“Home based business”. These magic words make business people search on the Internet for new business ideas. True enough, nobody likes to commute every day and to work in the office. What business people need to know about home based business is all about online business, technology changes and if they are doing any business offline how to bring it online. The video I posted today is a brief introduction to the project.

It should be noted if online business is your passion and it generates even some income, IRS will treat you as a regular business. In other words, you still need to pay taxes. 

However, according to “Silicon Molds Blog” there are several tax advantages of doing business online. Personal expenses, such as the use of your car, home or computer may become partially deductible, retirement savings plans can shelter part of your eBay income from taxes, and you may be able to hire your family to help shift income to members in a lower tax bracket. So even if you only earn a little money online, not only are you required to report your earnings, it may even help you reduce your income taxes by taking advantage of tax opportunities available only to small business owners.

Generally, any income you receive from all sources is subject to U.S. income tax unless it is specifically exempt by law (hint: online profits are not exempt by law). That means that a lot of activities that you might not think of as taxable, such as garage sale income, gambling winnings, and online businesses are taxable.

In a nutshell, an approach to the online vs. offline businesses should be comprehensive and tax issues need to be considered very well. Enjoy your weekend!

How many of Internet users read Terms of Use and Disclaimer sections on the web pages they visit? Is anybody concerned about protection of individuals and companies from the uncertainties and abuses surrounding the use of online communications methods and the use of digital content?

Protection of digital content and fair use of online communication are one of the controversial topics in e-commerce law. On the one hand, some lawyers consider drafting techniques based on statues and case law sufficiently protect users of digital content from infringement of rights of others.

This group of lawyers argues that sufficient protection is more appropriate approach because all rights of intellectual property may be enforced in a court. For this reason, users of digital content and online communication should rely on existing law and drafting techniques, and obey the rules. One the other hand, other lawyers claim that current legal tools that prevent infringement of digital content are not sufficiently developed for the proper protection.

Proponents of this approach argue that drafting techniques, statues and current case law have significant limitations with respect of relationships between owners and users of digital content including all kinds of third parties. They believe that those limitations/uncertainties encourage owners of digital content to maximize the level of protection. Because a digital content protection’s performance is evaluated on the basis of absolutely clear balance of rights and responsibilities, owners of digital content try to eliminate any uncertainties in this balance.

Current law and legal provisions to protect rights of others

There are two main forms of intellectual property used in online communication: software and websites. With regard to content of online communication, “text, music, movies, photographs, artwork, inventions, processes, product names, and confidential business information” would be also qualified for intellectual property protection, which digitized and implemented in specific online communication. All this in addition to computer software and HTML code and similar forms of code is a “website” and used in online communication.

Trade secret law, copyright law, patent law and trademark law govern protection of digital content

A trade secret is confidential information that provides competitive advantage to its owner in a market place. It can be information of production or business process, marketing or business plan, list of clients, advertising campaign plan. Such information needs to be protected from competitors and companies make their maximum effort to keep it in secret. An example of trade secret is Coca-Cola receipt or formula, to say so.

Copyright provides to the owner of product of human intellect, particularly software or website, exclusive right to control how this product is used. This control includes making copies, distributing them to the public, making derivative works, and performing the work.

A patent is a grant of “monopoly for a limited period of time on the use and development of an invention” which the U.S. Patent and Trademark Office qualify for its protection. To obtain a patent it is necessary to file an application with an explanation why the invention is original, with detailed description of the invention and its aspects, with all drawings, statements and filing fee.

A trademark is “a distinctive word, phrase, logo, graphic symbol, or other device” and uses “to identify the source of a product and to distinguish a manufacturer’s or merchant’s products from anyone else’s”.

No one is completely effective and has some limitations. Trade secret protection is limited by physical ability to keep the information from competitors. Copyright provides a protection for expression of the idea and not for idea itself. Patent has a complicated and costly procedure and doesn’t provide complete protection for disclosed information of the invention. Trademark provides all the protection which trade secret, copyright and patent don’t, but limited by its specific purpose. Therefore, digital content protection would be more effective when all of those legal tools used in combination covering their limitations.

Bottom line, intellectual property owners should implement special techniques for protection of digital content in online communications. In other words, there is a need for intellectual property plan. It’s consists primarily of using forms and procedures to identify, establish ownership, and protect the developer’s intellectual property.