Common Misconceptions About Technology Law

This week I'm going to try to dispel some common misconceptions about technology law. I suppose that since it's a relatively new legal specialty, it shouldn't surprise anyone that business folks and even lawyers who do not specialize in this field, get some of the fundamentals wrong.

Email is Meaningless

Let's start with what you say in email "counts." I write this thought many times each year and when I teach seminars I say it, but still otherwise sophisticated business folks come into my office with a problem and the belief that what they have said in their emails doesn't matter and doesn't "count."

Getting this point wrong back in the dawn of the Internet era (the prehistoric 1990's) seemed excusable. However, with all the publicity email gets in high-profile litigation, I just don't understand how folks can fail to get this very basic point. You just have to look at the Microsoft antitrust litigation a few years ago to see how even Bill Gates got fried by his own email.

There are just more ways for email to get you in trouble than I can list here. It can be subpoenaed and blown-up to poster-size - oh how ugly that can look in a court room. You can do things like infringe a copyright, commit libel, and sexually harass in email. In fact, you can do all of the same bad things in an email as you can do in a formal letter printed on a dead tree. The point is that email is real, although it's electronic, and the common misconception that email is ephemeral because it starts with electrons is oh so wrong. If you think it's ephemeral, you haven't considered the sometimes very evil "forward" button.

The Law of the Land

Many businesses seem to believe that as long as their website complies with their local law, they don't need to worry about the law in other states or countries. If you like living with blinders, that's a great theory, but it's wrong.

The fact is that people can access your website throughout the world. Moreover, if something about your website breaks the law some place other than where you're physically located, you could find yourself being hauled into a distant court to face civil or criminal charges. This rule also applies to SasS models in the cloud—where some of your vendor’s physical assets are located may determine the court that hears a case against you.

This is a rapidly evolving area of the law. My best suggestion is to consult with a lawyer familiar with these issues and have him audit your website and review your SaaS contracts for legal compliance.

Attorneys' Fees

This one is more of a general legal misconception than a pure tech law issue, but it comes up all the time in my tech lawyer world. The typical scenario is that my client is telling me a story about how somebody breached a contract with him to do something like create some custom software. After telling me his tale of woe, the final statement is inevitably, "And I want that $&!@*)^$ to pay my attorneys' fees."

Now, while I understand how viscerally good it feels to say that, it ignores the general rule in American jurisprudence (subject to exceptions) which is that each party pays their own attorneys' fees. The common misconception is that if you win a lawsuit, you get your attorneys' fees paid by the losing side.

Now, let's talk about the exceptions. The most important exception in the tech world is that if you have a contract that says that in case of litigation, the prevailing party gets their attorneys' fees reimbursed, a court will award attorneys' fees. A typical provision would read something like, "In the event of litigation between the parties to enforce the provisions of or with respect to this Agreement, the prevailing party shall be entitled to reimbursement for reasonable attorneys' fees and costs at trial and on appeal."

There's another exception when a lawsuit or defense is frivolous, but that "frivolity" standard is a tough one, so don't depend on it. It's often better to have a provision for attorneys' fees in your agreement.

However, before you start inserting the language I just gave you in all of your agreements, you should consider this: If you're a solvent big company that pays all of its bills, and you lose a lawsuit, you'll pay the attorneys' fee the court awarded. If the other side of your deal is a small and barely solvent company, you'll probably have a problem collecting any judgment a court awards. The answer may be to leave the attorneys' fee clause out of your agreement. I often do this when I represent the big guy and the other side is a small company. My attitude is why create a potential liability for my client if it loses some hypothetical lawsuit when it doesn't stand to gain if it wins.

It is the Wild West

The Internet is a lawless environment much like the old "Wild West" is one of the clichés of the Internet era. It's also wrong. Many laws from many cities, states, and countries may purport to regulate your online activities. That "I can do whatever I want, it's the Wild West" attitude will only get you in trouble and help your lawyer put his kids through college. A little lawyering before you have a problem can go a long way.

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