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In anticipation of our meeting next week to go over the launch of my e-commerce business, I would like to discuss the issues outlined in this document. It is my understanding that the laws that apply to traditional businesses also apply to e-business. My concern is the company will have greater legal exposure because of the ability of consumer access worldwide and twenty-four hours a day. Any controls that could be implemented prior to the launch would be ideal. My goal is to avoid future e-commerce legal problems by planning a legal risk management strategy and implementing industry best practices. My understandings of the issues are documented below. Please be prepared to clarify any misunderstandings I may have during our meeting next week.
Issue 1. Types of intellectual property applicable to e-business
Wikipedia (2006) describes intellectual property as ¡§a legal entitlement, which sometimes attaches to the expressed form of an idea, or to some other intangible subject matter. This legal entitlement generally enables its holder to exercise exclusive rights of use in relation to the subject matter of the intellectual property. The term intellectual property reflects the idea that this subject matter is the product of the mind or the intellect, and that intellectual property rights may be protected at law in the same way as any other form of property.¡¨
The main types of intellectual property are trademarks, patents and copyrights. Trademarks will protect our company brand, patents will protect the inventions and copyrights will protect computer software literary work etc. In addition, trademark law will protect business information of a confidential nature. As long as the company company continues to use the trademark, the rights will never expire unlike other intellectual property rights.
According to Rudnick (2004), ¡§the most misunderstood intellectual property law risk concerns the copyright laws. Many information products and other materials available from websites are protected by copyright. This is the case irrespective of whether the materials actually bear a copyright notice. Copying is inherent in the nature of the Internet medium and pervades virtually every activity such as browsing, linking, caching, accessing information, and operation of an online service. Posting materials on the web is considered a public display implicating the exclusive copyright right to display a work publicly. Since copyright rights vest automatically in the author by operation of law from the moment of creation and fixation in tangible media, the author of the materials has a copyright in and to the materials without regard to whether copyright rights were sought and irrespective of whether the materials include a copyright notice. The prudent strategy is to assume that copyrightable subject matter found on the Internet is subject to the exclusive rights of a copyright holder.¡¨ The company will also like to protect misuse of company images, company name, and domain.
Issue 2. Reasons and methods for acquiring and protecting intellectual property
There are many reasons for acquiring and protecting our intellectual property. They include but are not limited to the following risks (¡§E-business risks: Intellectual Property¡¨, 2005):
„X Availability Risk. It is necessary for a company to make information available, and yet it is necessary for all information to be protected against possible infringements.
„X Compliance Risk. Due to the incredible number of legal issues present when dealing with IP, it is important to be aware of the legal implications surrounding IP.
„X Brand Risk. A company’s brand name is part of its IP and can be one of its largest assets. It is important to protect images and brand reputation on the Internet.
„X Access Risk. Access risk includes the risk that access to information (data or programs) will be inappropriately granted or refused. Access risk is important to IP to ensure protection of trade secrets.
„X Business Value. It is important to be aware of and track all of a company’s intellectual assets, and know the business value of the assets in order to protect them.
There are other reasons for protecting intellectual property. The e-business deals with mainly electronic communication. This puts other website functions such as downloading, linking, caching and framing at risk. Privacy agreements, terms of use and electronic agreement must also be carefully considered when developing or strategy. If the strategy is poorly managed, the company will be at risk for the following:
„X Reduced competitive advantage
„X Discharge of confidential information
„X Various violation penalties
„X Low use of website because of lack of consumer trust
„X Injury to company brand
Issue 3. Impact of applicable laws and regulations within the United States
There are many Internet regulations in the United States. The Communications Decency Act of 1996 attempt to regulate obscenity and indecency on the Internet. Section 230 of the act provides ¡§that no provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider. In this provision, Congress rejected the notion of classifying ISPs as publishers in the event of defamation claims. In support of the desirability of ISPs exercising a degree of editorial control without that effort opening the door to liability exposure, Congress strictly limited the liability for defamatory material of ISPs if they had policies and practices aimed at restricting the Internet publication of materials the ISP viewed as obscene, lewd, lascivious, filthy, excessively violent, harassing, or otherwise objectionable, whether or not such material is constitutionally protected.¡¨ (Greenstein & Vasarhelyi, 2002, p.50).
There are also many reasons for liability. These can include indecent and defamatory material. In addition, the there can be different assessment standards in different countries. Standards can also be different depending on type of activity. These activities may include arms industries, financial services, and pharmaceuticals.
Being and e-commerce company, an important issue is jurisdiction. There is a concern of where suit will be decided if the company and the customer are in two different states or even two different countries. Care must also be taken so that a term of use agreement does not violate the customers right to free speech.
Issue 4. Impact of global applicable laws and regulations
The United Nations Commission on International Trade Law (UNCITRAL) develops international standards for electronic communications. The commission plays a key role in the development of standards for electronic signatures and works with various counties to establish uniform rules. When considering global e-commerce transactions the company must bear in mind the following:
„X The European Union Data Protection Directive (1998), which deals with use of personal data for European Union and non-union citizens who live in Europe.
„X How foreign taxes and tariffs are accounted and paid for
„X Legality of jurisdiction issues
„X International consumer protection issues and laws along with additional risks the company assumes.
„X Applicable international treaties
„X How enforcement differs according to country and product or service sold
Issue 5. Licensing copyrighted Web site content versus creating content in house.
There are advantages and disadvantages to creating in-house content over outside sources. The company feels that the risk is increased when content is brought in from and outside source and it would difficult to manage various content vendors. Online information is currently protected under the 1998 Copyright Designs and Patents Act, which protect original literary works. This would also cover databases and computer programs. Because content can be dangerous, care should be taken that is does not defame anyone or infringe upon a third party¡¦s intellectual property rights.
Issue 6. Linking agreements, frames and Meta tags
Linking to other websites may also need to be carefully reviewed and link agreements considered. According to Rudnick (2004), ¡§web linking agreements are used when the link involves economic considerations and in other situations, especially where the linking party wants protection against any claim for contributory liability, negligent referral, endorsement liability or other liability. The new adage is: think before you link. Linking agreements may be advisable in a number of situations. One of those situations is where the linking is to an interior page of a website directly rather than through the website owner¡¦s home page.¡¨
Frames that incorporate third party content and may be better controlled by developing content in-house. Inlining is another form of frames which displays content without a border. Care should be taken as to not mislead the consumer when using these methods.
Finally, meta-tags are used in web application code and are invisible to the user. Search engines use key words to return results back to the user. In the past this issue and the manipulation of search results has caused litigation.
Issue 7. Domain names and trademarks
Domain names identify the e-commerce business and help to bring traffic to the site. They can be registered and used as a trademark to sell goods and are protected by the Anticybersquatting Consumer Protection Act. To prevent cyber squatting, the company may need to consider a cluster registration strategy in which all of the generic domain names are also registered.
Companies must consider intellectual property as part of their overall corporate strategy. This may include implementing a department that manages IP across all business units. An analysis should be done to identify how intellectual property can improve the company¡¦s competitive advantage so that they will be able to assist in defining the rules of the market.
I look forward to your ideas on how my e-business can improve its¡¦ IP position and minimize litigation.
E-business risks: Intellectual Property. (2005). Retrieved March 25, 2006 from http://www.knowledgeleader.com/iafreewebsite.nsf/content/SecurityE-businessrisksIntellectualProperty!OpenDocument.
Greenstein, M. & Vasarhelyi, M. (2002). Electronic Commerce, 2d ed. NY, NY: McGraw-Hill.
Rudnick, P. ( 2004). The E-business Legal Survival Kit. Retrieved March 24, 2006 from http://www.bbbonline.org/eExport/doc/PlavePiperEComEBusLegalKit.pdf#search=’intellectual%20property%20applicable%20to%20ebusiness.
Wikipedia. (2006), Intellectual Property. Retrieved February 24, from: http://en.wikipedia.org/wiki/Intellectual_property.