Ask the Lawyer @ silicon.com

Q. If we sell product into another EU country from a UK-based Web site and no-one has design or registered design rights over it and we don't know if there exist any overseas design rights over these products, which country's law prevails? So if, for example, a German in Germany or a Frenchman in France buys product online from the UK-based site, will the UK company be liable for infringing anything?

A. In general terms you will be safe if you do not target customers overseas but just accept orders passively and use shipment terms which mean you are not doing the importing. However, these are matters of foreign law and so you cannot be safe until you check the position in each relevant jurisdiction.

The answer depends to an extent on whether the product is covered by a foreign patent or trademark, but my reply is broadly applicable to all these.

If there is no UK right, but a foreign right exists, then the foreign right owner will have the exclusive right to sell and to import into his territory. He also has the right over the subject products. A court in his country would therefore need to consider whether your Web site amounted to selling in his country, and whether you subsequently were the person doing the importing. Let's look at each in turn.

In deciding whether a Web site is offering something for sale in a country, a court would probably look at various factors, such as whether the local language has been used on the site, whether prices are quoted in the local currency, and whether there is other country-specific material. A positive disclaimer by you ("Offers void where prohibited by local law") may help, provided it is not obviously a sham in the light of other material on the site.

In deciding whether you are the party doing the importing, the test is more straightforward - what do your terms of shipment say? If you ship 'Ex Works', 'FCA (UK port)' or similar, then you are not going to be the importer.

In both cases, there may be a difference between commercial and private sale - if your customer is a consumer then they may well be free to import where you could not.

Q. One of our competitors is using our company name as a key word on some pages of their Web site. Can we do anything to stop them? Obviously when a search is made for our company it will also find theirs.

A. What you can do will depend on whether or not you have trademark rights (TM) in your company name and whether or not those rights are registered or just common law rights. You are likely to have common law rights, because most company names do acquire brand recognition over time, and most crooks only try to steal something which has value to them.

The practice of including the trademarks of others in the code for a Web page - called meta-tagging - to attract business is a clear infringement of rights. If you have registered TM rights then you can sue for damages for trademark infringement. You can also sue for an injunction to restrain further misuse. If you have only common law rights, you can bring an action for passing off - which amounts to the same thing but is harder to prove. You need to show that there is actual market recognition of your brand associated with you, and that means you may need to commission market surveys or otherwise build evidence for use in court.

Your competitors can use the defence that they were unaware they were infringing. You can deny them that by putting them on notice of your rights, but you need to be aware that the law also includes a prohibition on issuing 'threats'. Therefore, engage a lawyer to draft your letter so the job is done without exposing you to risk.

Q. I'm a software developer and currently working on a project out of office hours. I wish to sell this across the Internet, but I do not have a registered company. How can I sell software without having to start-up a company, as extra income should be declared to the government?

A. I recommend you get yourself an accountant who will be able to explain your options and if need be set you up a company that you can use to sell your products. You do not have to set up a company - you are quite entitled to sell software in your own name, but as such you will be liable to pay tax on your profits. Even if you go down this route, an accountant will be able to help you minimise your tax exposure by identifying all the costs which you can set off against this income.

In general, a company does involve some extra overhead, but it has the advantage that, to a large degree, you do not have personal liability when the software doesn't perform and customers sue - that is what 'Ltd' means. The assets available for settling the liabilities of the company are limited to those owned by the company, so your private house is therefore not at risk.

You should also check two things carefully before you proceed. First, does your employment contract allow you to work outside hours? Many contracts forbid work in any other activity for gain during the term of employment. Employers may grant exceptions, but if your home project in any way competes with what you do at work then this is unlikely. Second, does your employment contract make anything you create the property of your employer anyway? A widely drafted contract may provide that even work done at home out of hours on your own system is owned by the employer, or at least that it must be disclosed so that the employer can decide whether it is relevant to the business.

** Network Multimedia Television Ltd/silicon.com give no warranties as to the accuracy of the information and advice contained herein and can take no responsibility for any acts or omissions resulting from reliance upon the information provided. Commentary is intended only as general guidance on legal issues arising from the circumstances described, and specific legal advice based on all relevant facts should always be sought.