IP Strategies for Your Online Business

Transitioning into an online business may feel daunting. From operations to technology, there are so many potentially new processes. Business owners currently operating online can also benefit from a review of their operations and how they can best protect their work. Don’t let your intellectual property strategy hinder your success! Here are five perspectives of what you need to consider when engaging online:

Advertising and Marketing 

  1. Marketing your product or service is an integral part of any business, especially when operating online. Creating an advertising strategy that abides by legal guidelines may sound confusing but there are a few easy tips.
  2. Firstly, make sure that all claims are truthful and substantiated. If you’re selling socks, don’t say that they can fix a broken bone.
  3. Don’t forget that this also applies to social media. Not only you and/or your business, but anyone you may work with such as content influencers, with must adhere to these rules.

Trademarks

  1. Select a strong name and/or logo for your business. What is a strong name? A good rule of thumb is, if it describes what you’re selling, it’s probably not distinct enough.
  2. Make sure you take steps to decrease the likelihood of infringement. Before committing to a name to use commercially, consult with a legal team to search existing marks and assess potential risks.
  3. Will you conduct business in multiple countries? Keep up to date with individual country’s trademark requirements so you understand how to file.
  4. Lastly, make sure to review your contracts to be aware of which rights you have and which rights you are granting. You cannot grant any rights that you don’t have! If you need help deciphering a contract, reach out.

Copyright

  1. Is there content that you use on your website, social media, or mobile apps? Make sure you know whether you can use media like music, text, photos, art, video, or other content in various ways- personally, commercially, within whatever geographic restrictions. Additionally, follow “proper credit and/or attribution” requirements for the content.
  2. Are third-parties able to post content on your website? You may want to limit your liability against their potential copyright infringement by taking advantage of the Digital Millennium Copyright Act (DMCA)’s Safe Harbor. Let us know if you need help navigating these requirements.
  3. Is there a person whose name, likeness, or image you are using in connection with your business? There are right of publicity laws that you must follow as well as applicable state laws.
  4. An online entrepreneurs’ website is like their online storefront. Do you have a clear agreement with your website or software developer? Make sure any other tools created for the operation of your business, like mobile apps, are included in your strategy. A well-written contract is a good way to take preventative measures before the work is done to avoid later infringement or theft.

Privacy and Other Legal Considerations

  1. Be in the know when it comes to changing data privacy and internet laws. Specific state laws may apply to your business even if you are not physically located there.
  2. The California Consumer Privacy Act (CCPA) and Californica Public Records Act (CPRA) grants California residents greater control over their personal data and how businesses use that information. If you want to prepare your businesses for CPRA compliance, start by reviewing how your company collects data, and then contact a professional about how to make sure everything is above board and complies with the new laws.
  3. Virginia recently passed similar legislation known as the Consumer Data Privacy Act (CDPA). There are some differences compared to California’s legislation such as which businesses apply to the regulations.
  4. Finally, set up your online presence to comply with other regulations such as the Americans with Disability Act (ADA). For example, make online offerings available to those with disabilities. Other important legislation includes the Children’s Online Privacy Protection Act (COPPA) and the Communications Decency Act (CDA).

Protection Strategies

  1. Last but certainly not least, educate yourself and pursue all routes to protect your content.
  2. Seeking registration with the Copyright Office and/or the USPTO is a great first step in protecting your business and intellectual property.
  3. Another strategy which helps to prevent improper use is to include notices on your website, social media, and /or mobile applications.
  4. If you are concerned about improper use, explore all monitoring tools and consult with your legal team.

Whether you already conduct business online or not, the internet is here to stay. It’s become an invaluable economic resource, especially with the need for remote options in the past year. As such a fast and accessible way to work, make sure you take into account all your legal and commercial options as an intellectual property owner.

(This is not intended as legal advice. Contact a lawyer for assistance in your particular situation.)

Virginia Becomes 2nd State to Pass Comprehensive Data Privacy Law

On March 2nd, Governor Ralph Northam signed into law the Consumer Data Protection Act (“CDPA”), making Virginia the second state to enact comprehensive data privacy legislation.  The new law, which will go into effect on January 1, 2023, combines concepts from the California Consumer Privacy Act (“CCPA”) and California Privacy Rights Act (“CPRA”), as well as Europe’s General Data Protection Regulation (“GDPR”).  The CDPA grants numerous rights to residents of the Commonwealth to provide them with greater control over their personal data, and places new obligations upon covered businesses.  Specifically, the law gives Virginia residents (“consumers”) the right to access, correct, delete, and obtain a copy of their personal data, as well as the right to opt out of the sale or processing of their personal data by covered businesses for purposes of “targeted advertising.”[1]  The CDPA broadly defines “personal data” as “any information that is linked or reasonably linkable to an identified or identifiable natural person,” and excludes de-identified data or publicly available information.  Virginia’s new law also creates a special sub-category for “sensitive data” that includes: “(1) personal data revealing racial or ethnic origin, religious beliefs, mental or physical health diagnosis, sexual orientation, or citizenship or immigration status; (2) the processing of genetic or biometric data for the purpose of uniquely identifying a natural person; (3) the personal data collected from a known child; or (4) precise geolocation data.”

Who is Covered?

The CDPA applies to businesses, whether physically located in Virginia or not, that conduct business in or target residents of the Commonwealth, and that either: (1) control or process the personal data of at least 100,000 consumers, or (2) derive over 50 percent of their gross revenue from the sale of personal data and control or process the personal data of at least 25,000 consumers.  In addition to excluding small business from its scope, Virginia’s law includes several other exemptions and provisions making it generally more business-friendly than Europe’s and California’s laws.   For example, the CDPA excludes non-profit organizations and institutions of higher education, as well as businesses that meet the above thresholds but are already subject to federal privacy laws such as the Gramm-Leach-Bliley Act and HIPPA.[2]  The law also defines “consumer” as “a natural person who is a resident of the Commonwealth acting only in an individual or household context. It does not include a natural person acting in a commercial or employment context.”  While California passed temporary business-to-business (“B2B”) and employment-related exemptions to lessen the burden of businesses’ compliance with the CCPA, the Virginia law considers and includes built-in exceptions for these types of personal data.

Requirements for Covered Businesses

Businesses subject to the provisions of the CDPA will need to develop processes to allow consumers to exercise the above-mentioned rights.  Covered businesses should also prepare to comply with the following obligations under the new law:

  1. The requirement that covered businesses provide a reasonably accessible, clear, and meaningful privacy notice (often referred to as a “privacy policy”) that includes specific information as outlined by the law.
  2. The requirement that covered businesses considered “controllers” put contracts in place with third party “processors” of personal data containing specific provisions related to the handling of consumers’ personal data.[3] Thus, businesses subject to the CDPA should adopt standard contractual language to include in any agreements with vendors that will touch personal data.
  3. The requirement that covered businesses limit the collection of personal data to what is “adequate, relevant, and reasonably necessary in relation to the purposes for which such data is processed, as disclosed to the consumer,” and that such businesses “establish, implement, and maintain reasonable administrative, technical, and physical data security practices to protect the confidentiality, integrity, and accessibility of personal data.”[4]
  4. The requirement that covered businesses conduct and document a formal “data protection assessment.” The assessment must include specific information related to businesses’ processing of personal data.  The Office of Attorney General may request a copy of a business’s data protection assessment under its investigative authority (which, for example, is likely to occur during its investigation into a covered business’s data breach).
  5. The requirement that covered businesses obtain affirmative consent from consumers before collecting and using “sensitive data.” Because affirmative consent is not currently required under California’s data privacy laws, many covered businesses will likely need to consider how they will obtain such consent and if/why they are processing sensitive data, specifically.

Enforcement

The CDPA will be enforced by Virginia’s Office of the Attorney General, which will have investigative authority and may seek injunctions and/or impose civil penalties of up to $7,500 per infraction for covered businesses that violate the law.  Any penalties and fees collected will go into a “Consumer Privacy Fund” used to support the work of the Office of the Attorney General to enforce the provisions of the CDPA.  Like the CCPA, Virginia’s new law also provides for a 30-day cure period for violations.  However, quite notably and unlike the CCPA, the CDPA does not include any private right of action.  Further, while the Virginia law does not contain language regarding rulemaking authority or procedures, it creates a “work group” to review the CDPA and issues related to its implementation.[5]  The work group’s findings, best practices, and recommendations regarding the implementation of the CDPA shall be submitted to the Chairmen of the Senate Committee on General Laws and Technology and the House Committee on Communications, Technology and Innovation no later than November 1, 2021.

Generally, the CDPA avoids several areas of uncertainty that lawmakers and California’s Attorney General, as well as covered businesses seeking to comply, encountered during the rollout of the CCPA.  Thus, Virginia’s law may provide a clearer model for consumers and businesses to follow, as well as for other states and possibly the federal government when developing their own data privacy legislation.  Gavin Law Offices, PLC will continue to monitor updates regarding the CDPA and other U.S. data privacy laws.

(This blog post is not intended as legal advice.  Please contact us for more information and assistance regarding your particular situation.)

[1] “Targeted advertising” means displaying advertisements to a consumer where the advertisement is selected based on personal data obtained from that consumer’s activities over time and across nonaffiliated websites or online applications to predict such consumer’s preferences or interests.  “Targeted advertising” does not include: (1) Advertisements based on activities within a controller’s own websites or online applications; (2) Advertisements based on the context of a consumer’s current search query, visit to a website, or online application; (3) Advertisements directed to a consumer in response to the consumer’s request for information or feedback; or (4) Processing personal data processed solely for measuring or reporting advertising performance, reach, or frequency.

[2] This language is considerably more favorable for businesses than a similar exception under the CCPA, which applies to only “personal information” collected, processed, sold, or disclosed pursuant to a specified federal law such as GLBA or HIPPA, and does not exclude the entity as a whole like the new Virginia law.

[3] Under the CDPA, “controller” means the natural or legal person that, alone or jointly with others, determines the purpose and means of processing personal data.  Meanwhile, “processor” means a natural or legal entity that processes personal data on behalf of a controller.  Both terms will be familiar to those acquainted with data privacy legislation, as they are borrowed from the GDPR.

[4] This “reasonable” safeguard standard is also included in the CCPA/CPRA and the GDPR.  The CDPA also includes language that “such data security practices shall be appropriate to the volume and nature of the personal data at issue.”  Thus, like existing data privacy law, Virginia’s will allow businesses to determine their own “reasonable” security practices and does not obligate covered businesses to put in place any specific data security measures.

[5] Specifically, the “Chairman of the Joint Commission on Technology and Science shall create a work group composed of the Secretary of Commerce and Trade, the Secretary of Administration, the Attorney General, the Chairman of the Senate Committee on Transportation, representatives of businesses who control or process personal data of at least 100,000 persons, and consumer rights advocates.”  Interestingly, this does not include representatives of businesses who derive over 50 percent of their gross revenue from the sale of personal data and control or process the personal data of at least 25,000 consumers.

 

–  Courtney Reigel, Esq.

U.S. Data Privacy Law – 2020 Update 

By now, many of you have likely heard of the California Consumer Privacy Act (the “CCPA”).  The law, passed by California’s State Legislature in 2018, became effective on January 1, 2020.  The CCPA gives California residents more control over the personal information that businesses collect about themgranting residents the right to know how businesses use/share their personal information, the right to request that a business delete their collected personal information, and the right to opt-out of the sale of their personal information.  The CCPA borrows many of its provisions from the European Union’s General Data Protection Regulation (“GDPR”) While many believed that the GDPR (adopted by the EU in 2016) would serve as a catalyst for the United States to enact similar data privacy law, the U.S. has yet to pass, or even seriously consider, any comparably comprehensive data privacy legislation at the national level.  

While several other states have passed data privacy and protection laws since 2018, arguably none have enacted laws as extensive as the CCPA.  However, due to revisions California’s legislature made to the original text of the CCPA, as well as certain language included in the Final CCPA Regulations published by California’s Office of the Attorney General (OAG) earlier this year, many Californians and consumer advocacy groups do not believe the CCPA goes far enough to protect consumers’ personal information.  Thus, on election day this year, California voters approved ballot initiative “Proposition 24”  the California Privacy Rights Act of 2020 (the “CPRA”).  The CPRA gives additional rights to California residents and further limits businesses ability to use/sell/share personal informationamending and expanding upon the CCPA.   

Most of the CPRA’s substantive provisions will not become effective until January 1, 2023.  However, businesses may begin preparing for compliance with the CPRA by familiarizing themselves with the following highlights of the new law: 

  1. Applicability – Just because the CCPA was or was not applicable to your business does not mean the same for the CPRA.  For example, the CPRA will cover businesses that buy, sell, or share over 100,000 consumers personal information (up from 50,000 under the CCPA), reducing the applicability of the law to small and midsize businesses. 
  1. Enforcement – The CCPA is currently enforced by California’s Office of the Attorney General (OAG) However, the CPRA establishes the California Privacy Protection Agency, which will have investigative, enforcement, and rulemaking powers instead of the OAG.  The CPRA also removes the 30-day cure period businesses have under the CCPA and increases maximum penalties for violations concerning minors. 
  1. New category of “sensitive personal information – The CPRA will keep the existing categories of personal information defined in the CCPA, but will add a new category for “sensitive personal information.”  Californians will have increased rights when their sensitive personal information is involved.  
  1. Expanded contractual requirements – The CPRA limits the use of personal information by service providers and contractors and adds contractual requirements regarding relationships between businesses and such third parties.   
  1. Modifying/adding new consumer rights – New rights include the CPRA’s expansion of an individuals’ private right of action for certain types of data breaches and requires that covered businesses provide consumers with two or more methods for submitting requests to correct inaccurate personal information 
  1. Regulates “sharing” in addition to “selling” personal information, to include cross-context behavioral advertising – The CPRA expands upon the CCPA’s limitations on businesses “sale” of consumers’ personal information to cover the “sharing” of consumers’ personal information even if such information is not being sold for monetary value.  Specifically, this will regulate cross-context behavioral advertising,” defined by the CPRA as the targeting of advertising to a consumer based on the consumer’s personal information obtained from the consumer’s activity across businesses, distinctly branded websites, applications, or services, other than the business, distinctly-branded website, application, or service with which the consumer intentionally interacts.”  Businesses that share personal information, including in the cross-context behavioral advertising context, will need to provide an opt-out choice for consumers, such as “Do Not Sell/Do Not Share My Personal Information for Cross-Context Behavioral Advertising.”    

The above highlights, as well as the other provisions of the CPRA, bring California’s data privacy laws closer to resembling the GDPR.  It will be interesting to see whether other states follow suit in 2021.  While Virginia established a task force to study data privacy issues last General Assembly session, it has not yet passed any data privacy law as comprehensive as the CCPA/CPRA.  The Commonwealth, as well as numerous other states, will likely consider data privacy legislation next year. 

In the meantime, while the effective date of the CPRA may seem far away, California’s OAG continues to publish updates to the CCPA Regulations and to enforce existing law.  For example, while the Final Text of the CCPA Regulations was published in August, the OAG released fourth set of modifications to the Regulations on December 10, 2020.  The latest modifications include further clarifications on the CCPA, including much-awaited guidance on the “Do Not Sell My Personal Information ‘Button.’”  Thus, businesses still need to regularly review their CCPA compliance while they prepare for the CPRA.  You can find more information on the CCPA, including updates, here: https://www.oag.ca.gov/privacy/ccpa.  Gavin Law Offices will continue to track data privacy-related issues in California, Virginia, and across the U.S. and abroad, and are here to help you navigate this complex field of law.  

– Courtney Reigel, Esq.

2020 Update: Data Privacy Laws in the United States

After the European Union passed the General Data Protection Regulation (“GDPR”) in 2016, the world watched to see whether the United States would adopt a similar data privacy law at the federal level.  While U.S. lawmakers, the tech industry, and consumer advocates have been working towards a federal data privacy bill, Congress has yet to pass, or even seriously consider, such legislation.  However, a federal law may finally be on the horizon – two data privacy bills have been introduced in the Senate, and a bi-partisan bill is currently being developed by a House committee.  In honor of Data Privacy Day, celebrated internationally on January 28, we explore the current status of data privacy laws in the United States.

In the absence of a comprehensive federal law, numerous states across the U.S. have passed their own data privacy legislation, including, perhaps most notably, California.  The California Consumer Privacy Act of 2018 (“CCPA”) became effective on January 1, 2020, creating new obligations for covered businesses regarding privacy notices and the handling of California consumers’ personal information.  The CCPA only protects Californians’ personal information but may apply to companies that do business in California even if they are not physically located in the state.  Businesses continue to scramble to understand and comply with the CCPA, which is only one of many state and industry-specific laws forming the current patchwork of data privacy laws in the U.S.

However, a federal solution may be on the horizon.  In November 2019, two data privacy bills were introduced in the Senate – the Consumer Online Privacy Rights Act (COPRA) and the United States Consumer Data Privacy Act (CDPA).  The bills share many similarities, including enforcement by the Federal Trade Commission, and would provide individuals with new rights regarding their personal information.  However, COPRA (introduced by Sen. Maria Cantwell, D-Wash.) and the CDPA (introduced by Sen. Roger Wicker, R-Miss.) vary on some important points, leading many to wonder whether either bill could make it through Congress.  For example, COPRA would preempt only state laws that expressly conflict with the Act, leaving state laws that provide additional protection to consumers intact, whereas the CDPA would preempt all state laws regarding data privacy (except for data breach notification provisions), including the CCPA.  COPRA would also allow for an individual private right of action, similar to the CCPA, while the CDPA would not.

Additionally, the House Energy & Commerce Committee recently released an initial draft of a bi-partisan data privacy bill.  Bi-partisan support will be critical for Congress to enact a federal data privacy law, but the initial House bill does little to reconcile the differences between the two introduced Senate bills.  Further, while this federal legislation is pending, numerous states are actively considering data privacy bills themselves.  Specifically, multiple states are in the process of considering data privacy legislation mirroring the CCPA.  In other states, such as Virginia (where the Virginia Privacy Act was introduced earlier this month), representatives have pulled provisions from the CCPA as well as the GDPR to create a more tailored bill for their state legislature to consider.  With many states in their legislative sessions and various federal bills pending, 2020 is already shaping up to be an exciting year for data privacy in the United States.

-Courtney Reigel, Esq.