Exploring the Role of IPR in E-Commerce

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Intellectual Property Rights play a crucial role in the field of e-commerce
Learn about how your favourite shopping website is protected under IPR for e-commerce

IPR in e-commerce is a highly valuable component of e-commerce. IPR stands for Intellectual Property Rights – 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. This article takes you through the significance of IPR in retail as well as the elements that are protected under IPR.

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:

  1. 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.  

  2. 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.

  3. 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.

  4. 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.

Importance of Intellectual Property in E-Commerce

For most companies across the globe, their Intellectual Property is an asset that is far more valuable than any tangible asset owned by them. This is because Intellectual Property Laws protect companies from disclosing their trade secrets, while also protecting them against unfair competition.

The role of IPR in E-commerce is most clearly visible in today’s digital economy. The presence of practices and statutes that govern the functioning of IP laws has encouraged new creations, while – also protecting the hard work put in by the creator. The law prevents others from stealing IPs and using it to their financial advantage, without paying the creator for the labour they put in, and their invention.

Understanding two fundamental areas concerning IPR in e-commerce:

internet-and-online-shoppingSafeguarding one’s own intellectual property

A common mistake most intellectual property owners make, is that they reveal their IP before they even file for its protection. This can prove to be quite fatal, since they cannot take legal action against entities who are unfairly using it for commercial purposes. For instance, if one discloses the secrets of a software algorithm, before filing it as a trade secret, they would not be eligible for IP protection. IP laws across the globe do not extend IP protection to companies if they make their trade secrets public.

Violating another company’s intellectual property

E-commerce websites are essentially those that are in the business of purchasing and selling products online. Many e-commerce companies often infringe copyright laws by portraying and describing products and also showing their images. For instance, many Indian and Chinese e-commerce portals often sell high-end products at a fraction of a price (these products are often exact duplications of the original products). Such e-commerce companies must do their due diligence to ensure they do not infringe upon an inventor’s IP rights. They can do this by ensuring that the product they are selling is the original creation of the IP owner and that the creator has permitted the third-party platform to sell their product.

Eight elements protected under IPR in e-commerce

IPR in retail and e-commerce deals with buying and selling products through a physical shop and a website, respectively. As such, both retail and E-commerce business owners have to protect several different kinds of intellectual properties. The following are elements covered by IPR in E-commerce, under various models and laws.

  1. E-commerce systems, search engines and other essential internet tools are protected under patents and utility models.
  2. Specific software, including the HTML code which is text-based, used by websites, is safeguarded under the Patent Law or the Copyrights Act, depending on the country’s IPR laws.
  3. The overall design used by an e-commerce website is also protected under Copyright Law.
  4. All the content present on the website; be it the written material or videos, the photographs or graphics used, etc., are protected under the Copyright Law.
  5. Under E-commerce in IPR, companies can protect their databases under copyright laws or specific database laws applicable in their country.
  6. With regards to both, IPR in retail and e-commerce, companies can protect their brand names, product names, logos, domain names, and other similar distinguishing signs posted on their websites under the Trademark Law.
  7. Companies are also permitted to protect their computer-generated displays, graphic signals, webpages, and graphical user interfaces under the Industrial Design Law applicable in their country. 
  8. Websites typically have several hidden aspects such as confidential graphics, object and source codes, algorithms and programs, technical descriptions, logic and data flow charts, user manuals, data structures and their database contents which are protected under various Trade Secret Laws.

Conclusion: 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 space 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.

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