A necessary distraction

Vikrant Rana of S.S. Rana & Co looks at the rise of the internet and the profound effect that it has had on IP protection and enforcement

In the early 1990s, when the internet was only developing, it was anticipated to be a simple technological infrastructure. Very soon it developed into a popular network, linking people in diverse communities throughout the world. The internet became a means for people around the world to exchange and share ideas, information, and gradually goods and services. What was, however, not anticipated was it becoming a platform for the easy violation of IP rights on a large scale.

The range of new technologies and the speed of innovation raises IP issues: domain names are often inextricably linked with trademark issues; and the ease with which digital technologies allow for copying and distribution challenges copyright law enforcement.

The emergence of the internet has caused policymakers, legislators, rights holders, content creators, businesses, content users and others to rethink the way that IP should operate in a modern inter-connected society.

IP on the internet

The digital age and the global economy are now closely linked. Since the 1990s, information technologies have accounted for a large share of investment and have made a significant contribution to economic growth, supported by an IP system that has provided effective protection for digital technologies in the new economy. Businesses, individuals and governments have all profited from the benefits that have been delivered by the ever-increasing and broadening use of the Internet.

There are, further, numerous .com companies that rely on business models that trade in physical manifestations of IP. The online traders Barnes and Noble and Amazon, for example, use vast databases of books, videos and songs, and user-friendly purchasing systems, to attract consumers away from shopping malls, and then send these products (each a work with inherent protectable IP) to consumers using postal mail. Travel sites and airline companies, such as EasyJet, and entertainment ticket sellers, such as Ticketmaster, profit by saving on overheads, conducting sales online, and using e-ticketing or mailing tickets to purchasers. Numerous SMEs have used the internet as a marketing tool to locate buyers for their products in a huge global marketplace.

Ever-adaptable IP has now migrated to the internet and its use is being modified to suit the online environment. The reality of this can be seen in today’s world where business assets are now reflected in intellectual as opposed to physical property, and where the value of many online companies may be found in their vast databases of customer information (which often are the subject of IP protection).

This trend has also been seen in textual work such as books and newspapers with an ever-growing demand for e-books. This can also be seen in online newspaper publishing. Where many of these initially were free sites, they are now seeking to introduce subscription access. In the field of fine art, indigenous craft and artifacts, and numerous museums and art galleries, have digitised their collections and made them available on the internet.

A recent survey from the Boston Consultancy Group revealed that India’s total online retail sector, which constituted 0.9 of its total retail industry in 2010, is expected to grow to 4.5 percent by 2016. User interest and participation are the main drivers that are leading India’s internet industry to be worth 10.8 trillion rupees by 2016 or about to make up 5.6 percent of the country’s GDP.

In light of this, IP has assumed a similar importance in electronic commerce as it has in the offline commercial sphere, although IP law has had to adapt to the different challenges that the internet presents.

The impact of the internet on IP law

Copyright and related rights

Given the capabilities and characteristics of digital network technologies, e-commerce has had a tremendous impact on the system of copyright and related rights, and in turn the scope of copyright and related rights has affected the evolution of e-commerce. It is essential that legal rules are set and applied appropriately, to ensure that digital technology does not undermine the basic tenets of copyright and related rights. From one perspective, the internet has been described as “the world’s biggest copy machine”. While earlier technologies such as photocopying and taping allow mechanical copying by individual consumers, they do so in limited quantities, requiring considerable time, and resulting in copies of lesser quality. Moreover, copies are physically located in the same place as the person making the copy.

On the internet, by contrast, it is possible to make an unlimited number of copies, virtually instantaneously, without perceptible degradation in quality. And these copies can be transmitted to locations around the world in a matter of seconds. The result could be the disruption of traditional markets for the sale of copies of programs, art, books and movies. In the music industry, for example, the emergence of internet-based file swapping services such as Napster and others have enabled a large-scale exploitation of music and recordings without the authorisation of the rights holders. That exploitation was further aggravated by the simultaneous broad commercialisation of CD burners and portable MP3 players, which were adapted to the most commonly used file format.

Copyright owners face these challenges at a time when the sphere of copyright in national economies is reaching unprecedented levels. The rapid digitisation, unauthorised copying, reproduction and distribution of works has caused their copyright owners to bear significant loses. Linking, framing and peer-to-peer (P2P) file sharing has all led to rampant digital piracy. It has been reported that the total number of users who are logged onto major P2P networks at any one time is approximately 10 million, sharing more than 10 petabytes (10 million gigabytes) worth of data. Regulating P2P systems is difficult because they do not use centralised servers. Instead, they enable a user’s computer to act as a search engine for processing each request and downloads.

Copyright owners may use technological protection measures such as encryption and watermarking to safeguard their rights. Also, digital rights management (DRM) enables IT tools to be used for exploiting proprietary rights. DRM systems aim to enforce usage rules in respect of IP-protected content with terms and prices under which a person is entitled to use a work. Industry experts are also predicting that copyright owners will rely more on licensing and contracts to manage their IP assets in the future.

Trademarks and domain names

Trademarks are an important tool in commerce, enabling consumers to identify the source of a product and link it with its manufacturer in heavily saturated markets.

The challenges that a trademark owner faces in the online environment include unauthorised deep linking, meta-tagging, banner advertising, framing, search engine marketing abuse, search engine optimisation manipulation and mouse trapping. The end results of these are often the diversion of traffic to competing businesses, the exploitation of a trademark owner’s brand for advertising revenue generation, and counterfeit and grey market sales.

Companies are applying innovative solutions to tackle trademark abuse on the internet. One approach is linking from a common website, so that a list of multiple trademarks is included on one website that further directs customers to relevant trademark sites. Hiring enforcement firms also pays dividends, as these firms monitor trademarks and warn rights holders the registration of trademarks that could have a negative effect on their businesses. Technical measures, such as the use of internet keywords, blocking the access of an Internet user who is located in a particular country, or refusing to deliver goods or services to customers that are located in a particular territory, may also alleviate trademark misuse on the internet.

Trademarks are essential to e-commerce, and are equally important on the internet as they are in the physical world. There is a general international consensus that trademark protection under law should extend to the internet, and that its scope should be neither less nor more extensive than the protection that is granted in the physical world. The challenges of this new medium of commerce are, however, not limited to trademarks only, and exist with regard to all kinds of distinctive signs online, including trade names and geographical indications.

The internet domain name system also presents challenges to trademarks. Domain names were originally intended to perform a purely technical function in a user-friendly way, but because of their intuitive and easy to remember nature, they now act as business or personal identifiers. Most businesses, whether e-commercial or not, advertise their domain names to signal their internet presences. In this way, domain names have now come to perform an identifying function similar to that of a trademark. The trend of businesses using their trademarks or trade names as their domain names has now caused conflict with the advent of predatory practices, such as cybersquatting.

For domain name disputes such as cybersquatting and typosquatting, the proceedings are initiated where a ccTLD is registered. The Uniform Domain-Name Dispute-Resolution Policy offers an expedited administrative proceeding for trademark holders to contest abusive registrations of domain names. In India, the .IN Registry’s IN Dispute Resolution Policy performs this function,

Patents in the digital environment

The patent system has also migrated onto the internet, as businesses have sought to recoup R&D costs in digital technologies by patenting their online business methods. In fact, the technology-intensive nature of e-commerce means that many of its constituent processes may be patentable subject matter so long as the legal criteria for patentability are met.

The patent system has played a vital role in promoting the development of the underlying technical infrastructure for the internet and e-commerce that takes place across its networks. E-commerce relies in a critical way on various computer and network technologies, both hardware and software. The market exclusively that is established through effective patent protection has provided a reward for investment and has justified the expenditures on R&D to achieve further technological progress. But new technologies pose challenges to the conventional legal scheme for patent systems.

Patents have recently been granted for certain inventions concerning financial services, electronic sales and advertising methods, and business methods, including business methods consisting of processes to be performed on the internet, and telephone exchange and billing methods. Such patents are viewed by some as important for creating incentives and spurring investment in new digital technologies.

On the other hand, these patents have been the subjects of criticism from those who stress that a number of patents concerning business practices and methods reflect familiar ways of doing business that are not new or novel—the only aspect that is different is that they occur in cyberspace.

Similarly, discussions concerning patentable subject matter have occurred in respect of software patents, as the significance of software itself extends well beyond the software industry. It is to be noted that the TRIPS Agreement (Article 27.1) does not allow the exclusion of software in general from patentability.

In the field of information technology, the value of intellectual assets often resides in the content of the information. In the past, software has often been sold as an integral part of the computer system, while, today, software products are often marketed in the form of computer readable media, for example, diskettes and CD-ROMs, or directly over the internet. Software-related inventions are stored in media such as this, and commercialised separately from the computer hardware. It is necessary, therefore, to claim software-related inventions such as these as a computer readable medium storing the software that performs the claimed functions. As this topic is relatively new, there is not as yet international harmonisation concerning an acceptable claim format with respect to software-related inventions.

Tackling online IP infringement

The explosion of the internet and the increase in .com enterprises have profoundly shaken the economic world, and at the same time, they have also affected the legal world by posing new problems when it comes to protecting IP on the internet.

The last couple of years, in fact, have established that trademark and copyright owners have a tense relationship with internet service providers. Since it is often difficult to seek action against the original infringer, IP owners frequently try to hold ISPs liable for hosting infringing content and for facilitating illegal distribution of protected works. By doing so, they repeatedly ask the courts for extensive measures, which can contravene fundamental rights such as privacy or freedom of expression. Courts often have to perform a balancing act between the protection of IP rights and freedom of information.

The circumstances under which an online service provider should be held accountable for infringing activities that are initiated by subscribers is another issue that needs to be addressed. Different jurisdictions have dealt with the issue either through legislative provisions or judicial pronouncements. The Copyright Act in India, though, does not address the liabilities of online intermediaries, and as far as copyright infringement is concerned, the Information Technology (Amendment) Act 2008 provides certain provisions that would effect IP rights in e-commerce and in digital environments. It also intends to clarify the scope of immunities available to intermediaries.

IP owners, including film and music creators, software developers, and authors and publishers, are now exploring ways in which they can make their products available online, while protecting their rights and recouping their investments. To some extent, the uptake of fee-based IP services is dependent on the efficient management of these rights, as well as the availability of workable and secure methods of micropayments that would enable pay-per-unit purchases, and the building of consumer confidence in online payment security, privacy and consumer protection. At the same time, however, creators and IP owners need to feel sure that they can protect their property from piracy and control its use, before they will be willing to make it available online.

New international laws, such as the World Intellectual Property Internet Treaties, adapt the IP laws to facilitate the dissemination of protected material over the internet. Technological tools such as encryption and watermarking provide practical solutions and, together with DRM initiatives, help to address this concern.

The global information society that was predicted in the early days of the internet has yet to become a worldwide reality, but the focus on information remains the key to the e-commerce economy. Although a good proportion of the information on the internet is in the public domain, that is, freely available to use and copy, an increasingly significant amount is also protected as IP.

In a nutshell, effective IP enforcement on the internet remains a complex affair. But the solution to increasing online sales of counterfeit and grey market products as well as online infringement is a proactive defence and decisive and effective enforcement action.
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