Intellectual Property Protection Strategies for E-commerce sellers in India

Introduction to IP in the context of E-commerce and its growing risk in the modern era –

IPR in e-commerce is one of the most essential components of e-commerce. IPR stands for Intellectual property rights- the rights that allow a business to use its invention and creativity to take financial benefits and market monopoly, over its competitors. In spite of its importance, it is seen that it is often neglected because most of the people often fail to understand it and its connection to e-commerce because it isn’t very obvious. Nevertheless, IP and E-commerce are entirely interdependent.

Basically, e-commerce includes buying and selling of goods and services on online platforms based on intellectual property and its licensing. In this modern and digital era, there are various types of intellectual properties that can be traded via an e-commerce platform be it music, photographs, designs, pictures, software, literature content and so much more. In all the given examples of IP, IPR is important since the value of these goods need to be protected from being copied, theft or from a wrong use of it. The protection can be given through tools such as IP laws and technological security systems. If IP theft goes unchecked, it could possibly destroy an e-commerce business platform, which is why IPR in e-commerce is extremely important.

Legal Definitions and Legal Framework of IP’S

There are mainly five types of intellectual properties which are often used in the e-commerce platforms. These are stated below-

• Trademark:

Legal Definition– section 2(1) (m) and 2(1) (za) of The Trade Marks Act, 1999 provides for the definitions of the word “mark” and “trade mark” which are given below;

“mark” includes a device, brand, heading, label, ticket, name, signature, word, letter, numeral, shape of goods, packaging or combination of colours or any combination thereof;

“Trade mark” means a mark capable of being represented graphically and which is capable of distinguishing the goods or services of one person from those of others and may include shape of goods, their packaging and combination of colours;

Legal Framework– The Trade Marks Act, 1999 provides for all the legal framework related to trade marks.

• Copyright:

Legal Definition- There is no legal definition of copyright but it can be defined as a legal and undivided right which is given to individuals for their original work such as music, art, literature etc. to control the reproduction, distribution, adaptation and display of their work for a limited period of time.

Legal Framework- The Copyright Act, 1957 provides for all the legal framework related to copyright.

• Patent:

Legal Definition- section 2(1) (j) and 2(1) (m) of The Patents Act, 1970 provides for the definitions of the word “invention” and “patent” which are given below;

“invention” means a new product or process involving an inventive step and capable of industrial application;

“patent” means a patent for any invention granted under this Act;

Legal Framework- The Patents Act, 1970 provides for all the legal framework related to patent.

• Industrial Designs:

Legal Definition- section 2(d) of The Designs Act, 2000 provides for the definition of the word “design” which is given below;

“design” means only the features of shape, configuration, pattern, ornament or composition of lines or colours applied to any article whether in two dimensional or three dimensional or in both forms, by any industrial process or means, whether manual, mechanical or chemical, separate or combined, which in the finished article appeal to and are judged solely by the eye; but does not include any mode or principle of construction or anything which is in substance a mere mechanical device, and does not include any trade mark as defined in clause (v) of sub-section (1) of section 2 of the Trade and Merchandise Marks Act, 1958 (43 of 1958) or property mark as defined in section 479 of the Indian Penal Code (45 of 1860) or any artistic work as defined in clause (c) of section 2 of the Copyright Act, 1957 (14 of 1957).

Legal Framework- The Designs Act, 2000 provides for all the legal framework related to Industrial Designs.

• Trade Secrets:

Legal Definition- There is no legal definition of trade secrets but it can be defined as The Intellectual Property rights on confidential information which may be sold or licensed.

Legal Framework- There is no specific legal statute for trade secrets but it has been governed by The Indian Contract Act, 1872.

Why early registration of IP is important? 

The Intellectual Properties that do not have a prior registration can offer you a very limited legal protection in case of infringement. Although common law rights may exist for trademarks (based on prior use) and some creative works (unpublished works under copyright law), but these rights are weaker and more difficult to enforce in case of infringement as compared to a registered IP.

Intellectual Property due diligence: An approach to curb future IP infringement

Intellectual Property due diligence is an investigative, calculative and an analytical process of evaluating a business’s IP – including trademarks, copyright, patents, trade secrets, software, domain names and some contractual rights. Its main goal is to dictate the scope, strength, and risks that comes with these assets before critical business decisions.

Below are the steps taken in the IP due diligence process;

1. To identify and list the IP assets.
2. To verify the ownership of the IP asset.
3. To assess the validity and enforceability of the IP asset.
4. FTO (Freedom-to-operate) analysis of the IP asset.
5. Infringement analysis of the IP asset.
6. To search for prior art.
7. Landscape analysis of the IP asset.
8. To review the IP agreements.

Protection of IP rights through well drafted contractual agreements

One of the efficacious ways to protect your intellectual property in businesses and e-commerce is to include smartly selected and well drafted IP clauses in the contractual agreements between the related parties. These clauses provide for the rights and responsibilities of each party related to the use and protection of IP.

Following are the main elements of an IP clause in a contractual agreement-

1. Clearly provides for the definition of the particular intellectual property that the clause going to cover to minimize the ambiguity.
2. Specifically mention about the owner of that intellectual property and if there are any transfer or licensing rights are granted to them.
3. Provides for the usage of that intellectual property like at what extent it is allowed and whether any restrictions or limitations imposed on it.
4. Specify the provisions to maintain the confidentiality of any ownership or confidential info shared between the related parties.
5. Provides for the consequences that can be faced by the infringing party and remedies available to the other party in case of IP infringement, including expected damages or injunctive remedies.

Protection of IP through infringement policies of various e-commerce giants

E-commerce tech giants like AMAZON and FLIPKART that made the e-commerce concept a big hit in today’s time have their own well drafted IP infringement policies that provides for the speedy enforcement and remedies available to the party whose IP has been infringed and punishment for the infringing party.

AMAZON’S IP INFRINGEMENT POLICY STATES THAT

“Amazon is dedicated to providing customers with the widest selection of goods on earth and creating an amazing customer experience. Amazon does not allow listings that violate the intellectual property rights of brands or other rights owners”.

FLIPKART IP INFRINGEMENT POLICY STATES THAT

“Flipkart is committed to removing infringing products from its platform. To facilitate this, Flipkart has put in place a Flipkart Infringement Verification process so that intellectual property owners could easily report listings that infringe their rights. It is in Flipkart’s interest to ensure that infringing products are removed from its platform, as they erode Buyer and Seller trust.

Flipkart respects third party Intellectual Property rights and actively supports protection of all third parties Intellectual Property including Copyrights and Trademarks (“IP”). It is our policy to expeditiously respond to clear notices of alleged IP infringement. If we receive proper notification of IP infringement, our response to such notices will include removing or disabling access to material claimed to be the subject of infringing activity”.

Other legal frameworks for the protection of IP other than the IP laws

There are many other legal statues other than the actual IPR law statutes which provides for the enforcement mechanism in case of IP infringement and related cases in the e-commerce environment and also provides for the remedies available.

These statues are as follows;

1. The Consumer Protection (E-Commerce) rules, 2020.
2. The Information Technology Act, 2000.
3. The Intellectual Property Rights (Imported goods) Enforcement rules, 2007.

 Tactical IP planning for E-commerce startups to minimize the future IP infringement 

The evolving e-commerce startups should have a robust IP strategy that can attract investors, strengthen legal protection and that can pave the way for long-term success. Having a strong and tactical IPR strategy can minimize the future risk of IP infringement and provides for most of the IP protection benefits.

Given below are the specific IP strategies that an e-commerce startup can implement for maximizing the advantages and minimizing the risk;

1. Having a Regular IP Audits by assessing and identifying all IP assets.
2. By using confidentiality and non-disclosure agreement clauses in the contractual agreements which can protect sensitive information.
3. By conducting a training session for educating employees about the importance of IP and avoiding accidental disclosure of confidential information about the parties involved.
4. Research about the licensing opportunities to generate most of the revenue from the IP assets.
5. Explore about the government schemes and other initiatives which offers fee reduction facility for IP registrations such as startup India Program.

Availability of Legal Remedies in case of IP infringement

In case of IP infringement by any third party, there are the following remedies which can be available to the original proprietor, these are mentioned below;

1. Civil remedies– Injunction (temporary/permanent based upon court’s discretion), damages or Account of profits, Anton pillar order, Delivery up and destruction, John doe orders.
2. Criminal remedies– Imprisonment (up to three years), fine (up to 2 lakhs rupees), search and seizure by the police.
3. Administration and border remedies– Custom enforcement, rectification/opposition.
4. Alternative Dispute Resolution.
5. Special remedies provided by the statute of the particular IP–
   • section 55 and 58 of The Copyrights Act, 1957
   • section 135 of The Trade Marks Act, 1999
   • section 108 of The Patent Act, 1970
   • section 22 of The Designs Act, 2000.

Conclusion

IP and IPR are most important aspects of e-commerce in the modern era, by having efficacious IP protection strategies, an e-commerce business can thrive in its field by minimizing the risk of infringement and can gain a lot of revenue by licensing. Early IP registration can give the e-commerce business a variety of legal protection for a long-term success in its field.

Author:–Anshika Singh, in case of any queries please contact/write back to us atsupport@ipandlegalfilings.com or   IP & Legal Filing.

    Endnotes:

1. The Consumer Protection (E-Commerce) rules, 2020.
2. The Information Technology Act, 2000.
3. The Intellectual Property Rights (Imported goods) Enforcement rules, 2007.
4. The Trademarks Act, 1999.
5. The Copyright Act, 1957.
6. The Patents Act, 1970.
7. The Designs Act, 2000.
8. The Amazon IP Infringement Policy.
9. The Flipkart IP Infringement Policy.