Presentation by Peter K F Cheung
Deputy Director of Intellectual Property , Hong Kong SAR Government

1 Introduction

Intellectual property refers to the property right conferred by law to protect basically the creations of the intellect. The nature of intellectual property is to encourage fair competition. Intellectual property in the area of trade marks has long been used in commerce.

E-commerce has become an additional business medium. It is transforming the fundamentals of international trade and the way informational goods and services are delivered. The global economy has been networked.

This paper explains how e-intellectual property management can impact on e-commerce. It concludes that a key success factor in e-commerce is strategic e-intellectual property management.

2 Trade mark v domain name

A trade mark crystalises the reputation of goods or services provider. It indicates the source of origin and guarantees certain quality of the goods or services. A trade mark proprietor has the exclusive right to use it to identify its goods or services. The period of registered protection can be renewed indefinitely.

E-commerce offers a new form of trading places. A trader naturally would like to continue to use its contextual trade mark as the domain name of its web site. A user-friendly domain name especially one which is reputable would attract more potential customers.

Domain names are contextual in form and are often unique. A trader may also like to take advantage of the difference in concept and practice between domain name registration and trade mark registration by registering a descriptive and laudatory domain name that is otherwise unregistrable as a trade mark. Some persons anticipate the demand. They have registered some domain names in a timely manner. They do not have any intention to run any business except to trade the registered domain name. They are known as cybersquatters.

The heydays of cybersquatters might have come and gone. It is now easier for the aggrieved party to get the sympathy of registration authorities, legislators, and judges. Even so, it does not make much commercial sense to invest time and money in administrative or judicial dispute settlement proceedings to evict cybersquatters. This can be prevented by good e-intellectual property management.

In the e-commerce environment, strategic management of a business domain name is just as important as managing a trade mark in the conventional setting. A timely action say the early registration of a trade mark and also a desired domain name could provide a leading edge in e-commerce.

3 Unfair competition and web site design

Unfair competition (in a narrow sense) is another aspect of intellectual property. Competition to attract potential customers in the e-commerce environment can be quite mechanical. In designing a web site to lure potential customers, framing and meta-tagging are common techniques.

There is jurisprudence to support the inference that any such use with the intention to pass off or free ride on the reputation of others is likely to be found liable in unfair competition related court proceedings.

4 Copyright v web site content

Copyright is another aspect of intellectual property. Information technology converts informational goods (such as databases, photographs, computer software, sound recordings and films) and services (such as radio and television broadcast, and cable programmes) into digital forms. These digitalised goods and services can be exactly copied and distributed to customers via the Internet. These digital assets, most often than not, are subject to international copyright protection for a long period of time.

Web site contents are informational in nature. Unless authorised by the copyright owners, any one who transforms conventional copyright works into digital forms amounts to infringing reproductions. Copyright owners have the exclusive right to exploit their copyright works. There is generally no need for them to give any copyright notice. Unless expressed provided, one cannot assume that copyright works made available on the Internet can be freely copied. Unless the web site content provider creates all the contents independently, prior copyright clearance from right owners are essential.

Copyright loaded informational goods and services can be directly reproduced and distributed in the e-commerce environment. It is of paramount importance for the host who wants to engage in such distribution, whether for direct commercial gain or not, to ensure it has the right to hyper-link, upload or offer for sale of such digital items. Or else, the host may regret facing copyright civil infringement suits or even criminal prosecutions.

5 Undisclosed information v dissemination

Undisclosed information is another aspect of intellectual property. Such information can be anything. What makes it proprietary is that such information is secret, has commercial value because it is secret and has been subject to reasonable steps under the circumstances, by the person lawfully in control of the information to keep it secret.

Anyone who happens to receive proprietary information either by design or by mistake is generally under a legal obligation to maintain confidence. A prejudicial disclosure of the proprietary information may attract a law suit on breach of confidence.

6 Patent v e-commerce business method

Patent is another aspect of intellectual property. Patenting e-commerce business methods is a new phenomenon. The usual legal vehicle to protect business methods is by undisclosed information. Some e-commerce model developers have attempted to obtain exclusive patent protection for inventions involving the application of mathematical algorithms to implement a business method by a computer program.

If a business method is patented in a particular jurisdiction, the patentee has the monopoly right to use his inventive process in that particular jurisdiction. Any use of such patented invention has to be licensed by the patentee. Any unauthorised use would amount to a patent infringement.

7 Infringing liability v Internet service provider

Intellectual property is intangible. It is a private property right to restrict others from doing certain acts that might be prejudicial to the owner's interest. There is international consensus that the mere provision of physical facilities by the Internet service provider would not make it liable for any intellectual property infringement.

The shield, however, will be lifted if the Internet service provider has provided more than mere physical facilities. Depending on the circumstances, his legal position is likely to be the same as a content provider or a web site host.

In some jurisdictions, there is the legal requirement that the Internet service provider might be held liable if its does not take down infringing web sites within a reasonable time upon notice.

8 Valuation v digital assets

Like other assets, intellectual property has economic value. E-commerce provides a different dimension for commercial exploitation. Digitalised informational goods and services loaded with intellectual property rights that can be distributed via the Internet provide extra value.

It is only prudent that in valuing the assets of any business, their digital dimension should be taken into account. Due to their infinite nature, digital assets can be more valuable than physical assets.

9 Enforcement v digital asset management

Any intensive intellectual effort is likely to result in some intellectual property rights. Members of the information society are often users of some and owners of some.

The international e-intellectual property legal environment has begun to follow the pace of e-commerce development. The potential intellectual property rights and liabilities are there. Some intellectual property protection like copyright and undisclosed information are automatic. Some intellectual property rights like registered trade marks and patents have to be formally acquired. Once intellectual property rights subsist, right owners should enforce their intellectual property rights. This would help deter and prevent further infringement, and maintain the value of digital assets.

10 Conclusion

The world is getting larger with its expanding cyberspace. One world, one intellectual property system, is still at its infancy. Different countries or territories have different intellectual property rules, practice and procedures. However, in the final analysis, the fundamentals of intellectual property impacting on e-commerce as highlighted above still apply.

Strategic e-intellectual property management has its defensive and proactive aspects. On the defensive side, one has to avoid infringing intellectual property rights. On the proactive side, one should manage its intellectual property by strategic acquisition, licensing and enforcement.

It is submitted that a key success factor in e-commerce is strategic e-intellectual property management. Any member of the information society who loses sight or underestimates the impact of intellectual property on e-commerce may have to learn it the hard way, paying a high price for intellectual property infringement or lack of intellectual property protection, due to no or mismanagement.