Legal Matters

Many online merchants have been watching closely the saga of the Direct Marketing Association's (DMA) constitutional challenge to a 2010 Colorado law targeting remote sellers. This legislation would require out-of-state catalog and internet retailers that do not collect Colorado state and local sales tax to turn over customer transaction information to the Colorado Department of Revenue.

Unfortunately, it's not a question of if, but when your company will experience a data breach. Whether caused by a hacker, equipment failure, theft, disgruntled employee or a vendor error, most retailers will experience an incident resulting in the unauthorized disclosure of confidential customer or employee information. According to the Open Security Foundation and security consultancy Risk Based Security, last year set a record for the number of reported data breach incidents — 2,644 incidents, more than double the number in 2011, which previously had been the highest amount in one year.

If your company uses cookies — small information files that are downloaded onto a computer or mobile device when a user visits a website which enable the website operator to recognize the user's device and preferences — on its website, and the website is either "designed for the European market" or "provides products or services to customers in Europe," you should be aware of the new European Union (EU) Cookie Directive.

On Nov. 9, 2011, a group of 10 senators from both sides of the aisle introduced the Marketplace Fairness Act, S.1832. On Oct. 13, 2011, a similar bipartisan bill was introduced in the House of Representatives called the Marketplace Equity Act.

The Colorado General Assembly is taking an alternate path to obtain sales tax revenues on purchases by Colorado residents from out-of-state retailers.

A recent federal appellate court decision concluded that the 
removal of a product's universal product code (UPC) may constitute a trademark infringement. In Zino Davidoff SA v. CVS Corp., decided this past June, the court supported claims of a high-end distributor of luxury fragrances because "the UPC acts as a quality control mechanism which enables [the trademark owner] to protect the reputation of its trademarks by identifying counterfeits and by protecting 
against defects."