

DISCLAIMER: These guides are for informational purposes only, and do not constitute professional legal advice. Please consult independent legal advice for information specific to your country and circumstances. Shopify is not liable to you in any way for your use or reliance on these guides.

Structures Your Options (i) Sole Proprietorship (ii) Partnership (iii) Company Whether you’re just starting out or deciding the right structure for your existing company, understanding the law around business organization is important. This chapter will outline three commonly used options: a sole proprietorship, a partnership or a corporation. You’ll have to decide which option will protect you most from liability while affording you the greatest amount of benefits.

Sole Proprietorship This is the most common structure for online storeowners, and also the easiest to run and set up. A sole proprietorship is ideal for businesses with a relatively low risk of liability.

If you're operating under a name other than your own, register it with the appropriate authority — either your state or county office depending on where you do business. This is called registering your DBA (“doing business as”) name, and ensures that only you are conducting business in your area under that name. You can find information about DBA registration in your area here. They’re not always required, but the permits and registrations you may need are governed locally. Consult your government- supported local Small Business Development Center to make sure you have everything you need.

Although you need to have the correct permits, no separate entity is created for your company with a sole proprietorship. Your personal and business assets are one and the same, and your business taxes are found on your personal tax return.

Your company can evolve beyond a sole proprietorship in the future if need be, but this is a simple and low cost way to start operations of your online shop.

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Pros (i) Easy to set up and run. (ii) Control of all business decisions and profits. (iii) The company does not file taxes

Cons (i) Not a separate business entity. (ii) You are responsible for all debts or actions against the company. (iii) If business is doing well, you could in a higher tax bracket.

Partnership A partnership is another common structure for small businesses, and contains many of the simplicities of a sole proprietorship.

Partnerships are formed when two or more individuals work together as co-owners of a business venture. This structure allows individuals to pool their assets and skills to increase their chances of success.

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Agreements Considerations A well-drafted and balanced agreement should include: (i) Names of partners and how new partners can be added. (ii) Outline of the business. (iii) Investment liability and profit share of each partner. (iv) What if partnership is dissolved.

Like a sole proprietorship, there’s no separate entity created for your online shop. You need to submit an information form about your partnership to the IRS (Internal Revenue Service), but each owner pays all taxes on their personal income statement.

With this form of organization, remember to focus on the human element. There’s always a chance that a friendly partnership can change in the future. For this reason, make sure to have a lawyer assist you in drawing up a partnership agreement.

Selecting the right partner is also important because you’re liable for the debts and actions they incur on behalf of the business.

Although care should be taken when starting up, partnerships are a simple way to collaborate with others for a successful business.

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Pros (i) Allows for a division of work, capital and profits.

Cons (i) Not a separate entity. (ii) Jointly liable. (iii) Assets are jointly owned.

Corporation The incorporation process is more complicated than the other two options but does have many potential benefits for your online business.

This is another instance where speaking to a lawyer is important. The process is not overly complicated, but there are ways a lawyer can structure your company to maximize benefits.

One of the most notable differences about this structure is that the corporation becomes a separate entity from you as the owner. This means you’re not personally financially liable for what happens to the corporation, and your personal assets are protected from the liabilities created by your shop. When your store grows — and the liabilities you’re exposed to grow with it — this is a huge benefit.

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Pros (i) Separate entity. (ii) Limits personal liability. (iii) The corporation survives the death of shareholders or sale. (iv) Tax advantages.

(v) Improves your credibility.

Cons (i) Heavily regulated. (ii) Extensive record keeping required. (iii) More expensive to form (there are fees associated with incorporation).

Choosing a business structure It's important to consider the unique aspects of your business when deciding which organizational structure to choose. Before finalizing your decision, consult a lawyer to make sure you’ve made a sound choice and that the process is completed properly.

Conclusion Share This Guide Share the Legal Guide if you think that it may be helpful information for your friends and followers.

Being aware of and obeying the rules that apply to you as an online business owner is an important aspect of running your shop.

Protecting your brand, your assets, and maintaining a positive customer relations are all affected by your ability to understand and obey the law.

The law is fluid and can always change! The resources provided to you in this book will allow you to stay up to date and make sure you are aware of requirements placed on you.