International Business on the Web

If you want to be big, you have to think big. You say that you want to make your online business truly international, that's great. The Net is a wonderful tool to get you there. Just don't forget that once you, your products, or your website leave the United States, you've become a citizen of the world--possibly subject to the law of places your feet have never touched.

Yahoo learned this lesson the hard way not too long ago. In France, a local group sued Yahoo over the availability of Nazi memorabilia on the Yahoo auction site. They claimed that it violated French laws that prohibit the display and sale of racist material.

The French Court

The French court ruled against Yahoo and ordered it to either remove the memorabilia from its site, or implement a technological fix to prohibit French citizens from viewing and bidding on the items. The penalty: $13,000 for each day they failed to comply.

Yahoo removed the items soon after the French court's decision although they said that they didn't do it because of the French court, but because of public pressure due to the nature of the items. Yahoo has since sought judicial review from an American court seeking to overturn the French court's decision citing lack of jurisdiction and that it is technologically impossible to block access using filtering systems.

Whatever the outcome of the Yahoo controversy, it's clear that this case will encourage more local attempts to regulate the Web. It's unfortunate that legal trends can be set by ugly facts, but that's what's happened here.

There is a Principle

It's hard to get worked-up about Yahoo having a problem selling Nazi junk. Yet, the principle is bigger than Nazi junk. The principle is about to what extent we want every country regulating every website--even websites hosted, owned and operated far from the country trying to assert its jurisdiction.

Nobody knows what the next issue will be that will cause somebody in a foreign land to sue an American company. It could be groups seeking to censor anti-Islamic content or sites with women without veils. Maybe it will be some foreign anti-smoking group attacking a cigarette advertisement that's legal here, but not there.

These two examples help make the point that we can't make principled law based on facts of an individual case. You might not like the stuff about censoring women without veils, but you can't make laws that way. The bigger issue is to what extent are we prepared to allow every country to regulate every website.

Today, one of the practical limits on countries trying to require compliance with their local law is simply their inability to enforce their rules. China can say whatever it wants about American websites that don't meet its standards, but it's not like they can do much about it.

Still, that's not where the discussion ends either. If we like the idea of local regulation, we could implement treaties calling for international enforcement of local decrees.

Maybe, if you think gambling is a bad thing, you like the idea of enforcing American law against websites that allow Americans to gamble in violation of American law. It's a slippery slope though because then you have to be open to enforcing other countries' laws.

What To Do

Today, the state of the law regarding other countries enforcing their laws against your website is uncertain. Here are some practical tips to help you minimize your risks:

When a person is going to buy from you online, instead of asking her to fill in the name of her country, you can have a drop list of countries to which you have decided you will sell. While people can still view your site in countries that aren't on your drop-down list, you will have available to you the argument that you've taken reasonable steps to avoid doing business in their country.
If you're trying to exclude particular countries, another possibility is to have a pop-up window that says something like, "If you are a citizen of countries X, Y and Z, it is illegal for you to order our products or view the material on this site." This is especially important because a first-time viewer doesn't know what they'll see on your site.
Yet another approach is to localize your operation. If you want to sell to France, you could start a website called, "YourName.fr." You could then hire a local attorney to insure that you comply with local laws. This might help you if you have to defend yourself in a foreign country, especially when used in conjunction with the other approaches.

If you're in a heavily regulated industry, like tobacco or alcohol, just remember that you don't stop being regulated when you go online. If you can't take phone orders for wine from another country or state, you should assume that you can't take a Web order. If you sell to a place where possession of your goods is illegal, you might be committing a crime under their law by shipping it there.

Whatever you do, just make sure that you get some good lawyering before you start doing business in other countries. The law in this area is murky and therefore dangerous.