Your company may be a foreign company.  Where your company, for example, has operations or makes sales, outside of its home jurisdiction it may be required to register as a foreign corporation in those other jurisdictions.

The most common situation I encounter is a federally (Canada) incorporated company operating in any Canadian province or territory.  While federal incorporation involves listing the company’s head office, the company is still required to register extra provincially where it is doing business.  For example, a federal corporation with a head office in BC would register extra provincially in B.C.

On the U.S. side, the same applies to a Delaware corporation that has a head offices in another state, for example California, and requiring the company to register as a foreign corporation in that other state.  As such, all Delaware incorporated startups based in California are (or should be!) registered foreign corporations in California.

Each jurisdiction has different rules defining when your company has to register as a foreign corporation.  A head office is only one way to be considered a foreign corporation.  As a founder, it’s less important to understand the exact requirements (that’s the lawyers job) than to understand that doing business in jurisdictions outside of where you are incorporated may require the company to register as a foreign corporation.

While many agreements are entered into online, some online companies continue to operate partially offline.  Challenges arise when offline contracts require agreement to an additional online contract, such as a Terms of Service.  This is not to say that offline contracts can’t incorporate online contracts, rather, the online contract must be properly presented to the user signing offline to be enforceable.

When integrating an online contract into the terms of an offline contract, include a clear call-to-action on the part of the signatory.  This is a statement that signing the contract indicates acceptance of the online contract OR to only sign the contract if the signatory agrees to the online contract as well.  Ultimately, you want the signatory to indicate acceptance of the online contract clearly and in an informed fashion.

What calls-to-action don’t work?  A recent U.S. court case considered a link, above the signature line, to the terms and conditions (“Download Terms and Conditions”) and determined that this was insufficient to establish acceptance of the online contract.  As such, the mere existence of a hyperlink, without anything more to draw attention to the link, does not establish acceptance of an online contract.

Admittedly, while this post is more technical than most we put online, our goal is to remind our readers that caution should be exercised when trying to incorporate online contracts into the acceptance of an offline agreement.  While not impossible, contract language is pivotal to ensure enforceability of the online contract.

Worried about lawsuits resulting from 3rd parties infringing copyright through your website or application?  The US Digital Millennium Copyright Act (“DMCA“) may be a solution!  The DMCA contains a safe harbour that protects online service providers from liability for copyright infringement committed by 3rd parties on/through the service.  At the outset, you should already qualify as a service provider as it is any businesses that operates a website or other Internet services (mobile applications, games connected to the Internet etc.) or facilities.

In order to take advance of the DMCA, your company will need to comply with a number of simple steps (in part):

1.  Designate a Copyright Agent to receive DMCA notices with the US Copyright Office;

2.  Post the Copyright Agent’s contact information on your website;

3.   Adopt, implement and communicate to users a policy to prevent/terminate repeat infringers; and

4.  Quickly respond to DMCA notices.

In addition to meeting a number of additional elements that are not covered in this post.

The focus of this post is on the Copyright Agent.  Frequently, companies are denied the above DMCA safe harbour simply because they have not complied with the Copyright Agent terms, a shocking result especially as compliance is relatively simple.

The first requirement is to appoint the agent.  This is done by filling out a form (http://copyright.gov/onlinesp/agent.pdf) that designates the agent and by sending it, along with payment, to the US Copyright Office.  The agent’s role is to respond to DMCA notices and, as such, needs to be a person within the company that understands the DMCA notice process or the company’s legal counsel.  Typically, the company’s legal counsel acts as the Copyright Agent barring sufficient internal DMCA expertise.

The second requirement is to post the agent’s information on your website.  Again, another simple step.  Usually the agent’s contact information is placed in the Terms of Service Agreement governing your website in a separate section concerning the DMCA, the copyright agent and the DMCA notice process.

If you are a U.S. company, check to see if you are in compliance with the DMCA so that you may take advance of the safe harbour described above.  Additionally, for certain Canadian companies, it may be a prudent business decision to comply with the DMCA (check with your legal counsel).

The U.S. Federal Trade Commission recently completed its first enforcement action against an undelivered Kickstarter project and resulting in an agreement to repay over $100,000 in campaign pledges.  The FTC alleged that the campaign deceived supporters and spent money on items unrelated to the campaign.   While not all undelivered crowdfunding campaigns will prompt FTC action, this first action lays out important rules to follow so as to avoid deceptive claims in your crowd funding campaign.

In the enforcement Action, the FTC implicitly set out four standards to comply with so as to not misrepresent a crowdfunding campaign to consumers:

1.  How will funds be used.  Don’t use campaign funds for purposes unrelated to the campaign, such as personal expenses or for other businesses or projects.  Where your project fails, don’t use campaign funds for a different project as backers never agreed to provide funding for a different project.

2.  Deliver your deliverables.  Don’t promise and not deliver the deliverables, including perks, you promised to each backer.  In order to avoid this issue, it is recommended that you research the exact cost of each deliverable to ensure that it is financially viable and can be manufactured on time and to the specifications promised to backers.

3. Don’t misrepresent the project.  Be honest as to the stage of development the project is at and the features that will be integrated into the project.  If a feature is not possible, don’t imply that it is part of the project or that it may be possible.  The FTC wants consumers to understand exactly what they are contributing to and not be mislead as to what the project delivers.

4.  Be honest about your skills.  You should set out the expertise/qualifications of any person associated with the crowdfunding campaign honestly.  Do not mislead backers as to team member expertise as the team is equally important as, and essential to the success of, the project.

Running through the above standards is a single rule:  don’t misrepresent, expressly or by implication, anything in your crowdfunding campaign.  Similar to a store selling goods, running a crowdfunding campaign requires you to clearly present to prospective purchasers what you are selling and who is involved in the item being sold.