How to Avoid the Costliest SEM Agreement Mistake

sem agreement mistakes
Do you make this mistake in your SEM agreement?

When you’re providing searching engine marketing (SEM) services to clients, the most expensive mistake you can make is not defining who owns what as part of your SEM agreement.

Whether you’re rendering SEM services as an independent contractor or as an employee, your client will assume they own what you create.

This means that if you don’t have a written agreement that defines the scope of services plus ownership, it can be an expensive legal mess to sort things out later.

Who Owns What?

Who owns the PPC (e.g. Google AdWords) accounts and the analytical data?

Who owns any custom coding that was done, including any APIs developed as part of providing services?

As a practical matter, you don’t want to be put in the position where you can’t use what you’ve created to provide SEM services to third parties. However, clients won’t be pleased to discover they paid you for SEM work and then you sold similar services to their competitor too. In short, they will feel cheated.

So what’s the solution?

Although there isn’t a one-size-fits-all answer to that, a good starting point is a provision in the SEM agreement where you retain ownership but provide a limited license to use the intellectual property (IP) you created for the client that enables you to license the same IP to others.

Some prospective clients will balk at this idea if they believe you’re going to sell the same SEM services to their competitors.

How do you respond?

First, explain to the prospect that the IP you create is the lifeblood of your business and that giving them exclusive ownership over key parts would in essence put you out of business.

If the prospective client still objects, offer a compromise that limits your use of the IP with one of their competitors for a reasonable period of time (e.g. 2 to 3 years). However, this should be a final offer not the starting point of negotiation.

Be careful when you do offer to restrict your future services to competitors. If the current prospect is a small fish, sometimes it’s better to wait for a bigger better deal with a large competitor of the prospect than be frozen out of that market for a few years because of a non-compete restriction.

Where do you start?

Your Internet lawyer can prepare an SEM agreement that’s designed to protect your interests and can be customized on an as-needed basis to serve individual client needs in order to get a deal done that’s good for both you and the client.

Books for Website Owners – May 30, 2015

As an Internet lawyer and entrepreneur, I read many business
books. From time to time, I’ll come across one that I think
will help you with your business. Here’s one you should take a
break to read.

Title: Built to Sell: Creating a Business That Can Thrive Without
You

Author: John Warrillow

Reason to Read:

Learn how to structure your online business so that it has value
when you either sell it or decide to step back out of the picture
(e.g. retire) and let someone else run it for you.

Key Quote:

“When people are the main assets of the business – and they
can come and go every night – the business will not be worth
very much.”

Frankenforms: The Dangers of Internet Business Broker Legal Documents

internet business broker legal documents
Most Internet business broker legal documents are dangerous Frankenforms

When you’re buying or selling an Internet business, using a broker’s template documents to do so is typically a very bad idea.

Why?

Whether it is a letter of intent (LOI), the purchase and sale agreement, or related documents (e.g. escrow agreement, promissory note, etc.), the broker’s documents are usually garbage that don’t protect anyone except perhaps the broker.

How the Frankenform is created

Most online business brokers are not Internet attorneys. In order to get deals done (even incorrectly), they’ll patch together various parts of different legal documents they find at different sources and use these Frankenstein forms for all e-commerce sales and acquisitions without even understanding what the legalese in the documents really means.

As an Internet lawyer representing clients in the purchase or sale of an e-commerce company, I’ve seen horror stories because of these Frankenforms. For example, it’s common for a broker to provide an asset purchase template to use even when it is an equity deal.

Because these documents are slapped together from various pieces of other contracts, you’ll often see problems with identifying what is being sold, the price, method and timing of payments, and even the identities of the parties (sometimes referring to the seller when it should be the buyer or vice versa).

The parties, including the broker, sign documents for the deal without anyone fully understanding the legal rights or obligations of everyone involved because the forms used are vague and often conflict with the parties’ intent.

It’s also common to see the broker try to push through a deal without all of key players signing on the dotted line. For example, brokers will often attempt to sell an Internet business by having a single signature on the documents for the seller even if the seller happens to be married. This can cloud ownership to the business because the spouse has not consented in writing to the sale. And that’s a recipe for disaster for the buyer, particularly when the seller goes through a divorce and the spouse wants either a share of the business or a cut of the sale proceeds from the deal.

Do Internet business brokers serve a purpose?

Yes! They help put sellers and buyers together. And that’s a good thing.

However, a business broker represents one party for a commission. And the broker’s forms should not be used to ink the deal for convenience purposes.

What should you do?

At a minimum, your Internet lawyer should review and revise the broker’s forms (including the LOI) before you sign anything. Ideally, you’ll want your Internet business attorney to draft the documents so they save you time, money, and many legal headaches. That way you’ll avoid the pitfalls of Internet business broker legal documents.

And if you’re a business broker who insists on using templates, have a qualified Internet lawyer prepare them for you, explain what they mean, and consult that attorney on deals to ensure you’re protected and your clients are getting deals done right.

Revenge Porn and Your Website

revenge porn
Can a visitor post revenge porn on your website?

If you operate a website that allows visitors to upload images (even just a profile pic), you need to be aware of the risks of having revenge porn on your website.

What is revenge porn? It’s when someone posts a nude, semi-nude, and/or sexually explicit photo or video online of a person without that person’s consent.

There are two common types of revenge porn.

First, a jilted spouse or lover will post pics out of spite to humiliate the person with whom they had a relationship that went bad.

Second, there are hackers who steal these types of photos and videos and post them online. The motives vary for hackers. For most, it seems to a quest for 15 minutes of fame acquired for posting nudie pics of actresses (e.g. the “Fappening”) or celebrity sex tapes. Some hackers have been arrested for selling software that’s designed to steal nude photos (See Ian Lang’s article at Askmen.com, “Hackers Face Charges After Selling Nude Photo Hacking Software”).

Thanks to new state laws, there’s been a crackdown on revenge porn sites, that is, websites focused on hosting user submissions of sex videos and erotic pics uploaded without consent of the person being attacked. In a New York Post article by Marissa Charles, “Meet the Angry Mom Who Took Down the King of Revenge Porn,” you can read the saga of one effort to remove revenge porn. It’s important to note that at least one website owner is going to prison.

Does this mean that if someone uploads revenge porn to your site that you’ll end up in jail? Of course not. However, even those who don’t get prosecuted for hosting such content can be sued civilly for actual and punitive damages.

This means it’s a good idea to keep a watch out for the types of photos and videos your website visitors are posting (or even linking to). And if there’s a request to take down a pic by someone (whether it’s revenge porn, copyright infringement, or another reason), take the request seriously.

Although your Internet lawyer can help you on a case-by-case basis, it’s a good idea to remove revenge porn quickly for both legal and ethical reasons. You should also consider having your Internet attorney draft submission guidelines that make it clear what type of user content is acceptable to be uploaded to your site.

Internet Lawyer Offers Beer Bounty on Cyber Terrorist Hacker

king sam hacker
Internet lawyer seeks someone to mete out justice to King Sam the hacker

Once upon a time there was a Pakistani who spent his time hacking computers. This hacker uses the pseudonym “King Sam” under the mistaken impression that it means “Goat Molester” in English.

Claiming to represent Muslims, King Sam hacked Internet Lawyer Mike Young’s website and posted the following as the Internet law firm’s home page.

king sam hacker

This came as a surprise to Attorney Young, his Muslim clients, and friends.

To be sure, some hackers have done good deeds by releasing information the public should know. This does not include King Sam’s efforts to destroy sites over the past few years.

So what to do about the goat-molesting hacktivist?

Attorney Young is offering to buy a case of beer* for (1) any member of law enforcement who arrests King Sam for hacking or bestiality, and for (2) any member of the U.S. military who kills King Sam as an enemy combatant by drone, bullet, or any other means.

Happy Hunting!

* This offer is void where prohibited by law.