Introduction
Intellectual Property Right (IPR) in electronic commerce (E-commerce) is a highly valuable component of e-commerce. IPR stands for Intellectual Property Rights which means the rights that allow a business to use their invention to gain financial benefits and market leadership, over its competitors. Despite its significant value, it is often neglected because most people fail to understand it and because its connections to e-commerce are not very obvious. Regardless, IP and E-commerce are entirely interdependent.
E-commerce typically involves selling products or services based on Intellectual Property and its licensing. In the digital world, there are so many types of Intellectual Properties that can be traded through an e-commerce platform be it music, photographs, designs, pictures, software, content, and so much more.
In all these scenarios, IPR is especially significant since the value of these goods need to be protected. The protection is afforded through tools such as Intellectual Property laws and technological security systems. If IP theft is rampant, it could potentially ruin an e-commerce business – which is why IPR in e-commerce is extremely crucial.
In today’s global innovation economy, the internet has become a revolutionary technology which is known to empower consumers and businesses alike with the blessings of connectivity at all levels. When it comes to E-Commerce, Intellectual Property (IP) is perhaps the most neglected, yet the highest value-bearing component either because it is less comprehended or its significant connections to E-Commerce aren’t evident. E-Commerce more than any other platform often involves the selling of goods and services that are based on IP and its licensing. Therefore, online businesses should make sincere efforts to ensure their activities are free from IP risks which might slow down or actually kill their businesses.
What is Intellectual Property?
Intellectual property (IP) refers to creations of the mind, such as inventions; literary and artistic works; designs; and symbols, names and images used in commerce.
IP is protected in law by, for example, patents, copyright and trademarks, which enable people to earn recognition or financial benefit from what they invent or create. By striking the right balance between the interests of innovators and the wider public interest, the IP system aims to foster an environment in which creativity and innovation can flourish.
Types of intellectual property
Copyright: Copyright is a legal term used to describe the rights that creators have over their literary and artistic works. Works covered by copyright range from books, music, paintings, sculpture and films, to computer programs, databases, advertisements, maps and technical drawings.
Patents : A patent is an exclusive right granted for an invention. Generally speaking, a patent provides the patent owner with the right to decide how - or whether - the invention can be used by others. In exchange for this right, the patent owner makes technical information about the invention publicly available in the published patent document.
Trademarks: A trademark is a sign capable of distinguishing the goods or services of one enterprise from those of other enterprises. Trademarks date back to ancient times when artisans used to put their signature or "mark" on their products.
Industrial designs: An industrial design constitutes the ornamental or aesthetic aspect of an article. A design may consist of three-dimensional features, such as the shape or surface of an article, or of two-dimensional features, such as patterns, lines or color.
Geographical indications: Geographical indications and appellations of origin are signs used on goods that have a specific geographical origin and possess qualities, a reputation or characteristics that are essentially attributable to that place of origin. Most commonly, a geographical indication includes the name of the place of origin of the goods.
Trade secrets:Trade secrets are IP rights on confidential information which may be sold or licensed. The unauthorized acquisition, use or disclosure of such secret information in a manner contrary to honest commercial practices by others is regarded as an unfair practice and a violation of the trade secret protection.
What is E-Commerce
E-commerce (electronic commerce) is the activity of electronically buying or selling of products on online services or over the Internet. E-commerce draws on technologies such as mobile commerce, electronic funds transfer, supply chain management, Internet marketing, online transaction processing, electronic data interchange (EDI), inventory management systems, and automated data collection systems. E-commerce is in turn driven by the technological advances of the semiconductor industry, and is the largest sector of the electronics industry.
E-commerce typically uses the web for at least a part of a transaction's life cycle although it may also use other technologies such as e-mail. Typical e-commerce transactions include the purchase of products (such as books from Amazon) or services (such as music downloads in the form of digital distribution such as iTunes Store).
The term was coined and first employed by Dr. Robert Jacobson, Principal Consultant to the California State Assembly's Utilities & Commerce Committee, in the title and text of California's Electronic Commerce Act, carried by the late Committee Chairwoman Gwen Moore (D-L.A.) and enacted in 1984.
According to Merriam Webster, E-Commerce refers to activities that are related to buying and selling of goods and services over the internet. Intellectual Property in E-Commerce is perhaps the most neglected, yet the most essential and value bearing component of E-Commerce.
Kinds of E-Commerce
E-Commerce or Electronic commerce refers to the business done online. So a company’s website can be a great tool for the business online and for the purpose of generating sales. E-Commerce is classified into four main categories:
B2B(Business to Business)
Companies doing business with each other like manufacturers selling to distributors and wholesalers selling to retailers. Pricing of these products are negotiable on a number of products ordered.
B2C (Business to Consumer)
Business to consumer (B2C) is a business transaction between a company and a consumer or consumers who are the end users of its product or services. B2C is different from the B2B model as B2B refers to the business between 2 business entities. All the business companies who directly sell to the consumers can be put in the category of B2C companies. This term became immensely popular during the dotcom boom of the late 1990s, when it was mainly used to refer to online retailers.
C2C (Consumer to consumer)
A consumer to consumer is that kind of a business model which is connected between two consumers and the mode of doing business is online. There are two modes of implementation of C2C markets i.e actions and classifieds. C2C marketing has gained a major boost over the internet through companies like Ebay and Craigslist.
Consumer to Business (C2B)
Consumer to business is an exceptionally authentic and plan of action where a shopper creates an item or administration that an association uses to finish a business procedure or with the end goal of picking up an upper hand. This technique transposes the conventional business to buyer (B2C) model.
Importance of Intellectual Property in E-Commerce
Intellectual property law protects against disclosure of trade secrets which further signifies protection against unfair competition. This makes intellectual property an asset which is more valuable than owning a tangible asset. This is most clearly visible in the field of technology and the digital economy. If there were no intellectual property practices and statutes governing the functioning of IP laws, there would have been no new creation of works and hard work of someone could be stolen and it would have spread around the world without paying any cost to its creator for his labor on the invention.
There Are two primary areas which must be taken care of in relation with Intellectual Property-
Safeguarding your own intellectual property
One of the common mistakes committed by the owner of the intellectual property owner is to reveal the intellectual property prior to filing for protection of that property. Similarly, in many countries making trade secrets public automatically dissolves any protection.
Violating someone else’s intellectual property
E-commerce websites who are in the business of buying and selling of products often infringes the intellectual property laws by portraying the description of products and showing their images. There are several essentials which must be followed for not infringing the IP laws are as follows:
It must be your own creation
Permission granted by the creator to use.
It must be under the ambit of public domain
It is covered under fair use.
Intellectual Property Rights and its role in E-Commerce
With constant improvements in the technological infrastructure of the internet, it’s more important now than ever before to understand the role of Intellectual Property in e-commerce. There are four ways in which IPR in e-commerce is applicable:
Safeguarding business interests of a company
Intellectual Property Laws essentially safeguard the business interests of a company and its entities, typically against unfair competition. The absence of IP practices and laws, especially in this digital economy can result in several IPR violations. As such everything ranging from software to design and music can be stolen, duplicated and distributed all over the world, and the proprietors may go unrewarded for their unique creations. However, with laws pertaining to IPR in e-commerce, companies can secure their rights.
Safeguarding essential components
Intellectual Property law in e-commerce also helps protect critical technical and digital components owned by a company. These could be networks, routers, designs, software and chips and so on. These components are all different forms of intellectual properties that require protection, which in turn allow the internet to function smoothly. Keeping this in mind, IPR in E-commerce also safeguards essential components.
Protecting products and patent licenses
All online and e-commerce businesses are typically based on patent and product licensing. Since it takes several different technologies to create a product, most online companies choose to outsource the development of a few components or share their technologies using licensing agreements. The agreement essentially consists of terms and conditions laid down for IPR protection.
Safeguarding patent portfolios and trademarks
For a business in the e-commerce space, Intellectual Property is its most valuable asset. Such a company typically owns a portfolio of patents and trademarks that help enhance the value of their business. IPR laws in e-commerce thus help safeguard these patents, portfolios and trademarks.
Elements granted protection in Intellectual Property
There are several parts of websites which are vested with the protection of different kinds of Intellectual Property.
E-Commerce systems, search engines or other technical Internet tools are granted protection under Patents or utility models.
Software includes the text-based HTML code which is used in websites and it is vested with a shield under Copyrights Act or patents law, depending upon national law.
Website design is protected under copyright.
All the website content in the form of written material, photographs, graphics, music and videos are protected under Copyrights.
Databases can be protected by copyright or by sui generis database laws.
Business Names, Logos, Product names, domain names and other signs posted on the website are covered under Trademarks.
Computer generated Graphic Symbols, displays, graphic user interfaces (GUIs) & even webpages are protected under Industrial Design Law.
Hidden aspects of a website like (confidential graphics, source code, object code, algorithms, algorithms, programs or other technical descriptions, data flow charts, logic flow charts, user manuals, data structures and database contents) are protected under Trade Law Secrets.
Governmental enactment which protect E-Commerce in different Countries
In the United States, California's Electronic Commerce Act (1984), enacted by the Legislature, and the more recent California Privacy Act (2020) enacted through a popular election proposition, control specifically how electronic commerce may be conducted in California. In the US in its entirety, electronic commerce activities are regulated more broadly by the Federal Trade Commission (FTC). These activities include the use of commercial e-mails, online advertising and consumer privacy. The CAN-SPAM Act of 2003 establishes national standards for direct marketing over email. The Federal Trade Commission Act regulates all forms of advertising, including online advertising, and states that advertising must be truthful and non-deceptive
In Australia, Trade is covered under Australian Treasury Guidelines for electronic commerce and the Australian Competition & Consumer Commission regulates and offers advice on how to deal with businesses online, and offers specific advice on what happens if things go wrong.
In the United Kingdom, The Financial Services Authority (FSA)] was formerly the regulating authority for most aspects of the EU's Payment Services Directive (PSD), until its replacement in 2013 by the Prudential Regulation Authority and the Financial Conduct Authority. The UK implemented the PSD through the Payment Services Regulations 2009 (PSRs), The PSR affects firms providing payment services and their customers. These firms include banks, non-bank credit card issuers and non-bank merchant acquirers, e-money issuers, etc.
In China, the Telecommunications Regulations of the People's Republic of China, stipulated the Ministry of Industry and Information Technology (MIIT) as the government department regulating all telecommunications related activities, including electronic commerce.
In India, the Information Technology Act 2000 governs the basic applicability of e-commerce.
Conclusion
E-commerce emerged in China just 25 years ago, in 1993. Two years later, the country’s first e-commerce company was established, and three years after that, in 1998, the first e-commerce transaction took place. From these modest beginnings, China’s e-commerce landscape has evolved beyond recognition. And in that process, it has moved away from mirroring the practices of Western economies to developing its own model which embraces globalization.
There is no denying that the fair and ethical compliance of digital practices and activities cannot be achieved without Intellectual Property Laws, especially in a field as diverse and dynamic as E-commerce and retail. IPR in e-commerce helps protect businesses that operate
on online platforms. Since the online retail spac
e is growing at an exponential rate, Intellectual
Property Rights help companies safeguard and maintain their secret trade activities. IP rights in e-commerce also allow IPR owners to claim a share of the company’s profits. As such, it should be said that IPR in e-commerce protects activities in the e-commerce field. However, the success rate depends entirely on the practical implementation of IP Rights.
Article-
Mr.Giriraj Prajapati
(Advocate)
B.A.LL.B & LL.M
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