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Business Process Patents, Trade Marks, Domain Names, and Online Issues in E-commerce, Exercises of Information Technology

Central University of Jammu and KashmirInformation Technology

The value and controversies of business process patents for e-commerce companies, as well as trade mark and domain name conflicts. It covers cyber squatting, concurrent use, parasite domain names, and online defamation, privacy, and taxation issues. Experts' opinions and solutions are provided.

Typology: Exercises

2011/2012

Uploaded on 08/11/2012

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© Copyright Virtual University of Pakistan 181
Lesson 45
GLOBAL LEGAL ISSUES OF E-COMMERCE
Patent infringement
A patent is an exclusive right granted by law to make, use and sell an invention. In order to be
patentable, the invention must be unique, genuine, and useful according to the prevalent technological
standards. Patenting software programs is not considered a popular option these days. Firms, which
had developed software programs for web sites, have experienced that obtaining a software patent is
expensive and quite time consuming. Therefore, copyright registration of software programs is
considered a more feasible option. It may, however, be interesting to talk about ‘business process
patents’ which have value for e-commerce companies. These patents are granted on ‘methods of doing
business’, and protect a specific set of procedures for doing a certain business activity. For instance, a
famous online business has conceived a unique 1-click purchasing method. Another e-business has a
peculiar price tendering system (‘name your own price’ system). Similarly, an online business uses a
specific approach of aggregating information from different web sites. The aforesaid businesses have
found their respective business process patents to be quite useful. However, in the opinion of some
experts the grant of such business process patents can cause unfair monopoly of the recipients. The
courts have yet to decide complicated issues involving business process patents.
Trade mark and domain name conflicts
A trade mark is that sign/symbol that associates the manufacturer or service provider with the
manufactured goods or services, respectively. For instance, where the letter ‘u’ is written in a particular
style (say in a circle) on the product packaging, it can be termed as a trade mark. A trade name is that
name or brand under which a business carries on its business activity to become recognizable. Often, a
trade name can be used as a part of the trade mark. A domain name is the user friendly name used to
access a web site, such as ‘vu.edu’. Domain names are unique and global in nature which means that
there cannot be two similar domain names. On the other hand, trade marks/trade names can be
multiple and localized. Thus, same trade mark/trade name can be used in relation to the same
product/service in different countries or geographical areas. Similarly, same trade mark/trade name can
be used in relation to different products/services within the same geographical area. Based upon this
distinction between trade marks/trade names and the domain names, the experts have identified four
areas of conflict as follows:
Cyber squatting
The act of intentionally registering domain names containing trademarks/trade names of prominent
companies to later blackmail or demand ransom from those companies is called cyber squatting. It is
regarded as an offence in most countries. Assume there is a firm ‘Glory Enterprise’ and it wants to have
its web site. It also wants to have the word ‘glory’ as a part of its domain name because for years it has
been recognized in the physical world through this word. However, at the time of registration of its
domain name it finds that a person Mr. ‘A’ who has nothing to do with the business of the firm or the
word ‘glory’ has already registered a domain name containing this word as a part of it. Since there
cannot be two similar domain names, the firm is forced to request Mr. ‘A’ to transfer that domain name
to it. In response, if Mr. ‘A’ blackmails or claims ransom from the said firm, he would be said to have
committed cyber squatting.
Concurrent use
This problem arises when two organizations have apparently legitimate claim to use the same domain
name but cannot do so due to the uniqueness of domain names. Suppose, there is a company
manufacturing electronic goods and another company selling French fries. Under the traditional trade
mark law both these companies can have the same trade mark/trade name such as ‘frys’. The problem
arises when both apply for the registration of a domain name containing the word ‘frys’. Here, both are
docsity.com
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Download Business Process Patents, Trade Marks, Domain Names, and Online Issues in E-commerce and more Exercises Information Technology in PDF only on Docsity!

Lesson 45 GLOBAL LEGAL ISSUES OF E-COMMERCE

Patent infringement

A patent is an exclusive right granted by law to make, use and sell an invention. In order to be patentable, the invention must be unique, genuine, and useful according to the prevalent technological standards. Patenting software programs is not considered a popular option these days. Firms, which had developed software programs for web sites, have experienced that obtaining a software patent is expensive and quite time consuming. Therefore, copyright registration of software programs is considered a more feasible option. It may, however, be interesting to talk about ‘business process patents’ which have value for e-commerce companies. These patents are granted on ‘methods of doing business’, and protect a specific set of procedures for doing a certain business activity. For instance, a famous online business has conceived a unique 1-click purchasing method. Another e-business has a peculiar price tendering system (‘name your own price’ system). Similarly, an online business uses a specific approach of aggregating information from different web sites. The aforesaid businesses have found their respective business process patents to be quite useful. However, in the opinion of some experts the grant of such business process patents can cause unfair monopoly of the recipients. The courts have yet to decide complicated issues involving business process patents.

Trade mark and domain name conflicts

A trade mark is that sign/symbol that associates the manufacturer or service provider with the manufactured goods or services, respectively. For instance, where the letter ‘u’ is written in a particular style (say in a circle) on the product packaging, it can be termed as a trade mark. A trade name is that name or brand under which a business carries on its business activity to become recognizable. Often, a trade name can be used as a part of the trade mark. A domain name is the user friendly name used to access a web site, such as ‘vu.edu’. Domain names are unique and global in nature which means that there cannot be two similar domain names. On the other hand, trade marks/trade names can be multiple and localized. Thus, same trade mark/trade name can be used in relation to the same product/service in different countries or geographical areas. Similarly, same trade mark/trade name can be used in relation to different products/services within the same geographical area. Based upon this distinction between trade marks/trade names and the domain names, the experts have identified four areas of conflict as follows:

Cyber squatting

The act of intentionally registering domain names containing trademarks/trade names of prominent companies to later blackmail or demand ransom from those companies is called cyber squatting. It is regarded as an offence in most countries. Assume there is a firm ‘Glory Enterprise’ and it wants to have its web site. It also wants to have the word ‘glory’ as a part of its domain name because for years it has been recognized in the physical world through this word. However, at the time of registration of its domain name it finds that a person Mr. ‘A’ who has nothing to do with the business of the firm or the word ‘glory’ has already registered a domain name containing this word as a part of it. Since there cannot be two similar domain names, the firm is forced to request Mr. ‘A’ to transfer that domain name to it. In response, if Mr. ‘A’ blackmails or claims ransom from the said firm, he would be said to have committed cyber squatting.

Concurrent use

This problem arises when two organizations have apparently legitimate claim to use the same domain name but cannot do so due to the uniqueness of domain names. Suppose, there is a company manufacturing electronic goods and another company selling French fries. Under the traditional trade mark law both these companies can have the same trade mark/trade name such as ‘frys’. The problem

arises when both apply for the registration of a domain name containing the word ‘frys’. Here, both aredocsity.com

legitimate claimants of this domain name but due to the element of uniqueness of domain names only one of them can be assigned the desired domain name.

Parasites

Parasite domain names are variants on famous domain names, and are confusingly similar to them to gain business advantage. For instance, a software company may intentionally register a domain name as ‘macrosoft.com’ (a variant of domain name of the famous company ‘Microsoft’) to take advantage of the reputation of ‘Microsoft’. The idea is that someone intending to reach the web site of ‘Microsoft’ may mistype or misspell and reach the web site of ‘Microsoft’, instead. xyz.com vs. xyz.org

This problem arises due to the fact that second level domain names can be assigned to multiple top- level domains. For example, ‘whitehouse.org’ and ‘whitehouse.com’ are two valid domain names. The former may take you to the web site containing information about the residence of the American President, whereas the later may have been deliberately registered with the same second level domain but a different top-level domain to gain business advantage. Thus, it is quite possible that a person wishing to know about the residence of the American President reaches an irrelevant or pornographic web site after typing the word ‘Whitehouse’ on a search engine.

International Corporation for Assigned Names and Numbers (ICAAN), which supervises the task of registration of domain names worldwide, has developed and implemented a policy known as Uniform Dispute Resolution Policy (UDRP) for deciding domain name disputes. It enables trademark holders to claim/retrieve domain names by invoking mandatory arbitration proceedings at different arbitration forums or service providers. Arbitration is a legal concept in which parties, through an agreement, appoint/nominate a person or a panel to act as a judge in the matter instead of referring the dispute to the ordinary court of law. The decision of the arbitrator is regarded as final and binding on the parties. World Intellectual Property Organization (WIPO) based in Switzerland is one such arbitration service provider nominated under the UDRP.

Online Defamation

A defamatory statement is a false statement that injures the reputation of on another person or company. If a statement injures the reputation of a product or service instead of a person, it is called product disparagement. Suppose, someone circulates a news item in the media about the reputation of a doctor, alleging him to be professionally incompetent and negligent. This doctor may then file a lawsuit against that person claiming that his reputation has been injured due to such an act. Often, in cases of defamation the plea taken by the defendant is that his statement is not false. Rather, it is a ‘fair comment’. In case defamation is done using the internet, it is termed as online defamation. In countries abroad, the courts are replete with cases of online defamation, mainly, because the person causing defamation can expect to remain anonymous due to the nature of internet technology.

It is difficult to draw a clear line between justifiable criticism and defamation. So, commercial web sites should avoid making negative or critical statements about other persons or products. Similarly, web site designers should avoid any defamation liability when indulged in the alteration or modification of a picture or image of a person. They should not depict such person in derogatory or negative sense. Moreover, any online statement about the competitors must be carefully reviewed before posting it on the web, lest it contains any element of defamation.

Closely connected with online defamation is the issue of liability of the internet service providers (ISPs). ISPs provide the channel for communication. An ISP may be accused of aiding in the commission of online defamation where it provides hosting service to a web site containing defamatory material. Courts have prescribed a test in determining ISP’s liability in such a case. Accordingly, where the ISP has editing control; it can review any defamatory material and take it down from the web site; it should be treated as a publisher. In such a case the ISP can be held liable for online defamation. Conversely, where the ISP has no editing control over the offensive material posted on a web site; it would be merely acting as a distributor. In such a case, the ISP can escape liability for online defamation.

docsity.com

country have to deal with the issue of nexus to know the governments/countries entitled to levy/receive taxes from them. Generally, the principle is that if a company undertakes sufficient business activities in a particular country it establishes nexus with that country and becomes liable for filing returns in that country and it must comply with its tax laws. Therefore, an e-business may be required to separately file tax returns and pay taxes in different countries. A web site maintained by a company in the United States must pay income tax to the American government on income generated inside and/or outside of the U.S.A. However, to avoid the issue of double taxation, the U.S. tax law allows credit/refund for taxes paid (if any) to the foreign countries in relation to foreign earnings. It is important for an online seller to know where the customer is located and what the law of sales tax is in that country or jurisdiction to determine whether or not a particular item is subject to sales tax.

Cyber Crimes

The use of internet technology has given rise to crimes which could not be conceived of a few years ago. Such crimes more suitably called cyber crimes include online fraud, online hate (spreading hatred against a community through internet), cyber-stalking (sending threatening messages using internet), online terrorism, distribution of pornography, using a computer for launching attacks on other computers etc. Today, many countries of the world are busy in either drafting new laws to deal with the issue of cyber crimes or making suitable amendments in existing criminal code. Again, the issue of territorial jurisdiction is critical in this behalf. For instance, where a Pakistani resident commits a cyber crime against a Canadian resident, the question arises whether or not the Canadian court can take an action against this Pakistani, particularly, where the act of Pakistani is not considered criminal under the Pakistani law.

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