Ethics Issues on Intellectual Property in E-Business Term Paper

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Ethics Issues on Intellectual Property in E-Business

This paper briefly outlines the basics of intellectual property. It also describes the importance of intellectual property in business and then provides a detailed discussion on e-business and intellectual property. The paper will deal with a few cases of infringement to illustrate how intellectual property is important in e-business.

Intellectual property is very important to any business. Intellectual property rights including patents and copyrights have been a key factor for the success of many companies. It provides them with an opportunity to protect their ideas and concepts, preventing others from copying them. With the boom in e-business, there have been many cases of infringement and this has become quite frequent because of the relative ease in sharing information over the Internet. Protection of intellectual property in the Internet is difficult. There are many debates existing over the type of violations that can be termed as copyright infringement in the Internet because the very existence of Internet is for sharing information. Another factor to be considered is that intellectual property rights are usually territorial or regional and not international. Thus if a company wants to register its trademark, it will have to do so in all the countries where the products are marketed.


Intellectual Property (or IP) basically refers to owning one's ideas and innovation. It is similar to physical property except that instead of some physical material like land, intellectual property deals with ideas. It is not possible to protect all ideas in the initial stage and usually an idea will need to be elaborated before it can be protected by intellectual property rights (IPR). These rights are private and provide the owner with exclusive authority as to how to use the idea. If another person uses the same idea then it indicates infringement. ( owner can provide licenses to other individuals to make use of the ideas. Since IP is similar to physical property, the owner can even sell the intellectual property to someone else. By selling the IP, the owner gives up his rights to the new owner.

Intellectual property can be broadly divided into four main categories: patents, copyrights, trademark and designs. Patents are applicable to any new invention or any new process for an industrial application. A patent prevents others from creating the same product without consent from the inventor. Usually, existing products or processes are modified slightly and then patented. The product need not be something entirely new in the market. Patents are valid for a specific period, usually 20 years. Copyrights are applicable to artistic or literary works and even software. (Oppedahl and Larson, 1993). Trademark, or brand name, is a unique sign used by a manufacturer to identify their products. The sign is used to prevent inferior brands from selling poor quality products using another manufacturers name. The period or protection of trademarks can be extended indefinitely.

In businesses new products and designs are made regularly and it is important for enterprises to make use of intellectual property rights. If a good product is unprotected then some other competitor could take advantage, commercialize the product and make profits. Any company can improve its competitiveness by using intellectual property protection. By protecting their IP the company prevents others from copying their ideas or products. If unprotected, the time and money spent on research would go waste because a competitor may copy the same idea. Before seeking protection, a company has to research into the IP rights of other companies as well. This will reduce chances of any litigation in future. Acquiring IP protection alone may not guarantee success for the company. Proper management of intellectual property is a crucial factor.

Establishing a brand name and trademark will help in marketing products easily. Keeping track of patents of other companies will also benefit the organization. Many small and medium sized enterprises feel that the IP system is too complex and obtaining protection is too costly. Intellectual property is like private property. If someone copies intellectual property then the owner has the right to take legal action based on the existing civil laws. It was in the early 1990's that companies realized that the Internet was a very potential tool for marketing. The Internet provided an easy way for communication and business organizations began to make use of this new technology in many ways. Suddenly, electronic business (or e-business) grew in popularity. Phenomenal amount of business is conducted on the Internet, up to the amount of U.S. $210 billion in 2001.

Since the Internet is a huge interconnection of computers, information can be shared very easily.
It is this very advantage that leads to many problems in protection of intellectual property. For example; pictures, music and literary works can be copied, modified and even distributed easily through the Internet. Such activities affect and violate copyright protection. There are several dangers in electronic business and organizations have to be very cautious and watchful. Copyright does not protect ideas but protects the forms in which they are expressed. Thus documents and material available on the Internet can be protected by copyright. According to the Copyright Act, even storing of material in a computer corresponds to reproduction of material. This implies that viewing a page on the Internet leads to infringement because the web browser would make a copy of the page in the computer.

Many argue that when someone puts material on the Internet, the owner provides with an implied licenses, which permits viewing the material because the Internet is a medium for sharing data. Both contrary viewpoints have led to an uncertainty in the issue of implied license. It would be appropriate to state that any user could view material on Internet without using them for any commercial purposes. There were two treaties formed by the World Intellectual Property Organization (WIPO) in Geneva in 1996. The WIPO Copyright Treaty (WCT) was formed to protect authors of literary and artistic works, including writings, computer programs, photographs.

The second treaty was the WIPO Performances and Phonograms Treaty (WPPT), to protect "related rights." Related rights are rights related to copyright and these were basically for phonogram producers. These two treaties were formed to extend the existing WIPO treaties on copyright and related rights in order to make them suitable for the latest technological developments. The two treaties provide complete rights to the owner even when any of the works are used on the Internet. The treaties were formed to ensure that the existing laws are extended to digital data also. The WIPO also requires that not only should countries provide rights but they should also tackle the problem of hacking.

The law on trade secrets ensures that ideas, concepts and methods are protected. Protection is ensured as long as the ideas have not been disclosed publicly; which means that it should not have been published on the Internet also. Trademarks could be unique signs or slogans for distinguishing one company from the others. Trademarks can be registered under the Trademarks Act as long as the symbol or slogan is unique and distinctive. There are no international trademark laws and hence a company will have to apply for trademark in countries where it's products are being marketed. Companies do e-business through their websites and these domain names are unique. No two companies can have the same website address or domain name. Registration for domain names is done on a first-come-first-serve basis and this has led to many problems.

Companies would usually prefer having their company name as the domain name so that consumers would find it easy to locate and communicate with the company on the Internet. Many individuals began to take advantage and registered domain names bearing company names, even though the person had no affiliation or association with the company. This is known as 'cyber squatting'. McDonalds was one of the first corporations to suffer because of cyber squatting. Josh Quittner, a journalist, registered the domain name of in 1995. The domain name was transferred to McDonalds after a modest settlement, which was used by Quittner for a good cause. After this case, there have been a number of cases where individuals have used cyber squatting for profit. There was even a case in United Kingdom where a small group registered many names, which had famous trademarks in them and then advertised in the newspaper declaring that they were dealers in domain names.

The trademarked companies filed a lawsuit on charges of trademark infringement. The judgement was passed in favor of the companies. Since cyber squatting is a major problem, ICANN (Internet Corporation for Assigned Names and Numbers - which is responsible for managing domain names) created the Uniform Domain Name Dispute Resolution Policy (UDRP). The aim of UDRP is to settle any disputes arising in domain names. For example the UDRP can cancel registration of a person in case a domain name bears a close similarity to a trademark or if the registrant uses the domain name in bad….....

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