Copyrights, Trademarks and Patents make up most of the area of law known as Intellectual Property. It is the Intellectual Property laws of Copyright, Trademark and Patents that are attempting to harmonize the effects that E-Commerce and the Internet have had on the individual’s ability to access and use this information. Most countries have their own systems for patents, copyrights and trademarks, but thanks to international coordination and agreement facilitated by the World Intellectual Property Organization (WIPO) these legal regimes are basically similar in structure and approach.
INTRODUCTION TO INTELLECTUAL PROPERTY
While E-Commerce is largely based in contract and commercial law, intellectual property law plays an important role in the success of E-Commerce. The various forms of intellectual property protection – copyrights, trademarks and patents – each contribute to the success of E-Commerce by protecting intangible assets valuable to business. Copyrights protect the content of both websites and the material transmitted over those websites. Trademarks protect the valuable symbols and phrases that distinguish businesses and increase loyalty. Patents protect the functionality of the software and the methods underlying much of E-Commerce.
IP consists of new ideas, original expressions, distinctive names, and appearance that make products unique and valuable. IP is often traded (or licensed) in its own right without trading in the value of an underlying product or service, by means of patent or other IP licenses from a rights owner to another.
INTELLECTUAL PROPERTY AND E-COMMERCE
There are several reasons why IP is important to E-Commerce and e-commerce is important to IP. E-Commerce, more than other business systems, often involves selling products and services that are based on IP and its licensing. Music, pictures, photos, software, designs, training modules, systems, etc. can all be traded through E-Commerce, in which case, IP is the main component of value in the transaction. IP is important because the things of value that are traded on the Internet must be protected, using technological security systems and IP laws, or else they can be stolen or pirated and whole businesses can be destroyed.
Also, IP is involved in making E-Commerce work. The systems that allow the Internet to function – software, networks, designs, chips, routers and switches, the user interface, and so on – are forms of IP and often protected by IP rights. Trademarks are an essential part of E-Commerce business, as branding, customer recognition and goodwill, essential elements of Web-based business, are protected by trademarks and unfair competition law.
E-Commerce businesses and Internet related businesses are based on product or patent licensing. This is because so many different technologies are required to create a product that companies often outsource the development of some component of products, or share technologies through licensing arrangements. If every company had to develop and produce all technological aspects of every product independently, development of high technology products would be impossible. Finally, E-Commerce based businesses usually hold a great deal of their value in IP; so the valuation of your E-Commerce business will be affected by whether you have protected your IP. Many E-Commerce companies, like other technology companies, have patent portfolios and trademarks that enhance the value of their business.
TRADEMARK IN E-COMMERCE
Trademarks are vital tools for electronic commerce. They provide the trademark owner with the exclusive right to use the mark in connection with certain goods or services. These exclusive rights allow the trademark holder to build up the goodwill and reputation of their products. A trademark signifies that all goods bearing the mark come from the same source and are of a particular level of quality. It also allows consumers to identify the goods or services of one company from those of another.
When a trademark is used over the Internet, it is potentially accessible by viewers worldwide. Businesses are realizing that their on-line identities are potentially valuable resources and must be protected accordingly. This is evidenced by the fact that United States Patent and Trademark Office trademark registrations have increased significantly over the past few years, in correlation with exponential growth in electronic commerce.
However, business owners must be aware of the legal challenges accompanying Internet use of trademarks. Electronic businesses must protect valuable intangibles, such as domain names and metatags. Companies should know what constitutes a valid trademark and be prepared to enforce their trademark rights over the Internet. They must also be aware of methods to detect further infringement and what remedies are available.
COPYRIGHTS IN E-COMMERCE
Web sites are compilations of various components. Much of the material that is used to create or that is found on web sites, such as photographs, text, artwork, and audio components, are copyrightable. Businesses that choose to create an Internet presence for themselves need to be aware of how copyright law works and affects material on the web. For e-commerce businesses, a primary source of protection for their intellectual property is copyright law. Material that can be protected through copyright law includes the software that runs programs on the web site, the text and photos on the page, audio components, and databases.
A copyright in a work entitles the owner to a bundle of exclusive rights. With that bundle of rights, a copyright owner has the ability to grant any one or all of his exclusive rights to another. The owner may choose to divide the bundle of rights any way that the copyright holder sees fit. With the Internet, there are more avenues for which exclusive rights can be used. For example, the author of a book would have the general exclusive rights granted by copyright. The author would have the right of reproduction, distribution, the right to create a derivative work, etc. According to the author’s wishes, the author could grant the right of reproduction and distribution to a traditional book publisher for the book to be printed in hard copy form.
The World Intellectual Property Organization has also explored the benefits of electronic rights management. Electronic Copyright Management Systems can promote the public interest, making it easier for people to properly clear rights before using copyrighted works unlawfully. The basic methods of rights management systems identify content and the rights owners of the content, a method for licensing the content, a method for tracking the use of the work after the licensing has occurred, and a method for ensuring that the rights holders are duly compensated for the use of the work.
PATENTS IN E-COMMERCE
The software that runs E-Commerce is a prime target for patenting. E-Commerce has increasingly become accustomed to using patents. Patents protect the methods of implementing E-Commerce solutions, for example the Priceline ‘207 patent on Dutch auctioning. Patents protect the software underpinning E-Commerce transactions, and patents protect the graphical representations associated with E-Commerce
So long as the software achieves a useful result and meets all the traditional tests for patentability, a software patent is obtainable. The processes used by software for executing a particular commerce-related task could be patentable as a business method. Consider for example the various shopping systems that have received business method patents. The graphical representations and icons used in the E-Commerce programs may be eligible for design patent protection.
E-Commerce across the internet will continue to grow. There are many traditional and non-traditional uses for patents in this rapidly developing sector. The software that runs E-Commerce is a prime target for patenting. So long as the software achieves a useful result and meets all the traditional tests for patentability, a software patent is obtainable. The processes used by software for executing a particular commerce-related task could be patentable as a business method. Consider for example the various shopping systems that have received business method patents. The graphical representations and icons used in the E-Commerce programs may be eligible for design patent protection. Activities such as these represent traditional uses of the patent power. Two non-traditional issues of patents particularly deserve discussion: defensive patents and essential facilities. Defensive patenting occurs when a patent is obtained primarily for the purpose of excluding others from an invention, without specifically intending to practice the invention oneself, or when patent is obtained primarily to be used as a bargaining chip in negotiating a license to another’s patent.
Internet indisputably has emerged as a key to successful commercial ventures. It has become indispensable for companies to manage intellectual property assets including patents, trademarks and copyright in this dynamic environment. Before drafting business plans for e-businesses, an entity must conduct an IP Audit to clearly identify its IP assets relevant to e-commerce. The trademark and domain name should be chosen properly to avoid any potential cybersquatting and use of words that are restricted and prohibited. The online contents of the concerned company should be clearly identified with a copyright notice and policies should be framed against illegal copying of other’s content or software. Relevant IP rights notices, and trademark and copyright disclaimers should also be inserted to restrict infringement. E-commerce can only attain its true potential in a global environment if issues like these are aptly acknowledged and addressed.
Written by: Jaspreet Kohli
Amity Law School