Legal requirements are laws or statutes that an organization is legally obligated to follow, often based on the country or region in which it operates. For example, when an organization collects or process privacy information, this organization is obligated to adhere to the data protection law enforced by the country where the organization is running. Meeting legal requirements protects your organization from lawsuits, fines, and reputational damage.
Regulatory Requirements are rules and standards set by regulatory bodies, often industry-specific, that enforce compliance with laws. For example, an organizations that processes or stores private medical information about individuals is mandated by U.S. law to comply with Health Insurance Portability and Accountability Act (HIPPA). Regulatory compliance is often audited and non-compliance can result in fines, loss of license, or legal action.
Compliance refers to adhering to standards, frameworks, or contractual obligations, which may be voluntary, industry-driven, or internally enforced. For example, PCI DSS is mandated by credit card companies for merchants while it is up to an organization to comply with ISO 27001. Compliance often reflects best practices, improves customer trust, and may be a condition for doing business.
Now, let’s walk through the legal issues surrounding intellectual property, licensing, Import/Export Controls, privacy, and transborder data flow.
Intellectual Property (IP)
IP laws are legal frameworks that protect intangible assets such as copyrights, trademarks, patents, and trade secrets.
Copyrights
Copyright protects against the unauthorized use of the original works, like books, music, or source codes. Copying contents from a website without its creator permissions and republishing them on your website is an example of copyright violation. Digital Millennium Copyright Act (DMAC) is the U.S. copyright law. In a copyright dispute, you must provide evidence proving you were the original creator.
Trademarks
A trademark is a legally recognized word, phrase, symbol, design, or a combination of these that identifies and distinguishes the source of goods or services of one party from those of others. The main objectives of trademark protection are to protect brand identity (e.g., logos, product names), to prevent consumer confusion, and to grant the owner exclusive rights to use the mark in commerce. Below is an example of the trademark protection process in U.S. when an organization wants official recognition of its trademark:
1- An organization contacts the U.S. Patent and Trademark Office (USPTO) to register its trademarks.
2- USPTO goes throgh a formal review process making sure that trademark is not already registered or confusingly similar to another trademark.
3- The organization receives a trade registration certificate from the USPTO.
4- The organization can denote its mark as a registered trademark with the ® symbol.
In a trademark dispute, you present the registration certificate as an evidence.
Note: The ™ symbol is used to indicate that a word, phrase, logo, or design is being claimed as a trademark, even if it has not been officially registered with a government trademark office. Using ™ does not give full legal protection, but it can help in future disputes by showing intent to protect the brand.
Patents
There are two commonly used types of patents, each protecting different kinds of inventions:
A utility patent protects new and useful processes, machines, or improvements to any of these. A novel encryption method is an example of utility patents.
A design Patent protects the ornamental design or appearance of a functional item—not how it works, but how it looks. A unique external casing of a router or the graphical interface of a security dashboard is an example of design patents.
To obtain a patent, the inventor must formally apply through a patent office,such as USPTO, and once granted, the patent gives the holder the exclusive right to use, make, or sell the invention for a limited period—typically 20 years for utility patents and 15 years for design patents.
In a patent dispute, you present the patent registration certificate as an evidence.
Trade Secrets
Trade secrets refer to confidential business information which gives a company a competitive advantage. The secret formula for Coca-Cola and KFC are examples of trade secrets.
Trade secrets could not be protected by copyrights or patents as their registration processes are associated with disclosing these secrets. Additionally, copyrights and patents protection is for a limited time. This is why the organizations are responsible of protecting their trade secrets. This could be achieved by restricting personnel access to their trade screts and making sure that the authorized individuals are bound by a Non-Disclosure Agreement.
Licensing Requirements
Licensing requirements refer to the legal or contractual obligations that govern how intellectual property (IP), software, services, or products can be used, distributed, or accessed by others.
Licensing requirements define who can use the product or IP, how it can be used, under what conditions, and what restrictions or obligations apply. Our focus in the following section is on the software licensing.
Software Licensing
Software licensing is a legal framework that defines the rights and restrictions granted to the user by the software owner or vendor. The common types of software licenses are:
Perpetual License
A perpetual license allows the user to use a specific version of the software indefinitely, after a one-time payment. Support and updates (especially for newer versions) often require a separate maintenance contract. For example, buying Microsoft Office 2019 as a perpetual license means you can use that version forever, but you won’t get Office 2021 unless you purchase it separately.
Subscription-Based License
The user pays monthly or annually for using the software and the access ends if subscription lapses. Microsoft 365 and Adobe Creative Cloud plans are examples of the subscription-based licenses.
Open-Source License
An open-source license provides access to the source code of the software and allows users to use, modify, and distribute it at no cost.
Freeware
A Freeware is the software that is free to use, but still proprietary, i.e., it cannot be modified or redistributed. Skype is an example of freeware.
Import/Export Controls
Import/Export Controls refer to the legal regulations and restrictions that govern the movement of certain goods, technologies, software, and services across international borders, particularly when those items have national security, economic, or strategic value. For example, the U.S. export control laws restrict the U.S. firms to export encryption technology, software/hardware, to certain countries. Similary, for AI-focused GPU-based computation hardware, there are restrictions on what can be exported to China.
Privacy
Privacy refers to an individual’s right to control how their personal information is collected, used, stored, and shared. Privacy is regulated by laws that vary by country as explained in this section.
General Data Protection Regulation (GDPR)
GDPR is a comprehensive European Union (EU) privacy law that governs how personal data of EU citizens is collected, processed, stored, and transferred. And it applies to any organization—inside or outside the EU—that processes the personal data of EUcitizens. Organizations violating the GDPR could be fined up to €20 million or 4% of global annual revenue (whichever is higher).
Personal Information Protection Law (PIPL)
PIPL is China’s primary legislation for protecting personal data. It is often compared to the EU’s GDPR due to its broad scope and strict requirements. Organizations violating the PIPL could be fined up to $7M USD or 5% of annual revenue in addition to suspension of business activities and revocation of their business licenses.
Protection of Personal Information Act (POPIA)
POPIA is South Africa’s comprehensive data protection law, similar in scope to the GDPR in the EU. Organizations violating the PIPL could be fined up to $550,000 in addition to Criminal prosecution.
The California Consumer Privacy Act (CCPA)
CCPA is a comprehensive data privacy law enacted in the state of California, USA, that gives residents enhanced rights and control over their personal data.
Consumer Rights
Consumer rights refer to the legal rights the individuals have over their personal data—how it’s collected, used, shared, stored, and deleted by organizations. Let’s demonstrate examples of the consumer rights shared by the privacy laws.
The right to know what personal data is being collected and why.
The right to delete their data under certain conditions (also called the “right to be forgotten“).
The right to opt out of certain uses (like data sales or targeted advertising).
Transborder data flow
Transborder Data Flow refers to the movement of digital information across national boundaries—for example, when a company in one country transfers personal data to a cloud provider or office in another country. Privacy laws restricts the transfer of personal data outside the country/EU unless the receiving country ensures an adequate level of data protection or appropriate safeguards are in place.