legal matters in e-commerce
DESCRIPTION
This topic was presented by Benan İlhanlı, senior lawyer of B+B Law Firm on 2nd of October in our lesson.TRANSCRIPT
Plan - Definition
- Startup / Establishment - IP rights
- Consumer protection in E-commerce
- Other relevant regulations
- Investment & Exit Process
Definition - Most basic definition : commercial activities between
distant parties. - It is not legally defined under current regulations, but only
in the draft law on E-Commerce.
- Electronic ≠ Internet : It may be done via internet (Ebay, Markafoni), telephone (insurance brokers), SMS (Turkcell), etc.
Start-up // Establishment - Choosing the right company type
- A.Ş. (Joint Stock Company) - Minimum capital 50,000 TL, - Board of directors, - More flexible, - Attractive for investors.
- Ltd.Şti (Limited Liability Company) - Minimum capital 10,000 TL, - Directors (higher responsibility), - Suitable for closely held companies, more difficult to
transfer the shares.
Start-up // Establishment - Corporate documents
- Shareholders Agreement (‘SHA’) : The agreement organizing the relation between the shareholders, exit rights, share transfers. Best to have from the beginning.
- Articles of Association (‘AoA’) : The agreement between the shareholders which must be registered before the Trade Registry and published. Contains most of the SHA provisions.
Intellectual Property - Most valuable asset of an E-Commerce Business. (i.e
Google, Philips)
- Trademark - The trademark (i.e. Gittigidiyor) to be used shall be
original and registered before Turkish Patent Institute. - The non-registered use is possible but harder to
protect, important to act fast and register before the launch of the business.
- Third parties may register the trademark beforehand and that would cause a significant problem for the business (i.e. Polo trademark).
Intellectual Property
- Specific protection with 556 s.KHK on Protection of Trade Marks, providing indemnification and penal prosecution for violations.
- Dispute resolution : Specialized IP Courts. - It is required to register the trademark or to have the
trade name in order to obtain ‘.com.tr’ domain name (i.e www.markafoni.com.tr)
Intellectual Property - Domain Name
- Core value of the E-Commerce business. - Vital to buy as many as possible variations of the name to be
used. For example: - markafoni.com, markafoni.net, markafoni.org, etc. - zizigo.com, zzigo.com, zuzigo.com, etc. - misspera.com.tr, mısspera.com, mişpera.com, etc
- Dispute resolution : for international domain names (i.e .com, .net, etc) WIPO arbitration. The main evidence is always the trademark.
- Dispute resolution : for turkish domain names (.com.tr, .net.tr, etc) almost inexistent, a group in ODTU.
Intellectual Property
- Trade Name - It is the company name (i.e Sahibinden Bilgi
Teknolojileri Pazarlama ve Ticaret A.Ş.) - Provides a generic protection on the name based on
Turkish Commercial Code.
Intellectual Property - Protecting the IP Rights
- The photographs or other similar materials produced by an E-Commerce business is in its own property and shall be duly protected.
- Employment contracts shall always include a provision that the Company owns the IP rights of even if produced by an employee.
- On the other hand, an E-Commerce business shall respect the rights on IP protected material and shall not use these material on the website, nor import counterfeit products.
Consumer Protection
- Draft Law on E-Commerce : Pending to be enacted. - Regulates both B2B and B2C. - Provides private data protection and sanctions
unwanted commercial messages (SMS, e-mail) without the prior approval of the consumer.
- Law on Protection of Consumers and Regulation on Distant Contracts
- Regulates the distant contracts (contracts stipulated between the seller and consumer without physical presence and trough written, visual, phone and electronic means).
Consumer Protection
- Since the E-Commerce Businesses rely mostly on consumers, the transactions are mainly based on these regulations.
- Issues Related to Distant Contracts - Turkish law requires the E-Commerce businesses to stipulate
a distant sales contract and pre-information form with the consumers.
Terms of Service (‘ToS’) Legal disclaimer and considered to be approved by being read in the website.
Distant Sales Contracts This is a legal document approved electronically (opt-in) by the consumer
Consumer Protection
- Withdrawal Right of Consumers
- The consumers are entitled to withdraw from their purchases within 14 days of delivery in accordance with the new Consumer Protection Law.
- Exceptions: Hygienic products, DVD, CD, printer cartridges, etc.
- Seller shall return the payment within 10 days from the withdrawal and the consumer shall return the good within 20 days (at the expense of the Seller).
Consumer Protection
- Defective Goods
- Apart from the withdrawal right, consumers are entitled to 1. return the good, 2. ask for a replacement, 3. reduction on the price, or 4. ask for repair for visible defects within 6 months of the delivery.
- The invisible defects, which may appear with the use of the good, are subject to 2 years-period of claim. This term expires in 5 years for the real-estate for residence or vacation purposes.
Consumer Protection - Dispute Resolution
- Consumer Arbitration Commissions - County Commissions (up to TRY 2,000) - City Commissions (up to TRY 3,000) - Between TRY 2000-3000 TL City Commissions are
mandatory in metropolitan areas.
- Consumer Courts - The consumer courts are competent for the sums
above the limits given above.
Other Relevant Regulations
- Customs
- Sending goods from abroad : All goods with a value superior to Euro 75 are subject to importation procedures (taxes, duties, etc.). The perfumery products cannot be delivered from abroad. (i.e. Strawberrynet)
- Importing goods : All imports shall be done in accordance with Turkish law, parallel import is possible but the goods shall be original (the counterfeit products may be confiscated by the customs).
Other Relevant Regulations
- Regulatory Authorities & Criminal Regulations
- Internet is regulated by Information and Communications Technologies Authority (‘ICTA’) in Turkey.
- ICTA and other bodies under its supervision are entitled to suspend the access to a certain website, non compliant with laws. Thus, it is very important for E-Commerce businesses to comply with the regulations.
Other Relevant Regulations
- The following categorical crimes are mentioned in the Law numbered 5651 on the Crimes Committed on Internet;
- Manipulation for suicide, - Sexual abuse of children, - Enabling narcotic materials, - Providing dangerous materials to health, - Pornography, - Prostitution, - Gambling, - Crimes against Ataturk.
- Any content published in the website and falling under the mentioned categorical crimes would cause the suspension of the access to the website by ICTA.
Other Relevant Regulations - The article added to the law numbered 5651 on 06.02.2014
provides the suspension based on the protection of the privacy.
- The claimants are entitled to ask the suspension directly from ICTA.
- Should ICTA approves the claim, the internet service providers shall comply with the suspension within 4 hours.
- The suspension shall be applied based on the URL of the
violating publication, picture, video.
Other Relevant Regulations
- The violations of third parties’ IP rights might cause the suspension by a court resolution as well.
- The directors of the company might be criminally liable for the content, thus better act prudently than to be sorry.
Other Issues
- Inspections from the Ministry of Customs and Trade - Charge back issues
- Complaints to prosecutors’ offices, claiming that the E-Commerce business has committed a fraud
- Complaints to the ministry or the minister himself
- Complaints and/or insults on social media
- Copy cat websites
Investment
- Finding investments : a matter of life or death. - Choosing your partner : Angel investor, VC or strategic
investor. - Phases of Investment:
- Primary negotiations and valuation - Term Sheet / Letter of Intent (LOI) / Memorandum of
Understanding (MOU) / Heads of Terms - Due diligence and Subscription and Shareholders
Agreement - Payment of the money (finally) - General Assembly meeting and capital increase
Exit
- The governing document would be Share Purchase Agreement (‘SPA’).
- Not so easy because of the lock-up periods. - In most cases, several years of non-compete obligations. - In most cases, the exiting shareholders would be giving
pages of representations and warranties and indemnify the purchaser in case of a breach.
Cumhuriyet Cad. No.147 K.1 Harbiye -‐ Istanbul T: +90 212 219 16 30 F: +90 212 219 16 32 info@bb-‐legal.com www.bb-‐legal.com Istanbul | Roma | Milano | Bologna