Legal & Ethical Issues in E-Commerce
EHTICS:
“Ethics is a branch of philosophy which defines what is right & wrong. “
LAWS:
“Determine what Right is right & Wrong is wrong but there is punishment for wrong & appreciation for
right.”
Legal issues :
Business Registration.
Domain Name Registration.
Website Development.
Business Registration
o Sole proprietorship (no registration but exceptional cases may be e.g. medical store)
o Partnership (optional) www.smeda.org.pk
o Corporation (company in UK)
o Single Member Company.
o Private Limited
o Public Limited
www.secp.gov.pk
1) Memorandum of Association (Scope of Business)
2) Article of Association (Business Procedures)
Domain Name Registration.
In the beginning in USA, some people adopted the website names for the famous Businesses but when Business
demanded that domain name they began to bargain.
*All ISP deals with domain name registration.
ICANN - Internet Corporation for Assigned Names & Numbers. (First come, first serve)
www.pknic.net.pk (Affiliated Regional Registrar )
Domain name should be unique.
Domain name should be relevant to your business.
Domain name should be as small as possible, abbreviations and numbers can help a
lot.
Domain name should be easy to pronounce.
Domain name should be easy to remember.
Domain name should not be easily copy able.
Domain name should not break down ( one part + other part may not be used for the
name of other website).
TRADEMARK
“Trademarks are any names, logos, sounds, shapes, colors and or any combination of all
these that distinguish the products / source of goods or services of one party/ company from
those of another. “
Domain Name registration using some one’s famous trademark (legal concerns):
Any business that uses a name, in advertising or on its web page to attract potential customers has
entered the realm of trademark law. For successful operations and to avoid legal disputes one
should consider the following trademark infringement possibilities.
If any one registers the domain name which contains the trademarks of any other business will be
held liable for trademark infringement. There should neither be Phonetic Deception nor be any
Visual Deception.
For example
www.youphone.com creates phonetic deception with respect to www.ufone.com that is why no one
can take such domain name, and
KOKA KOLA creates phonetic deception with respect to coca cola etc.
www.micros0ft.com creates visual deception with respect to www.microsoft.com. Similarly
www.yahooo.com.
So at the time of domain name registration this precaution should be taken into consideration that
desired domain name will not create any type of confusion, neither phonetic nor visual with respect
to existing trademarks of others.
Website Development.
Website development and Trademark infringement possibilities:
Other than domain name registration, one should care about trademark infringements when
developing a website. Followings are the ways in which there could be a trademark infringement:
Using trademark in links or in web pages
Another bad thing about frames
Trademark infringement using Meta Tags
Using trademark in links or in web pages:
If any web page of a site contains the trademark of any other company without their permission or
legitimate reason there will be trademark infringement. So to avoid such a dispute you must care
that your site does not contain any trademark of other company from whom you haven’t got any
permission or there is no legitimate purpose to use that trademark.
When ever your site contains trademarks of other companies if possible you must give appropriate
disclosures.
Another bad thing about frames:
If your site contains frames, you must not open the pages of other companies in your frames rather
pages of third parties or other companies should always be opened in separate page. If you will not
care there could be a trademark infringement.
Trademark infringement using Meta Tags:
Meta tag is used to make your page searchable with search engines. Some time web developers do
not care which key words they should provide in the description of trademark
Can Key word advertisement be regarded as trademark infringement? :
Search engines sell keywords for sponsored links as well as for banner advertisements. Such key
word selling is allowed in law and does not involve any trademark infringement.
So search can sell out trademarks of others for key word advertisement.
COPYRIGHT
“Copyright is right granted by government to some author against his or her
original work.”
In case cyberspace copyright may have following violation:
1. Publishing all or any part of material of other parities in one’s web pages
without getting appropriate permission.
2. Showing contents of other sites in frames.
3. Distributing copyrighted material through the website like songs, softwares,
images etc.
4. Establishing a peer-to-peer network and supporting distribution of
copyrighted material.
What Copy Right Not Protect:-
Idea
Concept
Color
Screen
Database
What is Not Copy right:-
Govt. data
Govt. Report
Public Information
Empty Form
What are requirements of Copy rights:-
Authorship
Originality (Material must be original , not copy)
PATENT
“Patent is right granted by the government to an inventor against his or her invention.
It also applies to internet business and software processes”.
For example:
One click order processing model of www.amazon.com has patent rights. Other example is naming
your own price model by www.priceline.com.
PRIVACY STATEMENT
Privacy statement must address:
1. What information your organization collects?
2. What information third parties collect through your Web site?
3. How you or third parties collect information through your website?
a) Visit
b) Registration
c) Order
d) cookies
4. How you use the collected information?
5. With whom you may share the collected information?
6. What are the choices you providing to users regarding collection, use and distribution of the information?
7. What types of security procedures are in place to protect the loss, misuse or alteration of information under
your control?
8. How users can correct any inaccuracies in the information?
9. Is there any access to the user so that they can change their information
10. What if company merges with some other businesses? Who will own the information?
TERMS OF SERVICE
What you consider are the services you are providing?
What are terms and conditions one should abide by to use your services?
DISCLAIMER
“Define what things you are not liable, or liable for things.”
Disclaimer is the statement in which company deny the liabilities on its part.
Disown warranties
Disown the jurisdiction
