Ellasaurus Products Enterprises. Creating an On Line Merchandising Business

Transcription

1 Ellasaurus Products Enterprises Creating an On Line Merchandising Business Dayna Evert ID # Internet Commerce WEB222 f2013 ol u Seminar Five Chapter 7, Case 2 1 P age

2 Ellasauras Products Enterprises (EPE) was created to develop merchandising products for Ellasaurus, a four year old dinosaur from Ellen Carson s children s books series (Schneider, 2013). EPE would like to create a website in which to sell their merchandise. They envision the site to be an entertaining place for children to visit, similar to Hello Kitty and Nick Jr., where there are games and chat rooms and to build brand loyalty (Schneider, 2013). Since Ellen will be using copyrighted illustrations from her books, as well as themes and storylines, there may be some issues with using this material if Ellen does not own the rights to it. If this were the case, she must adhere to the licensing and contractual agreements. Assuming that Ellen does own the rights to her own intellectual property (not her publisher), she can use the material on her website. One of the biggest issues with putting this information online is that another company or individual can steal the information and profit from it. This is evident from the many articles online about Cody Foster & Co. stealing work of independent artists. This company has stolen many designs from other artists and incorporated those designs into their line of Christmas ornaments. Prosecuting people like this is costly and difficult. According to AIPLA, the average cost of pursuing a copyright infringement suit with damages less than $1 million starts at $200,000 (Brownlee, 2013). In order to protect her intellectual property, Ellen should start by preventing her images from being easily copied. This can be done by using the original image as a background and putting a transparent image of the same size over it so it cannot be copied by clicking on it. Although the image can still be screen printed, it may be a deterrent for some. There is also 2 P age

3 software that Ellen can use, such as Blue Spike or Digimark, which offers an electronic mechanism to protect intellectual property through watermarking (Schneider, 2013). With regard to the games that Ellen will be including on her site, she can protect them with verbiage in a user agreement that must be read and checked before registered users can access the game. In the user agreement she can outline specific terms of service which prevent the use of copying the software. There are also some ethical issues that must be addressed in running a website designed for children. The toy and fast food industries have long advertised, and in my opinion, mislead children with their advertising. A young child lacks the ability to distinguish between reality and fantasy in many of the commercials, video games and online media they are subject to. According to a 2004 study by the American Psychological Association, children 8 years old and younger do not comprehend the notion of commercials (Oksenkrug). Since Ellen s target audience are children aged 4 to 6 years old, she needs to be careful about using appropriate content and games on her website, making them kid friendly and conveying appropriate messages. Since children visiting Ellen s website are so young, not only are they unable to read or comprehend any privacy statements, but they are not old enough to enter into any contracts. Restrictions must be put into place where an adult signs up their children and give permission for them to enter the website. There are additional issues which arise from use of chat rooms. It is impossible to determine who is actually registered and chatting in those chat rooms. In order to help protect children from sexual predators, I would recommend implementing software similar to that used by MySpace which compares registered users against a database of sex offenders and deletes those accounts (Schneider, 2013). 3 Page

4 There are laws in place which protect children online and Ellen must comply with those laws. Children s Online Privacy Protection Act of 1998 (COPPA) provides restrictions on the collection of data from electronic commerce sites directed at children. Truste.com offers privacy protection services and a seal of approval to place on websites that use their services. They specifically have a seal for children under age 13 (Privacy Rights Clearinghouse). Websites collecting information from children under 13 must comply with COPPA. This includes specific information which must be included in a privacy policy, seeking consent from a parent and other responsibilities to protect children s privacy and safety online (COPPA). The law covers: Personal Information such as full name, home address, address, telephone number or any other information that would allow someone to identify or contact the child. It also covers other types of information including hobbies, interests and information collected through cookies or other types of tracking mechanisms (COPPA). Privacy Notice notice must be placed prominently on the home page and at each area where personal information is collected (COPPA). It should be clearly written and include contact information, kinds of information collected, how that information is to be used, whether the information is used by third parties, that the information can be reviewed, etc. (COPPA). Direct Notice to Parents Consent is required by the parent for any collection of information. A notice must be included which states internal uses and public disclosures, disclosures to third parties and exceptions (COPPA). Any changes in the Privacy Policy must be sent to parents for consent (COPPA). 4 P age

5 I would recommend that Ellen retain legal services in drafting her privacy policy and in maintaining compliance with COPPA throughout her website. The website will be selling its merchandise across the entire United States. With its headquarters in Michigan, its manufacturer located in Texas and its distribution centers in New Jersey, Ohio and California, the company will be exposed to multiple sales tax liabilities. Current laws require ecommerce websites to collect sales tax on merchandise shipped to states where they have a physical presence (Kelly, 2013). Therefore, EPE would need to pay sales tax on purchases made in New Jersey, Ohio, California and Michigan. Although online retailers are not currently required to collect sales tax from all states in which they ship goods, the Marketplace Fairness Act of 2013 has passed and all retailers will eventually need to comply with the law. The Marketplace Fairness Act requires that states must simplify their sales tax laws in order to make multistate sales tax collection easy (MarketplaceFairness.org). States can either join with the 24 states that already have voluntarily adopted the simplification measures of the Streamlined Sales and Use Tax Agreement or they can meet five mandates as required by the law (MarketplaceFairness.org). 5 P age

6 REFERENCES Brownlee, John. (October 18, 2013) How a Company Gets Away with Stealing Independent Designers Work. Retrieved from: acompany gets away with stealing independent designers work COPPA. How to comply with Children s Online Privacy Protection Act. Retrieved from Marketplace Fairness Act. What is the Marketplace Fairness Act of 2013? Retrieved from is the marketplace fairness act/ Oksenkrug, Margarita. The Ethics of Marketing to Children. Retrieved from MargaritaOksenkrug.do Kelly, Heather (May 7, 2013). Internet sales tax: What You ll pay, and when. CNN. Retrieved from sales tax/ Privacy Rights Clearinghouse. (July 2013) Fact Sheet 21: Children s Online Privacy: A Resource Guide for Parents. Retrieved from onlineprivacy a resource guide for parents Schneider, Gary P. (2013), Electronic Commerce (10th ed.). Boston, MA: Cengage, p P age