It is important for every fireworks company to examine all websites that contain references to them. Particular attention should be given to the wording and phrasing of all references; sometimes the web master may be ignorant to the fact that words can get lost in translation.
A recent experience helps illustrate the problems that may arise. On its website, a China manufacturer incorporates a common navigational tool bar that provides a one-word description of the various web pages contained in the website, e.g., ‘Home’, ‘About Us’, ‘Products’, ‘Service’, ‘Contact’. When one clicks on the ‘Contact’ page, contact information relating solely to the China manufacturer appears, i.e., name, address, phone/fax numbers. When one clicks on the ‘Service’ page, the China Manufacturer lists itself, and also identifies companies located in Hong Kong and Canada. There are a number of reasons why the China manufacturer would identify other companies: (i) to provide the impression of world-wide capabilities, (ii) to overcome a language barrier by permitting customers to contact individuals who speak the same language, and (iii) the convenience of not having to contact the China manufacturer during its local hours of operation.
In the context of the website, what does ‘Service’ mean? Understandably, it can mean different things to different people. For one lawyer (not this writer), ‘Service’ means service of process and, as a result, service of process upon either the Hong Kong or Canadian company constitutes valid service upon the China manufacturer. One main reason why a US lawyer would prefer to complete service on a party located outside of China (in this instance, upon the Canadian company) is convenience. In short, service of process upon a China corporation is easier said than done; it is both time-consuming and expensive. Unwittingly, the Hong Kong or Canadian company may become embroiled in litigation regarding the China manufacturer, notwithstanding the fact that no common ownership exists by and between the China manufacturer and either the Hong Kong or Canadian companies.
To avoid the risk of becoming entangled in litigation, it is important that all website references clearly identify the business relationship by and between to the two parties. If there is no common ownership between the two companies avoid giving the impression that such a relationship exists. Absent common ownership related companies are presumed to be separate.
Even in the instance where common ownership exists between the China manufacturer and another company, this factor alone does not establish a business relationship sufficient to confer jurisdiction (over the China manufacturer as a result of service made upon the Canadian company or, as the case may be, the Hong Kong company). In the situation of the Canadian company, other factors to be considered (all factors are equally applicable for the Hong Kong company) are:
1. What written agreements, if any, exist between the companies?
2. Can customers purchase directly from the Chinese manufacturer, or must they send the order to Canada for forwarding?
3. Is the Canadian company financially dependent upon the Chinese manufacturer?
4. Does the Chinese manufacturer pay any portion of salary or compensation of the Canadian employees?
5. Does the Chinese manufacturer have the power to direct the selection of the Canadian employees?
6. What control, if any, does the China manufacturer have over the marketing and business operations of the Canadian company?
7. Does the net income of the Canadian company appear on the balance sheet of the China manufacturer?
8. Does the China manufacturer advertise and promote the Canadian company as a branch office or company department?
9. Does the China manufacturer mention the name of the Canadian company in any advertising other than on its own website?
10. Does the Canadian company mention the China Manufacturer in its own website, if any, or marketing materials, if any?
This list is not exhaustive; however, it does serve to highlight some of the issues to be aware of when evaluating how the business relationship by and between your company and another company is being presented to the world at large.
In conclusion, it is important that you police all websites containing references to your business to ensure that the references themselves are not misleading or confusing; otherwise you may find yourself in the unenviable position of undertaking the time, expense and risks associated with clarifying information found on a website owned by another company.
