¶ … legal issues should Heimusic be thinking about?
Choice of Laws
Heimusic is a UK-based website, however it does not limit the use of its website to only UK citizens. The Heimusic website can be accessed by anyone in the world through the Internet and therefore the company may be subject to the rules and laws of many different countries. Heimusic should consider the legal implications of being subject to numerous jurisdictions and take action to implement user policies that will limit the laws governing its operations. A choice of laws provision in the websites terms and use will be provide some protection for Heimusic, but will not entirely eliminate the application of other countries laws. Heimusic should continue to consider the risks of liability from multiple jurisdictions because it is operating in a global market.
Heimusic faces the possibility of having to comply with multiple laws from its data collection activities. The company collects information about its users in a database and then licenses the use of the data to third parties. The users of the website must consent to the inclusion of their information in the database, but are enticed to do so through and offer of small discounts. Depending on how much detail is present in the actual terms of the consent given by users, Heimusic may be entering into consumer contracts with each of users for the use and licensing of their information. The formation of a contract requires an offer by a party, an acceptance on the offered terms, definite terms as to what the contract is for and adequate consideration (Ollek, 2009). There is an offer to consent to the use of the information from Heimusic to the user made in the login process. There is consideration for the use of the information by the giving of the discount from Heimusic to the user. There are terms regarding the use of the information, although these terms are not specified, which may create a contract. Lastly, there is acceptance by the user of the terms when they consent to the use of their information during in the logging in process. If a contract has been created, Heimusic should be concerned about the application of other countries laws to these activities.
The creation of a consumer contract may cause Heimusic to be subject to the consumer protection laws of the country where the user resides. The Rome I Regulation, which took effect in the UK on 17 December 2009, updates the rules determining which country's laws apply to a contract (Halton, 2010). This law provides that a consumer's local consumer law will apply where the seller either "pursues his commercial or professional activities" in the customer's country of habitual residence or "by any means, directs such activities to that country" (Halton, 2010). "Directing activities" towards a country could include activities such as offering a choice of languages on a website or providing prices in Euros for other EEA states (Halton, 2010). The parties to a consumer contract can choose the law that governs the contract but the consumer retains the benefit of any mandatory consumer law protections in their home country, provided certain conditions are met (Halton, 2010).
Since Heimusic is a consumer-based website, it should be concerned with the application of the Rome I Regulation in light of the possibility that it is forming consumer contracts with users. A website disclaimer would be a very good idea for Heimusic to limit liability, provide for a choice of law, and to set forth the terms that users must agree to in accessing and using the website (Davey, 2008).
B. Copyright Infringement
The most glaring copyright issue for Heimusic is the file swapping portion of its website that allows users to upload and download music files with software provided by Heimusic. File sharing was first brought into controversy by Internet giant Napster and the subsequent legal battles over its peer-to-peer (P2P) file sharing website. The Napster litigation began in December of 1999, when the five major recording industry companies -- BMG, Sony, EMI, Universal and Warner -- filed suit against Napster for copyright infringement (Sher, 2002). The Internet music-swapping or file sharing brought into the spotlight by the Napster litigation is now known the industry as the "digital distribution of music" (Sher, 2002). Numerous file sharing websites experienced similar lawsuits as the world's legal systems tried to deal with the flood of electronic media sharing. Gnutella, Madster/Aimster, Grokster, Morpheus, KazaA, FreeNet and numerous other peer-to-peer systems use different technological frameworks and present varying legal issues (Bower and Rimmer, 2005). As the law regarding...
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