What entrepreneurs must know about digital assets, internet liability
Rotimi Ogunyemi, managing Partner at Bayo Ogunyemi & Co., a specialist in information and communications technology (ICT) law practice in Lagos and digital strategist and developer, shares insights on how technological advancement is changing the business environment, with emphasis on what entrepreneurs should know about digital assets and internet liability
Business today has experienced a number of disruptive changes. From the industrial revolution to computing, and now the knowledge economy, where information is invaluable, these disruptions have moved the world, as we know it, forward. The active forces behind the industrial revolution were breakthroughs in hardware innovation; the steam engines, railroads and manufacturing industries all came alive. Next came telephones and mainframe computers. But today it is all about information technology and software – all sorts of new computer applications – that move markets and have forever changed the way we do business.
One singularsoftware that has made all the difference is the web browser, which is the backbone of the internet that arguably impacts all aspects of business today. And in the last decade, social networks have redefined the way businesses interact with clients and customers. The power of social media has also been felt in the sphere of governance, and it continues to advance the frontiers of globalisation. And with mobile proliferation, we can safely say the world stands on the cusps of new realities. We rely on the internet for everyday task, from shopping to studying, banking, connectivity and, of course, doing business. All of these interactions bring to the fore a number of legal issues that must be considered by individuals, entrepreneurs and businesses who intend to remain relevant in today’s digital economy.
Beyond tangible assets such as real or personal property, computing and the internet have brought into focus digital assets of immerse proportions. Such assets include words, music, data, photos and video. Owing to this, several issues arise for an entrepreneur. Questions like: What are the legal risks involved in conducting one’s affairs or doing business online? Are there legal safeguards to consider in securing intellectual capital within an online context?
Online liability and the risks related to it can take many forms including risks and potential liability related to intellectual property infringement (such as copyright and trademark); contracts (like website development agreement, terms of use agreement, and privacy policy), as well as online speech such as defamation.
While it is important that the (online) entrepreneur has basic legal literacy, it is more important that the lawyer he or she appoints as adviser has a fundamental understanding of the intersection of law, business and technology. Below are some factors you might need to consider.
Business Structure
If you want to protect your personal and digital assets while doing business online, then you have to incorporate a limited liability company as opposed to a sole proprietorship or business name. While this is an issue of business structure, it is foundational and critical even within an online context. Limited liability is the kind of protection an online entrepreneur wants, in that the entrepreneur cannot lose more than was invested -in the event that the business collapses – and these protections extend to intellectual capital.
Contracts
While an online business is in many ways similar to any other business, businesses with digital presence enter into a significant number of contracts at inception, such as website development agreements, terms of use agreements, and privacy policies. An entrepreneur would do well to be careful, for instance, that his or her website developer provides an agreement giving website source code, design and content ownership to the entrepreneur upon completion and final payment of the project, else ownership resides in the developer. Similarly, there are a number of legal issues and potential liability that properly drafted terms of use andprivacy policy will protect an online entrepreneur against.
Intellectual Property Infringement
Intellectual property rights attach to websites, photos, videos, blogs, music, books and an assortment of other works or expression captured in a fixed medium, whether digital or otherwise. Almost any imaginable use of the internet will expose an individual or business to intellectual property implications, either as a user or creator of content. The fact that information is readily available online does not make them useable by anybody. Downloading a random photograph from a google search and using same on your business homepage most certainly is a violation of the intellectual property rights of the owner of the photograph and this can lead to grave consequences. A business would do well, for instance, to request indemnification from its web developer for any potential violation of intellectual properties rights of third parties during the development of its website.
Jurisdiction
The borderless nature of transactions on the internet raises fundamental questions of jurisdiction. A transaction can originate in Boston and be completed in Lagos within seconds. The legal complications that can occur due to differences in laws often agitate the mind of an entrepreneur. The general rule, however, is that parties are free to agree to the laws and jurisdiction, which they wish to govern their contract.
Finally, a lot of the attention in Nigeria is focused on cybercrime and issues of cyber security. These, no doubt, are important to businesses as the confidentiality, integrity and authenticity of digital assets ought to be preserved. However the matters detailed above appear to be of greater importance to the development of online business laws in Nigeria.
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