Protecting Your Business Globally

ResellerClub Hosting Summit 2013

W. David Snead

Attorney + Counselor

Tactical Legal Advice for Internet Business

• Creating a global user agreement• Negotiating with international vendors• Optimizing your corporate structure• Handling abuse issues

Vendors• Term• Warranties• Intellectual property protection• Fees• Flow down provisions• Assignability

Customers• Can you provide service during term?• Carefully consider warranties• IP is your most important asset• Can vendor raise fees?• Create integrated contract• Keep in mind your exit

Terms of Service AUP Privacy PolicySLA

Customer

TOS

SLA

Privacy

AUP

TOS• Start with your vendor contracts• Look at your marketing materials• Consider your place in the market• Reflect your home country’s laws

• Amendment of the TOS• Resource usage• Order process• Ownership• Fees and Payment• Termination• SLA• Warranties• Limitation of liability• Choice of law

Your TOS should tell the truth

SLA

• Start with your vendor contracts• Look at your marketing materials• Consider your place in the market• Don’t bite off more than you can chew• Asterisks don’t protect you• Technical staff must verify

Your SLA is not just marketing

Privacy

• Start with your country’s laws• Look at your vendors contracts• If you sell information: disclose that• Understand cultural sensitivities

• Describe “personal information”• Disclose of monitoring tools• Disclose sale of data• Consider data retention

Privacy policies are contracts

AUP

• Start with your vendor contracts• Look at marketplace• Consult home country laws• Consult laws of data location

• Lawful use• End users responsible for content• Intellectual property issues• Unwanted content• Offensive content• Suspension• Notice address

Harmonize your AUP with your vendor’s

Your TOS should tell the truth

Your SLA is not just marketing

Privacy policies are contracts

Harmonize your AUP with your vendor’s

Customer

TOS

SLA

Privacy

AUP

• Creating a global user agreement• Negotiating with international vendors• Optimizing your corporate structure• Handling abuse issues

• What are you required to do?• What type of assistance will you get?• What are your long term obligations?• What are you giving up?• Are you negotiating on price only?

How does the technology operate?

What is the level of automation?

How do other companies affect the technology?

General contract analysis. • SLA• Choice of Law

• Possibility of human error

• Destabilization

• Contract• Scalability

• Reliability / SLA• Security• Privacy• Skin in the game• Choice of law• Long term viability

Legalese Plain English

• You get access to the servicesCompany shall provide to Customer an access code andthe functionality set out on the particular pagedescribing the functions and features provided by theService. Company’s sole and exclusive obligation is tomake the Service available to Customer as set out inthe SLA.

Your vendors should stand behind their products and have “skin in the game.”

Legalese Plain English

• You get access to the servicesCompany shall provide to Customer an access code andthe functionality set out on the particular pagedescribing the functions and features provided by theService. Company’s sole and exclusive obligation is tomake the Service available to Customer as set out inthe SLA.

If you don’t understand the product, you should find or get assistance.

Legalese

Title to XXX Units, including all patents, copyrights andother intellectual property rights shall at all timesremain with XXX and its suppliers. MSSP acknowledgesthat XXX Units constitute a valuable asset of XXX andagrees to hold all such XXX Units strictly confidential inaccordance with the terms and conditions of this MSSPAgreement. MSSP shall, use commercially reasonableefforts to minimize the unauthorized disclosure,publication, display or use of XXX Units. MSSP shall notcopy, modify or reverse engineer any XXX Units, norremove, alter, cover or obfuscate any copyright noticesor other proprietary legends placed or embedded byXXX on or in any of the XXX Units. MSSP may not useany component part of the XXX Software owned by anXXX supplier as a standalone program or in any wayindependent from XXX Software provided by XXX toMSSP.

Plain English

• The company owns everything. • You own nothing.

Intellectual property is your most valuable asset. You should keep yours.

Legalese

Subject to the cancellation terms outlinedbelow (which are only applicable to themonthly and hybrid paymentoptions), MSSP will be responsible forpaying the full billable amount per user forthe full year during which the terminationoccurs and a cancellation fee applicable toremaining years in the Term.

Plain English

• There is an early termination fee

Pay attention to words like “year” and “term.”

Legalese

In addition to the foregoing, we specificallydisclaim all liability, and you shall be solelyresponsible for thedevelopment, operation, and maintenanceof your Application (including any BundledApplication) and for all materials thatappear on or within your Application andyou agree that you shall, withoutlimitation, be solely responsible for: anyinteractions between users of the Service

Plain English

• You are responsible for maintenanceUnderstand upgrades, updates and

versions.

Your vendors should stand behind their products and have “skin in the game.”

If you don’t understand the product, you should find or get

assistance.Intellectual property is your most

valuable asset. You should keep yours.

Pay attention to words like “year” and “term.”

Understand upgrades, updates and versions.

• Creating a global user agreement• Negotiating with international vendors• Optimizing your corporate structure• Handling abuse issues

• Who owns what• Type of entity• Place of formation• Tax treatment• Registered agent / corporate records agent

Tax treatment controls

• How do you quantify your business? • Revenue recognition• Prepaid accounts• Reseller issues• Deferred revenue

• Find a good tax advisor • Experience with the Internet• Experience with startups• Experience setting up systems• Experience with deferred revenue• Can advise on International corporate structuring.

SPAMOperational Issues

• Real Time Black hole Lists / IP Blocking

• CAN-SPAM

Customer and Service Issues:

• Marketing frustration

• Customer Service Issues

SPAMOperational Issues

• Real Time Black hole Lists / IP Blocking

• CAN-SPAM

Customer and Service Issues:

• Marketing frustration

• Customer Service Issues

Subpoenas and Warrants

Any and all materials, containing any information…any and all back-up tapes which contain or storeany electronic mail from any past or current…electronic mail accounts.

• Prepare for requests for production• Amend TOS to require clients to bear cost• Amend TOS to specifically address issue• Determine your tolerance for risk• Confer with parties early and often• Assess costs of storage now

Subpoenas and Warrants

Subpoenas and Warrants • Review, Verify, Schedule , Comply• Relationship with law enforcement

SPAM • Draft policy• Post contact information• Check complaint• Develop relationship with RBL

Termination for Abuse • Based on contracts• Determine procedure up front• Don’t rely on disclaimer of liability

What’s the number for your lawyer? • Base response on contracts• Find someone with Internet experience

All contracts are negotiable

Understand flow down provisions

Don’t lock yourself in more than 2 years

Tell the truth

Don’t negotiate on price alone

W. David SneadAttorney + Counselor

Tactical Legal Advice for Internet Business

david.snead@dsnead.comwdsneadpc / Twitterthewhir.com / Blog