Internet Electronic Commerce

August 14, 2012

The profound use of the Internet has affected the legal world in so far as the protection of intellectual property (IP) asset is concerned. IP has assumed similar importance in electronic commerce as it has in the offline commercial sphere, albeit with different aspects to be addressed.


The development of the World Wide Web in the early 90s has led to the evolution of the Internet  from  a  mere   tech-nological infrastructure to a network linking people and ultimately to the forerunner of information and the dig- ital age, which now plays a major role in the global economy. What initially started as a scientific and academic network has unleashed an era of elec- tronic commerce with its easy access and multifunctional character. The increase in .com enterprises has led to the inception of new commercial mod-els  and  business  dynamics,  whereby organisations  are  developing  ways  to exploit  the  Internet  as  a  marketing and commercial tool. E-commerce has opened  up  avenues  to  increase  rev- enues  by  engaging  new  clientele  and by minimising staff expenses. A recent survey conducted by the Boston Con- sultancy Group reveals that India’s to- tal  online  retailing  which  constituted 0.9%  of  its  total  retailing  industry  in 2010  is  expected  to  grow  to  4.5%  by 2016.  User  interest  and  participation are  the  main  drivers  that  are  leading India’s Internet industry to `10.8 tril-lion  by  2016  which  is  about  5.6%   of the country’s Gross Domestic Product (GDP).

This profound use of the Internet has also affected the legal world in so far as the protection of intellectual property (IP) asset is concerned. IP has assumed similar importance in electronic com- merce as it has in the offline commer- cial sphere, albeit with different aspects to be addressed. This article discusses challenges to IP law and e-commerce practices that raise trademark, patent and copyright policy questions in light of the role played by the Internet in the world economy and intellectual prop- erty system.


Copyright and Related Rights

The balance that a copyright system seeks to strike, that is safeguarding the rights of owners and public interest use, is the real challenge in the digital era. The creative content spanning the Internet and information constituting the subject matter of e-commerce are indeed protected by copyright. The rapid digitization and unauthorised copying, reproduction and distribu- tion of their work has caused the right owners to bear significant losses. With the improvement in compression tech- nology and expansion of bandwidth, even sharing of larger files has become very easy. Linking, framing, peer-to- peer file sharing has all led to ram- pant digital piracy. It is reported that the total number of users logged onto major P2P networks at any one time is approximately 10 million, sharing over 10,000,000  GB  (10  Petabytes)  worth of data.1  It is difficult regulating those P2P systems that are not using central- ised servers but enable the user’s com- puter to act as a search engine for pro- cessing each request and downloads.

The   circumstances   under   which   an Online Service Provider (OSP) should be held accountable for infringing ac- tivities  initiated  by  the  subscribers  is another  issue  which  needs  to  be  ad- dressed.  Different  jurisdictions  have dealt   with   the   issue   either   through legislative  provisions  or  judicial  pro- nouncements.   In   India,   though   the Copyright  Act  does  not  address  the liabilities   of   online   intermediaries, in  so  far  as  copyright  infringement  is concerned,  the  Information  Technol- ogy  (Amendment)  Act,  2008,  though directly not addressing any IPR issues, makes a provision that would have an impact on the IPR in e-commerce and digital environment. It also tends to clarify the scope of immunities avail- able to intermediaries.

The copyright owners may themselves use technological protection measures such as encryption and watermarking to safeguard their rights. Also under “Digital Rights Management (DRM)”, IT tools can be employed to facilitate the right holder to exploit their propri- etary rights. The DRM systems aim to enforce certain usage rules in respect of content protected by intellectual property such as the terms and price under which a person is entitled to use work. Industry experts are also of the opinion that in the coming days, copy- right holders will rely more on licens- ing and contracts, together with copy- right law to manage their IP assets.


Trademarks and Domain Names

Trademarks are of considerable im- portance in e-commerce and are of similar significance in the online world as in the physical world. The brand plays a crucial role in e-business, mo- reso because the consumer is deprived of face-to-face interaction in the vir- tual market. The challenges that a trademark owner faces in the online environment include unauthorised deep linking, meta-tagging, banner advertising, framing, search engine marketing abuse, SEO manipulation, pop-up advertisement, mouse trap- ping, etc. The offences result in diver- sion of traffic to competing business, exploitation of right holders’ brand  for generation of advertising revenues and counterfeit, and grey market sales. These issues are alleviated by the terri- torial nature of trademark law and the global nature of the Internet.

Companies around the globe are com- ing up with innovative solutions to baffle trademark abuse on the Inter- net. One such approach is linking from common websites, such that a list of multiple trademarks is included on one website which further directs cus- tomers to relevant trademark sites. For example, offers access to Dis- tributor Information Systems Corpo- ration of Farmington, Connecticut as well as Dynamic Information Systems Corporation of Boulder, Colorado. This approach allows the companies to reconcile the limitation of register- ing only one domain name in cyberspace with the ability for separate businesses to own the same trademark in two separate geographic locations in the physical world. states: “In the spirit of Internet cooperation, these two companies known as DISC are sharing this intermediate home page. Please choose the company of interest.”2

Hiring the services of enforcement firms also pays dividend as these firms monitor trademarks and warn the right holders if such marks are regis- tered that negatively affects his busi- ness. Technical measures such as use of Internet keywords, blocking access by Internet users located in a particu- lar country, or by refusing to deliver goods or services to customers located in a particular territory may also al- leviate trademark misuse on the In- ternet. For domain name disputes, such as typosquatting and cybersquat- ting the proceedings are initiated where country code top level domain (ccTLD) is registered. The Uniform Domain Name Dispute Resolution Policy adopted by ICANN offers an ex- pedited administrative proceeding for trademark holders to contest “abusive registrations of domain names”. In In- dia the same is provided by IN Dispute Resolution Policy (INDRP) formulated by the .IN Registry.


Trademarks & Domain Names

Electronic Business and Patents

The innate technological nature and infrastructure of e-commerce  rely- ing on computer technologies, both hardware and software, highlights the prominence and significance of patent system in e-business. Undeniably the rapid technological growth in this are- na is the outcome of incentives, pro- vided by the patents to the researchers and innovators. The business intelli-gentsia is however divided on the pat- enting of business methods. While the proponents of the system believe that patenting leads to knowledge sharing and offers distinctive advantage to businesses, the same practice is sus- pected to adversely affect competition. It is contended that companies may exploit the system to obtain patents for business methods that are not new and already exist in non-cyberspace. Nev- ertheless, patents have been granted to inventions pertaining to financial services, electronic sales and advertis- ing methods and business methods, including business methods consisting of processes to be performed on the Internet, and telephone exchange and billing methods.


Management of Intellectual Property

Internet indisputably has emerged as a key to successful commercial ventures. It has become indispensible for com- panies to manage intellectual property assets including patents, trademarks and copyright in this dynamic environ- ment. Before drafting business plans for e-businesses, an entity must con- duct 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 poten- tial 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 copy- ing of other’s content or software. Rel- evant 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 is- sues like these are aptly acknowledged and addressed.


Disclaimer – The article intends to provide general information only and should  not be taken as legal advice or opinion related to specific situations. Every possible effort has been made to ensure accuracy of the information contained in the article but the author cannot be held responsible for any misrepresentation or inaccuracy. The pa- per “Intellectual Property on the Internet,  a survey of issues” released by World Intel- lectual Property Organization was referred by the authors for factual details.



Ms Rishu Srivastava is a patent agent and holds an engi- neering degree in biotechnology and life sciences. She was selected as Woman Scientist specialising in IPR by TIFAC and has secured first rank in the Patent Agent Examination conducted by the CGPTDM, GOI, India. She is proficient in all aspects of patent and design prosecution and regularly advises clients on IP strategy and portfolio management. She has a flair for writing and regularly submits articles for the firm’s newsletters as well as for various legal journals-

Rishu Srivastava

Patent Agent

S.S Rana & Co. Email


Pooja Thakur is Trademark Attorney at S.S Rana & Co. She is proficient in all aspects of trademark and copy- right matters including registration of trademark, searching, drafting assignments, licenses, prosecution-

Pooja Thakur

Associate Advocate

S.S Rana & Co Email

Related Posts

Curbing Online Counterfeiting in India: Need of the Hour


For more information please contact us at :