Tag: Copyright

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Rule Of Law in Globalising World

The concept of rule of law finds its origin in the rulings of Chief Justice Sir Edward Coke[1] wherein he emphasised the significance of the King being under the law. However, it was only later that A. V. Dicey in his book: Introduction to the study of the Law of the Constitution, 1885[2], tried developing the concept further. He identified three components of the rule of law[3]–

  1. The supremacy of law
  2. Equality before law
  • Constitution as a result of ordinary law of the land (signifying the relevance of judge-made laws in England)

These components ensured that the rule of law acted as a constraint on the arbitrary exercise of power by the sovereign over its subjects. Therefore, his primary focus was on the way in which the law was made, applied, and enforced (process-focused approach), rather than the actual content of the law (end-focussed approach). This creates a lot of confusion with respect to the applicability of the rule of law. Modern democracies are founded on this principle, however, there are contrasting convictions about what ‘law’ is/should be.

Previously, the concept of rule of law was limited in its application to the sovereign territory of the state as the interactions were primarily intranational. However, over a period of time, with the advent of technology and the movement of people, goods and services across borders, such interaction became international, leading to cross-border disputes. Through the process of globalization, “political, economic, and technological changes have had globalizing ramifications that penetrate state borders in ways that transformed the core rule of law values in the international legal order and have created a shift away from the previously prevailing state-centric system.”[4]

With respect to the applicability of rule of law at the international level, globalisation has made the world one single market where individual and state entities interact with other individuals and entities on a daily basis. Therefore, such interaction cannot be left unchecked with respect to the foundation principle of the legal system i.e. the rule of law. Hence, there is a need to transpose the principle of rule of law, internationally, in light of the globalized world. The significance of rule of law at the international level in the era of globalisation has been pointed out a number of times[5].

However, this transposition is easier said than done. There are some inherent issues in applying the principle globally. Firstly, with respect to whether such a principle, which was originally developed to be applicable to the national legal system, can be applied to the international legal system, in the absence of a central sovereign authority. Secondly, if the answer to the first issue is affirmative, does such international application require a reconceptualization of the original concept of rule of law in order to adapt it to the legal issues arising at the international level. Thirdly, should the international rule of law be limited in its application with respect to the relationship of different sovereign nation-states, or should it also be applied to the relationship of different individuals who are subjects of such nation-states?

The first roadblock towards the applicability of the principle of rule of law in the globalised world today encompasses the fact that there is no common sovereign power in the international arena. There is United Nations, however, the international law establishing such an institution, is a soft law in itself. Besides, it is left to the discretion of the nation-states to decide whether they wish to be a part of the U.N. Since there is no common sovereign, it is often contented by scholars that the rule of law cannot meaningfully exist in the international arena.[6] This further entails the difficulty in ascertaining what constitutes “law” in the international context since there is no “one” sovereign, and no “one” law regulating the conduct of individual nation-states.

Secondly, the Dicean concept of rule of law highlights a very narrow and process-focused approach. Such a framework will not satisfy the end objective of rule of law at the international level, with respect to acting as a constraint against the gross violation of the fundamental human rights of the individuals by the sovereign states. Therefore, the rule of law, when transposed to the international level, should not only be process-oriented but also end-oriented.

However, the nation-states, in light of the growing interaction in the globalized world and the common aim to attain international peace and order, have taken the necessary steps to address these roadblocks in the applicability of the principle internationally[7]. Globalization has a significant contribution to the development of both domestic and international legal frameworks governing and regulating transnational transactions and activities. This has led to the development of international institutions tasked with the implementation of international law to secure peace, order and respect for basic human rights in the international community.

In today’s world, however, the significance of the rule of law stretches far beyond its application to traditional inter-state relations. The second aspect of the rule of law at the international level is the increasing attention of the international community on the impact of the international rule of law on individuals, with respect to the need to protect the inalienable human rights of the individuals. The international humanitarian law and human rights law has ensured that the basic human rights of the “individuals” are brought at the centre stage[8], and that every nation-state is obligated to protect them. These developments have placed legal constraints on the conduct of sovereign states in the international community and prescribed international standards which ensure that substantive aspects of justice are also catered to, at the global level.

However, this individual-focused approach to rule of law at the international level is being implemented at the domestic level, by making the domestic legal system in line with the international standards. In light of this, it is important to keep a check on the discretion provided to the national legal system regarding the substantive rules as rule of law cannot be considered effective in its true essence if the laws are unjust and oppressive.

 

[1] LTJ, http://lawtimesjournal.in/rule-of-law/ (last visited Feb. 1, 2021).

[2] A V DICEY, INTRODUCTION TO THE STUDY OF THE LAW OF THE CONSTITUTION (1885).

[3] Id.

[4] Ruti G. Teitel, Humanity’s Law: Rule of Law for the New Global Politics, 35 CORNELL INT’L L.J. 355, 357 (2002).

[5] The Rio +20 Conference on Sustainable Development Outcome Document, 2012; UN Millennium Development Goals etc.

[6] Charles Sampford, Reconceiving the Rule of Law for a Globalizing World, GLOBALISATION AND THE RULE OF LAW 9, 10 (2005).

[7] UDHR, ICCPR, ICESCR, Convention against Terrorism, Human Trafficking etc.

[8] United Nations Human Rights Committee, the International Criminal Tribunals (ICTY, ICTR), and the International Criminal Court (ICC) etc.

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Data Protection Regime in India

Privacy has been considered an international human right, as is enumerated under Article 12 of the Universal Declaration of Human Rights[1] and Article 17 of International Covenant on Civil and Political Rights.[2] India being a signatory to these international instruments, is under an obligation to protect privacy of the individuals. The current legal framework in India with respect to privacy and data protection is scattered in different legislations, rules and regulations, which individually deal with certain aspects of data protection.

The most important piece of legislation with respect to data protection is the Information Technology Act, 2000 (IT Act). Section 43A of the Act imposes civil liability on the body corporates if, while dealing with sensitive personal data or information, they are found to be negligent in implementing reasonable security practices and procedures and this leads to wrongful loss or gain to any person[3]. Furthermore, Section 72A imposes criminal liability on any person for disclosing personal information of an individual to a third party, without the consent of such individual[4]. These provisions are to be read with the IT (Reasonable security practices and procedures and sensitive personal data or information) Rules, 2011[5] [SPDI Rules], which defines sensitive personal data or information[6] and provides the procedures to be followed by a body corporate for collection[7], disclosure[8] and transfer[9] of information. The Rules further provides what constitutes reasonable security practices and procedures[10].

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Furthermore, the Information Technology (the Indian Computer Emergency Response Team and Manner of Performing Functions and Duties) Rules, 2013 (Cert-In Rules) impose an obligation on the service providers, intermediaries, data centers and corporate entities to mandatorily notify, in case of certain type of ‘Cyber Security Incidents’.

With respect to the protection of financial data, the Credit Information Companies (Regulation) Act, 2005 (CICRA) requires that the credit information of individuals in India has to be collected as per privacy norms enunciated in the CICRA regulation. Entities collecting the data and maintaining the same have also been made liable for any possible leak or alteration of this data.

With respect to the protection of health data, the Digital Information Security in Healthcare Act (DISHA), 2018 aims to protect the privacy of patients by protecting their medical data. It lays down the procedure for sharing of personal health records, through digital medium, between various healthcare service providers. Further, the Indian Medical Council (Professional Conduct, Etiquette and Ethics) Regulations, 2020 impose an obligation on the registered medical practitioner to comply with the relevant provisions of the IT Act, data protection and privacy laws[11].

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The Indian Contract Act, 1872 also become applicable if the privacy and confidentiality clauses enumerated in the agreement are breached by either party.

The Indian Penal Code, 1860 becomes applicable in the realm of data protection regime, as when there is a theft of data, prosecution can follow for the offenses of theft[12], misappropriation of property[13] or criminal breach of trust[14] under the Code.

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The most significant development in India has been the case of Justice K S Puttaswamy v Union of India[15], wherein the nine-judge bench of the Apex Court unanimously held that the right to privacy is an intrinsic part of personal liberty under Article 21 of the Indian Constitution. This highlighted the need for a data protection legislation dealing with all the direct and incidental aspects. The latest step towards this has been the Personal Data Protection Bill of 2019 which is currently being reviewed by the Joint Parliamentary Committee. Once this Bill becomes a law, India will have a single piece of legislation exclusively dedicated to privacy and data protection.

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[1] Universal Declaration of Human Rights, 1948, art. 12.

[2] International Covenant on Civil and Political Rights, 1966, art. 17.

[3] Information Technology Act, 2000, s. 43A

[4] Information Technology Act, 2000, s. 72A.

[5] Information Technology (Reasonable security practices and procedures and sensitive personal data or information) Rules, 2011

[6] Id, rule 3.

[7] Supra note 66, rule 5.

[8] Supra note 66, rule 6.

[9] Supra note 66, rule 7.

[10] Supra note 66, rule 8.

[11] Applicability of the Regulations.

[12] Indian Penal Code, 1860 , s. 378 and s. 379.

[13] Indian Penal Code, 1860, s. 403.

[14] Indian Penal Code, 1860 , s. 405, s. 408 and s. 409.

[15] Justice K S Puttaswamy v. Union of India, (2017) 10 SCC 1.

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Ritu Kumar v. Biba

Ritika Private Ltd. vs Biba Apparels Pvt Ltd. 230 (2016) DLT 109

Delhi High Court

Judges: Justice Valmiki J. Mehta

Applicable law: Section 15 of the Copyright Act, 1957

Did you know: In order for the owner of a design to enjoy protection under the Designs Act, 1911, it is necessary that the design be registered under the act.

Effect of Legal Provisions: Section 15 of the Copyright Act states that if a design is registered under the Designs Act, 1911 the copyright in such design will cease. Copyright will also cease even if the design is not registered but is capable of registration and the design has been reproduced more than 50 times.

Where it all began:

  1. Ritika owns the famous brand ‘Ritu Kumar’ and Biba Apparels also owns a famous brand called ‘Biba’. Both produced apparel and accessories using industrial designs
  2. Ritika alleged that Biba had copied the designs of Ritu Kumar and had used them to produce apparel and as such, it had infringed the copyright of Ritika.
  3. Ritika’s designs are not registered under the designs act.

Legal issue: Once the copyrighted works of the plaintiff are applied for the making of dresses, and the production of dresses exceeds 50 in number, whether protection of copyright is lost?

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Ritika’s arguments: there is originality in the garment prints and sketches created by Ritika Pvt Ltd for the dresses/garments. It is pleaded that its ensembles are so designed that each component, such as sleeves, front and back panels etc are delineated and are coordinated with unique features. As such it is entitled to copyright protection.

Biba’s arguments: Because the designs of Ritika are industrial designs, the suit for infringement of copyright is barred because of Section 15 of the Copyright Act.

Judgment in the case:

  1. The court came to the conclusion that the suit was barred by Section 15(2) of the Copyright Act, 1957 as Ritika’s copyright in the said works had ceased to exist.
  2. Ritika’s case fell squarely under Section 15(2) of the Copyright Act, 1957 i.e. the copyright in Ritika’s designs ceased to exist as it had been reproduced more than 50 times by an industrial process.

Significance

The court elucidated the position as to the operation of subsection (2) of section 15 and re-affirmed the view that the bar would apply under certain conditions even if the design is not registered.

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Significance of Cyber Forensics in the modern digital world

The influence of Information and Communication Technologies (referred to as ‘ICTs’ hereafter) on society goes far beyond establishing basic information infrastructure. It has proven to be a foundation for development in the creation, availability and use of network-based services. It has played the most significant role in transforming the world we live in.

Although ICTs have helped in the creation of a truly global marketplace, characterized by a constant flow of information through networks and websites, however, just like everything, Internet technology to has its own pros and cons. On one hand, the ICT makes our life easier and on the other hand, it provides a platform for individuals to commit crimes in cyberspace, by taking advantage of the vulnerabilities and risks associated with the Internet. This led to the development of jurisprudence with respect to ‘cybercrime’ or crime committed in cyberspace.

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With the recognition of new age crimes as ‘cybercrimes’ and their peculiar nature, as opposed to traditional crimes, there was also a need to develop a security framework as well as a legal framework to exclusively combat such crimes. This led to the development of the regime of ‘cyber security and ‘cyber laws’ in various jurisdictions.

The basis of the cyber law regime was the same as that of traditional law- for the prosecution of crimes, whether traditional or new age, the court of law required credible evidence. However, it was no secret that the form of evidence required in traditional criminal cases differs from that in the case of cybercrimes, as the latter entails procurement of evidence from the ‘cyberspace’ itself, as opposed to a physical location. Since the traditional investigation and evidence procurement tools were not adequate in the context of cybercrimes which eventually led to a lack of prosecution of cybercriminals, therefore, a new disciple of forensics[1] known as ‘cyber forensics’ emerged.

Cyber forensics is defined as “the collection and analysis of data from computer systems, networks, communication streams and storage media in a manner that is admissible in a court of law”[2]. In general terms, it was the use of knowledge of computer science to gain access to credible evidence which will be considered admissible in the court of law while prosecuting an accused in a case concerning the commission of cybercrime.

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Initially, the use of cyber forensic tools was limited to the purpose of prosecution in court where cybercrimes were committed against private individuals. However, cybercrimes were not directed only at private individuals, various public, as well as private organizations which adopted ICTs in their day-to-day operations, were increasingly becoming victims of such crimes. Therefore, these organizations realized the potential of cyber forensics in identifying the offenders and securing their networks and started using the same within their organizations. Presently, cyber forensic tools are used equally by the government, private organizations and investigating authorities.

Cyber forensics per se involves the utilisation of knowledge of computers, computer systems, computer networks and the Internet i.e. it is primarily technical in nature. It is pertinent to note that the evidence collected with the use of cyber forensics should be admissible in a court of law, otherwise such evidence is futile. Therefore, there is also a requirement for setting legal standards as to how to collect, store and process evidence in cases of cybercrime. The legal framework of the country provides for these legal standards. For example, in India, the Indian Evidence Act, 1872[3] was amended in 2000 to insert various provisions relating to the admissibility of electronic evidence. The definition of the term ‘evidence’ was amended to include within its ambit, electronic records.[4] Section 65A[5] read with section 65B[6] provides for the admissibility of electronic records.

The COVID-19 pandemic had an unprecedented impact on the technological sector. Most individuals were completely dependent on the use of technology for their day-to-day activities, employment and education, among other things. This dependence provided a breeding ground for cybercriminals to exploit the vulnerable networks. Therefore, the significance of cyber forensic tools to combat such cybercrime activities was realised during the COVID-19 pandemic, more than ever.

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[1] Forensics is the use of scientific knowledge to collect information for supporting a fact.

[2] Anjani Singh Tomar, Cyber forensics in combating cybercrimes, 3 PARIPEX 69, (2014).

[3] The Indian Evidence Act, 1872.

[4] Id., § 3.

[5] Special provisions as to evidence relating to documents may be given.

[6] Admissibility of electronic records.

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Data Protection Regime in the European Union- General Data Protection Regulation (EU-GDPR)

Originally proposed by the European Commission in 2012, the EU GDPR[1] came into effect on 25th May 2018. It is intended to harmonize privacy and data protection laws across Europe. It further aims to provide a framework to ensure that the data subjects have control over their personal data. The provisions are GDPR are applicable[2]–

  1. When a controller or a processor is established in the EU
  2. When the personal data of EU data subjects is processed

The Regulation defines terms like ‘personal data’, ‘processing’, ‘data subject’, ‘controller’, ‘consent’, ‘processor’ and ‘personal data breach’.[3] It also enumerates the basic principles on which GDPR is based. These include “lawfulness, fairness and transparency; purpose limitation; data minimization; accuracy; storage limitation; integrity and confidentiality; and accountability”[4].

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One of the grounds mentioned under the Regulation which makes the processing of personal data by the controller or the processor lawful is when the data subject has consented to such processing[5]. The declaration seeking such consent should be made in an intelligible and easily accessible form, using clear and plain language[6]. Further, the data subject has the right to withdraw his consent at any time, and such withdrawal will not affect the lawfulness of the processing prior to the withdrawal.[7] When the data subject is a child below the age of 16 years, consent for the processing of personal data can only be given or authorized by the parents.[8] However, the Regulation gives the discretion to the individual member states of the EU to decide the minimum age for which parental consent will be required, however, such age cannot be lower than 13 years.[9]

The GDPR prohibits the processing of personal data relating to a specific category (sensitive personal data)[10]. However, such data can be processed in certain conditions like when the data subject gives explicit consent or when processing is necessary to protect the vital interests of the data subject or when processing is necessary for substantial public interest etc.[11]

Chapter 4 of GDPR enumerates the rights provided to the data subject with respect to the processing of their personal data. These include the right to access the data by the data subject (to know the purpose of processing, the categories of data being processed, recipients of such data, the period for which data will be stored, right to be informed of additional safeguards if data is transferred to a third country or an international organization etc.)[12], right to rectification (of inaccurate data concerning the data subject), right to erasure (when data is no longer necessary, when consent is withdrawn when data is unlawfully processed etc.), right to restriction of processing (for a particular time period) , right to data portability (receive the data in a machine-readable format and transmit the same to another controller) and right to object.

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The member states of the Union have the right to restrict the scope of rights and obligations[13] of the data subject and the controllers/processors, under the Regulation on the ground of national security, defence, public security, and criminal offences[14], general public interest etc.[15] by means of legislative measures.

The controller is obligated to take necessary technical and organizational measures which are designed to implement the principle of GDPR while processing the personal data of the subject (data protection by design).[16] Furthermore, the technical measures should be implemented to ensure that, by default, only the personal data which is required for specific purposes, is processed[17] (data protection by default).

In case of a data breach which is likely to risk the rights of natural persons, the controller should notify the supervisory authority within 72 hours of becoming aware of such breach. The controller should also inform the data subject about such data breaches in certain specific situations[18].

Further, if the processing of data involves new technology which might result in “high risk to the rights and freedoms of natural persons, the controller should carry out an impact assessment, before processing any data”[19].

The Regulation also mandates the appointment of a Data Protection Officer by the controller and processor in certain situations.[20] The Officer has the duty to inform and advise the employees of their obligations while processing the data of data subjects, to monitor the compliance of provisions of GDPR, to cooperate with supervisory authority etc.[21]

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In case of infringement of any right of the data subject or any obligation mentioned under GDPR, the data subject has the right to lodge a complaint with the supervisory authority of a particular member state[22]. For severe violations, the fine framework can be “up to 20 million euros, or in the case of an undertaking, up to 4 % of their total global turnover of the preceding fiscal year, whichever is higher”[23]. In case of less severe violations, the Regulation sets forth fines of “up to 10 million euros, or, in the case of an undertaking, up to 2% of its entire global turnover of the preceding fiscal year, whichever is higher”[24].

Therefore, the privacy and data protection regime in the European Union is very stringent. Although it has only been two years since the GDPR came into effect, however, the recent cases of imposition of huge sums of fines on Twitter[25] and Google[26] in Europe for violating the provisions of GDPR, highlight the seriousness of privacy and data protection in Europe.

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[1] General Data Protection Regulation, Regulation (EU) (2016/679).

[2] Id, art. .

[3] Supra note 1, art. 4.

[4] Supra note 1, art. 5.

[5] Supra note 1, art. 6(1)(a).

[6] Supra note 1, art. 7(2).

[7] Supra note 1, art. 7(3).

[8] Supra note 1, art. 8(1).

[9] Id.

[10] Supra note 1, art. 9(1).

[11] Supra note 1, art. 9(2).

[12] Supra note 1, art. 15.

[13] Supra note 1, under art. 12-22, art. 34 and art 5.

[14] Prevention, Investigation, Detection or Prosecution.

[15] Supra note 1, art. 23.

[16] Supra note 1, art. 25(1).

[17] Supra note 1, art. 25(2).

[18] Supra note 1, art. 34(3).

[19] Supra note 1, art. 35.

[20] Supra note 1, art. 37.

[21] Supra note 1, art. 39.

[22] Supra note 1, art. 77.

[23] Supra note 1, art. 83(5).

[24] Supra note 1, art. 83(4).

[25] BGR, https://www.bgr.in/news/twitter-fined-547000-dollars-for-not-disclosing-data-breach-927683/ (last visited Feb. 1, 2021).

[26] REUTERS, https://www.reuters.com/article/us-google-privacy-france/french-watchdog-fines-google-amazon-for-breaching-cookies-rules-idUSKBN28K0NA (last visited Feb. 1, 2021).

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The Himalaya Drug Company vs Sumit 2006

Delhi High Court

Judges: Justice Badar Durrez Ahmed

Applicable law: Copyright Act, 1957

Did you know: ‘Meta-Data’ is like a digital footprint, which allows a person to assess what tools and code have been used to develop a particular website

Where it all began:

  1. Drug Company is engaged in the manufacture and sale of Ayurvedic Medicinal preparations and was established in the trade in the year 1930. Realizing the potential of the Internet as a medium of information, the plaintiff registered its own domain name www.thehimalayadrugco.com’ on 10.6.1998 and developed a website under the said name.
  2. The most important feature of the website is the section titled “HIMALAYAS HERBS”. This section essentially consists of a database of a wide variety of medicinal herbs, arranged in alphabetical order.
  3. Such information is not only comprehensive but is also arranged in a manner that is visually appealing and easy to grasp. It was clear that Himalaya has expended considerable time, labour, skill and money in preparing this database of Ayurvedic Herbs that find mentioned on its website. Himalaya has claimed that the preparation of the database began sometime in June 1998 and took more than a year to complete.

Legal issue: Whether Sumit has infringed the copyright of Himalaya and if so what damages is Himalaya entitled to?

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Himalaya’s arguments: Himalaya noticed that Sumit was operating a website “http://ayurveda.virtualave.net” which reproduced Himalaya’s entire herbal data verbatim. The copying was to such an extent that even the grammatical or syntactical errors that appear on Himalaya’s website have been copied onto Sumit’s website. Moreover, the meta tag of the source code of Sumit’s website includes Himalaya’s trademark “Himalaya Drug Co.”

Sumit’s arguments: Sumit did not appear despite service and the case proceeded ex-parte

Judgment in the case:

  1. The Court held that Sumit had misappropriated the effort, skill and expense that had gone into the creation of Himalaya’s website. Therefore, Sumit had copied the entire herbal database of the plaintiff and had infringed the copyright of Himalaya.
  2. The plaintiff has also been able to demonstrate that the defendants have attempted to pass off its herbal database as and for that of the plaintiff’s and have also violated the “trade dress” rights that exist in respect of the plaintiff’s herbal database. The reason being that the plaintiff’s herbal database is unique and, therefore, any similar herbal database that appears on a different website is bound to create confusion by causing a consumer to associate the website with that of the plaintiff’s.
  3. Because Sumit did not appear in this case it was impossible to assess what kind of profits he had earned from the website and accordingly difficult to calculate damages. Thus the court calculated the costs involved in preparing and putting up the website. Those costs were 7.9 Lakhs and the court granted 7.9 Lakhs as compensatory damages and an additional 7.9 Lakhs as punitive/Exemplary damages.

Significance: The judgment is noteworthy because it has used a novel way of calculating damages and has awarded both compensatory as well as punitive damages.

 

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Right to Privacy and its Significance in Social Media

Life and personal liberty can be considered as inalienable rights which an individual enjoys by virtue of being a human. These rights are inseparable from a dignified human existence.[1] According to J S Mill, “privacy is an aspect of liberty grounded on the permanent interests of man as a progressive human being”.[2] It exists in every human being, irrespective of socio-economic status, gender or orientation.

Until a few years ago, there was a lack of clarity with respect to the scope of the right to privacy under the Indian Constitution. However, in 2017, the nine-judge bench of the Supreme Court in Justice K.S. Puttaswamy v. Union of India[3] held that privacy is a fundamental right, as part of the right to life and personal liberty under Article 21. However, it cannot be considered as an absolute right and is subject to invasion by state, only if such an invasion is based on “legality, need and proportionality for safeguarding this cherished right”[4].

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It is pertinent to note that privacy should not only be protected in the physical world but in cyberspace as well. The use of the Internet and social media has become very common in India owing to the availability of smart devices, lower internet tariffs and global connectivity.

The social media platforms, on one hand, provide an effective platform to freely express oneself to a large audience, and on the other hand, risk the exposure of certain sensitive personal data of the users. In certain situations, the user is aware of the information being collected by the social media networking sites, however, there might also be instances where the user is completely unaware of the information trail he is leaving online, over which he has no control. Such information can be used by potential offenders to commit physical crimes. For example, in 2016, a group of thieves pretended to be Police officials, entered a hotel in Paris where Kim Kardashian,[5] an American model, was staying for the time being and robbed her at gunpoint. It was later found out that the thieves were following Kim’s Instagram posts where she uploaded pictures wearing costly jewellery and tracked down Kim’s location using her Instagram. This instance shows how potential cybercrime offenders can exploit social media platforms to commit conventional crimes. This example was just one of many instances where information either provided or retained by the social media sites could be made use of for purposes unknown to the user, thus violating the user’s privacy. Therefore, just like any other aspect of life, privacy is an indispensable part of social media life as well.

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The existing and emerging legal framework governing the right to privacy vis-à-vis social media in India

  • The Information Technology Act, 2000 (I.T. Act)[6]

The right to privacy in social media has been protected in India even before privacy was even recognized as a fundamental right. The Information Technology Act, 2000 is considered comprehensive legislation dealing exclusively with the aspects of privacy in the realm of cyberspace.

Section 43A of the I.T. Act obligates a body corporate that possesses, deals or handles any sensitive personal data or information in a computer resource, to implement and maintain reasonable security practices and procedures. If the body corporate fails to do so, and as a result, there is a wrongful loss or wrongful gain to any person, such body corporate can be made to pay damages to the affected person.[7] The provision further defines ‘body corporate’[8] and ‘reasonable security practices and procedures[9].

Furthermore, the I.T. Act, under Section 69A, authorizes the Central Government to block public access to any information through any computer resource under certain grounds[10]. This provision has been relied on by the Government to ban various Chinese apps, including the social media site TikTok, over privacy concerns.[11]

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  • The Information Technology (Reasonable security practices and procedures and sensitive personal data or information) [SPDI] Rules, 2011[12]

With respect to the reasonable security practices and procedures which the body corporate is required to implement under the I.T. Act, section 43A has to be read with the SPDI Rules of 2011. These rules provide a detailed framework for the implementation of section 43A.

The Rules firstly define ‘personal information[13] and ‘sensitive personal data or information.[14] It obligates the body corporate to-

  1. Provide a privacy policy for handling personal information, including sensitive personal information, to the users[15]. The same has to be published on the website of the body corporate[16];
  2. Obtain the consent of the user providing sensitive personal information, regarding the purpose of usage, before collecting such information[17];
  • Take prior consent of the user before disclosing any sensitive personal information of the user to a third party[18];
  1. Have a documented policy containing managerial, technical, operational and physical security control measures that are proportional to the information assets being protected with the nature of business.[19]

Therefore, it is evident that the SDPI Rules primarily cover privacy concerns over sensitive personal information. However, such protection has not been provided to the personal information of the user.

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  • The Personal Data Protection Bill, 2019[20] (PDP Bill)

Taking into account the limited protection provided to privacy on social media by section 43A of the I.T. Act read with the SDPI Rules of 2011, and the judgement of the Apex Court in the Puttaswamy case[21] recognizing privacy as a fundamental right, the Personal Data Protection Bill, 2019 was finally drafted to provide a robust framework on privacy and data protection in India.

The Bill defines ‘personal data’[22], ‘sensitive personal data[23], ‘data principal’[24], ‘data fiduciary’[25] and ‘consent’[26].

By dealing with the loopholes of the existing legal framework in India, the PDP Bill obligates the processing of ‘personal data of an individual only for specific, clear and lawful purposes [27]. It further provides that processing of personal data should be carried out in a fair and reasonable manner to ensure the privacy of data principal and for the purpose consented to[28]. Furthermore, personal data should be collected only to the extent necessary for the purpose of processing.[29]

With respect to the consent of data principal, consent should be obtained prior to processing of personal data[30] and should be specific vis-à-vis the purpose of processing[31]. Furthermore, with respect to consent for the processing of sensitive personal data, it should be obtained after giving the choice to the data principal to separately consent for purposes of the use of different categories of sensitive personal data[32].

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The PDP Bill has not yet become law and is currently referred to the Standing Committee[33].

  • The Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021[34]

The Government of India notified the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021, which replaced the Information Technology (Intermediaries Guidelines) Rules, 2011.

Under the Rules, the intermediary is required to publish its privacy policy on its website[35]. Further, the intermediary is required to periodically inform its users that in case of non-compliance with privacy policy, it has the right to terminate the account of such users [36]. However, the Rules do not talk about the elements and aspects of the privacy policy, leaving it to the whims and fancies of the intermediaries in the absence of a privacy and data protection framework in India. Furthermore, the provision of traceability of originator of information[37] under Rule 5(2) has the implication of violating the privacy of the users as for tracking the first originator of a message/information, the intermediary should have access to the metadata of the entire chain of the conversation. Therefore, in order to comply with the traceability requirement, the significant social media intermediaries will have to break end-to-end encryption, thereby compromising the privacy of communication.

WhatsApp privacy policy issue

The current privacy policy change by WhatsApp is undoubtedly the best example to illustrate the concern of the right to privacy on social media. Before understanding the implications of policy change in 2021, let us first understand the policy change in 2016.

WhatsApp was launched in 2010 and was bought by Facebook in 2014. Facebook affirmed that it would not change the privacy policy of WhatsApp. However, in 2016, WhatsApp announced a change in its privacy policy to be effective from the 25th of September 2016. The new policy sought to collect information like phone numbers, names, device information etc. of every WhatsApp account, and share the same with the parent company, Facebook. As a result, a petition was filed in the Delhi High Court challenging the change of the policy. In Karmanya Singh v. Union of India,[38] the Delhi High Court rejected the petition but directed WhatsApp to delete the data collected till 25th September 2016 from its servers. The information shared post-25th September was allowed to be shared according to the new policy. Aggrieved by the decision, the petitioners appealed to the Supreme Court, where this case is presently pending.[39]

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In January 2021, WhatsApp came up with a new privacy policy that basically does not touch upon the end-to-end encryption feature, however, WhatsApp can now share user metadata with its parent company and its subsidiaries[40]. WhatsApp gave two options to its users- either accept the policy and continue using the platform, or the WhatsApp account will be eventually deleted. Therefore, in essence, an opt-out option for the new policy change was not provided to the users.

Taking these developments into account, an application[41] was filed in the Apex Court challenging the new privacy policy. The application claimed that WhatsApp was offering lower privacy protection in India as compared to Europe[42]. The primary issue in the case is whether the ‘opt-out’ provision simply opts out of the application in totality i.e. whether WhatsApp is obligated to provide a specific option of ‘Not sharing data with Facebook. The case is currently pending in the Supreme Court.

It is pertinent to note that WhatsApp was able to come up with a privacy policy of ‘take it or exit it’ because of the lack of privacy and data protection framework in India. In such a situation, users have to rely on the privacy policies of the company as the I.T. Act read with SDPI rules provide very limited protection in this regard. If the PDP Bill had become law, WhatsApp would never be able to come up with a policy like this as the provisions of the Bill ensure that information is collected only for a specific purpose for which consent of data principal is explicitly taken and that the data fiduciary takes consent for processing sensitive personal data separately for each different purpose[43]. This provision would have prevented WhatsApp from taking consent for both purposes (for a chat with friends and family and chat with businesses) together, as messages with business entities could reveal sensitive personal data like health information, sexual orientation, etc. However, the scope of Clause 11(3)(c) should be expanded to include ‘personal data’ rather than ‘sensitive personal data of the data principal, just like Article 7(2) of the GDPR.

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[1] Opinion of Justice D Y Chandrachud in Justice K S Puttaswamy v. Union of India, (2017) 10 SCC 1.

[2] Jack Stillinger, Introduction in John Stuart Mill Auto biography, OXFORD UNIVERSITY PRESS, 7 (1971).

[3] Justice K.S. Puttaswamy v. Union of India, (2017) 10 SCC 1.

[4] Id, part T(3)(H).

[5] VANITY FAIR, https://www.vanityfair.com/style/2016/10/solving-kim-kardashian-west-paris-robbery (last visited Apr. 26, 2021).

[6] The Information Technology Act, 2000, No. 21, Act of Parliament, 2000.

[7] Id., § 43A.

[8] Id., explanation (i).

[9] Supra note 7, explanation (ii).

[10] If such information is prejudicial to the sovereignty and integrity of India, defense of India, security of the State, friendly relations with foreign States or public order or incites the commission of any cognizable offence relating to above.

[11] BBC, https://www.bbc.co.uk/newsround/53266068 (last visited Apr. 26, 2021).

[12] The Information Technology (Reasonable security practices and procedures and sensitive personal data or information) Rules, 2011.

[13] Id., Rule 2(1)(i).

[14] Supra note 12, rule 3.

[15] Supra note 12, rule 4.

[16] Id.

[17] Supra note 12, rule 5.

[18] Supra note 12, rule 6

[19] Supra note 12, rule 8.

[20] The Personal Data Protection Bill, 2019.

[21] Supra note 3.

[22] Supra note 20, cl. 3(28).

[23] Supra note 20, cl. 3(36).

[24] Supra note 20, cl. 3(14).

[25] Supra note 20, cl. 3(13).

[26] Supra note 20, cl. 3(10).

[27] Supra note 20, cl. 4.

[28] Supra note 20, cl. 5.

[29] Supra note 20, cl. 6.

[30] Supra note 20, cl. 11(1).

[31] Supra note 20, cl. 11(2)(c).

[32] Supra note 20, cl. 11(3)(c).

[33] PRS INDIA, https://prsindia.org/billtrack/the-personal-data-protection-bill-2019 (last visited Feb. 26, 2021).

[34] The Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021.

[35] Id., rule 4(1)(a).

[36] Supra note 34, rule 4(1)(c).

[37] Supra note 34, rule 5(2).

[38] Karmanya Singh v. Union of India, 233 (2016) DLT 436.

[39] SC OBSERVER, https://www.scobserver.in/court-case/whatsapp-facebook-privacy-case (last visited Apr. 26, 2021).

[40] The latest clarifications from WhatsApp drew a differentiation between “messages with friends or family” and “messages with a business”. It claims that the new privacy policy pertains to the latter alone and the former remains unchanged. WhatsApp has clarified that some “large businesses might need to use secure hosting services from Facebook to manage WhatsApp chats with their customers, answer questions, and send helpful information like purchase receipts”.

[41] Supra note 38.

[42] In Europe, by virtue of General Data protection Regulation, though WhatsApp privacy policy talks about data sharing with Facebook, however, the users can rectify, update or erase information that the platform controls.

[43] Supra note 20, cl. 11(3)(c).

Categories
Blog

Initial Public Offering (IPO)

By: Mahima Bheemaiah

What is an IPO?

Most companies that kick off their business starts with a limited source of capital and resources, but soon these companies over a period of time grow into a sustainable business and will need more capital to expand and to grow their business. These funds can be raised through private placements and by also taking loans but when a company needs much more money for its business then it issues securities to the general public. This raising of fresh funds through the public is done through the primary market. Funds are raised through retail investors, qualified institutional buyers and non-institutional investors. The primary market is nothing but a capital market where a company issues securities to the general public for the first time and which is not previously traded in the stock exchanges. Securities are directly issued to the investors through the company. The primary market is also known as the New Issue Market (NIM). The secondary market is where the trading of the stock takes place and keeps varying from time to time. The initial raising of capital is done through the stock market where the general public is allotted shares of that respective company. This process of initially raising capital is known as “Initial Public Offering”.

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Initial Public Offerings or in its abbreviated form called ‘IPO’ raises funds by listing a company in the stock market exchange and by selling securities to the people who have been allotted their respective shares. Only a limited number of shares are available and are allotted in a random process without any bias. Securities could be shares, stock, debentures, bonds etc., but in an IPO it is only the selling of shares to the public. Only a public company is allowed to raise funds through the stock market and a private company cannot do so. IPO raises funds by a company to fulfil its long term goals.

IPO is a fundamental aspect of Capital Markets. It is the very first step for a public company to grow its funds for the development of a company. A company raises capital for the growth of the business, for new investments, to expand their business, to reimburse their debt, for research and development, to acquire any company for strategic planning etc. It can also help in expanding their brand name which provides companies with a huge amount of publicity which may help in securing better terms in lenders. In terms of the economy, when a large number of IPOs are issued, it is a sign of a healthy stock market and economy.

In an IPO the relationship is directly between a shareholder and the company. A shareholder carries the risk factor associated with the shares of the company. A shareholder becomes the owner of a company when he acquires the shares of the company, hence the risk factor which comes with it. If a company performs well in a financial year, these shareholders will also get dividends or bonus shares according to the number of shares they hold in that company. Along with it if there is an increase in demand for the shares of that particular company then the profits of the capital returns will also add to the advantage of the shareholders. A company is liable to its shareholders and must disclose requirements such as filing quarterly and annual financial reports. The money that flows into a company from its investors is known as the ‘Share Capital’ of a company. IPO is the largest source of funds to raise capital for a company.

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While IPO seems like an easy option for a company to raise the capital it does have its share of ups and downs. A company cannot raise capital as and when it wants to. Filing an IPO comes with huge costs and resources. If a company is not well-advised by its financial advisors the company could flop in the open market and might lose out financially. Advantages of going public could be for 1) Easier raising of funds 2) Exit for existing investors 3) Liquidity 4) Increased trust of shareholders 5) Possibilities of takeovers 6) Employee motivation through ESOPs 7) Enhanced visibility and 8) Cost-effective way of raising funds compared to bank loans. Some of the disadvantages of going public can be 1) Loss of Autonomous control over the company and 2) Increase of Compliance Requirements.

What is the process of an IPO?

An IPO process in India typically takes at least seven to nine months. However, the timeline may vary depending on the transaction involved, compliance with the law, preparation of financial statements, receipt of all necessary regulatory approvals and other market conditions. The first step while applying for an IPO is to recruit merchant bankers. He is responsible for making sure the company follows the rules and regulations which goes from application till the listing date. The merchant banker and the company go and apply to the SEBI with their registration application which talks about the health of the company. After this process, the SEBI needs to give their approval for the listing of the company. Once the nod from SEBI is acquired then the company needs to draft a prospectus and this prospectus needs to be filed with SEBI at least after 30 days, it needs to be filed with the Registrar of Companies (ROC) and with the stock exchanges. If it’s a red herring prospectus then it needs to be filed at least 3 days before the ROC before listing takes place. Once the prospectus is issued which contains information about the company which talks about what the company has done so far, its management, the goals it wants to achieve, the risks associated with the shares of the company etc. This is followed by an IPO roadshow or simple marketing of the company, this could be advertising on TV, radio, newspaper etc., so that the general public comes to know about it. Further, the company needs to fix the price range to the shares, this process is known as the book-building process. SEBI guidelines define Book Building as “a process is undertaken by which a demand for the securities proposed to be issued by a body corporate is elicited and built-up and the price for such securities is assessed for the determination of the quantum of such securities to be issued employing a notice, circular, advertisement, document or information memoranda or offer document”.2 In this process bids are placed by the investors which could be above or below the floor price, and once the bidding ends a final offer price is fixed. And lastly, the listing day is when the company gets listed on a stock market exchange and according to the demand and supply of the market participants, the share price may be premium or discount.

Legal Framework over IPO

A company while filling for IPO is mainly regulated by the Securities and Exchange Board of India (SEBI) addition with it, it is also regulated by Securities Contract (Regulations) Act, 1956, Securities Contract (Regulations) Rules, 1957 and Companies Act, 2013. The SEBI ICDR (Issue of Capital and Disclosure Requirement), Regulations 2018 deals with all aspects of the IPO. This Act provides detailed provisions governing an IPO. They provide detailed provisions related to disclosure requirements, opening and closure of issuance, publicity guidelines etc. The other Act is the SEBI LODR (Listing Obligations and Disclosure Requirements) Regulations, 2015 deals with disclosing details of a company when a company is going to list itself in the stock exchange. The Listing Regulations cover principles, common obligations and continuing disclosure requirements for all entities that have already been listed on any of the stock exchanges in the country.

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IPO during Covid Outbreak

December 2019 saw the rise of a new virus called Covid-19. This outbreak disrupted the entire world. Everything came to a standstill when restrictions were imposed due to Covid. There was uncertainty everywhere around the world. When the lockdown was imposed in March of 2020 nobody expected that it would prolong around for months together and would still be looming around in the environment even today. Many sectors were affected by the impact of the Covid such as the manufacturing sector, agricultural sector, service sector and the list goes on and on.

The market was low during this period and took time to recover from the sudden crash in the market. The next few month’s companies were not listing themselves and IPO’s in India which was already staggering due to prolonged slowdown and also due to threat to financial stability only saw 146 IPO’s in the fiscal year of 2019-2020 which was little higher than the previous year. The past 3 years saw a downfall of IPO with the least in a year being 116 IPO’s. The start of 2020 saw the listing of 50 IPO’s, but after the lockdown was imposed the markets were very low. The next four months of FY2020 saw only 19 companies get listed in the stock exchanges, which was a 62% downfall compared to the previous fiscal year.

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The second half of the year saw a rise in IPO’s even though there was still a rise in Covid cases. A few of the company’s IPO was even oversubscribed. This was due to excess liquidity, positivity in the markets and positive sentiments that has resulted in even companies which were impacted by Covid-19 raising funds. There was also a rise in retail investors during this period it was reported by Zerodha that about 250,000 accounts were opened during the month of April 2020 alone which took them about 6 years since the inception of their company to gain their first 100,000 investors. Many young investors have joined the market during this period due to increased awareness and also due to a lot of social media platforms have been promoting and teaching how to trade in the market during the pandemic. The increase in user growth can also be attributed to the easy access to these platforms. Not only in India, but even the global markets saw a rise in IPO. One of the keys to raising in IPO’s is due to sectorial resilience that is a lot of pharmaceuticals, medical and biotech industries and chemical as well as technology sector were welcomed in the second part of 2020 with companies like Chemcon Specialty Chemicals Ltd., Mazagon Dock Shipbuilders and Happiest Minds Technologies Ltd was the most-subscribed IPO’s in 2020.

IPO post-Covid

Post-2020, there was a rise in IPO’s in the country. Not only was there a raise but there was stellar growth in IPO as compared to the previous few years. With the second wave still creating panic amongst the public, there seemed like no stop for IPO’s being listed in the stock exchanges.

In 2021 alone, 63 companies collectively raised 1.2 lakh crore through Initial Public Offerings-the highest amount raised in a single calendar year. December was the busiest month for IPO with 11 companies offering their securities through the primary market. Anuj Kapoor, head of investment banking at UBS India, told Bloomberg News that companies will raise twice the money in comparison to last year.5 Many companies have opted for IPOs since the end of 2020, primarily due to the impact of the Covid-19 pandemic on business and exuberant stock market activity. Due to the high number of first-time retail investors and huge foreign influx investors as well as due to excellent performance seen in the market a high number of companies issued securities through IPO. Some of the companies that excelled in the market are Nazara Technologies, Sona BLW Precision, FSN E-Commerce Ventures, and Tatva Chintan Pharma Company etc. Even though the Covid pandemic continues to wreak havoc on India’s economy, the domestic market still remains very optimistic, hence giving confidence to the issuer.

Most of these companies are raising capital due to losses suffered due to the pandemic as well as expanding business due to an increase in demand. Also high retail investors coupled with liquidity makes it a perfect platform for companies to use this space now for companies to go public. However, heading into 2022 the markets can still be volatile with omicron cases spreading and due to high inflation further raising and it could be that central banks may raise interest rates which could curb liquidity. Still, it is expected that IPO’S in 2022 might be vibrant and robust just like in the year 2021.

Regulation Changes by SEBI to IPO’s

2021 ended with a bang for IPO’s in the country. It was a stellar year with 63 companies listed in the stock exchanges. A lot of new-age companies listed their securities in the market with companies such as Zomato, Paytm etc., introducing themselves in the primary markets. SEBI has come up with new regulations to curb the listing of companies.

To enhance the growth and development of public markets as well as to keep transparency and to remove ambiguity before going public and also keeping in mind the best interests of retail investors, SEBI has made amendments to an already existing volatile market.

SEBI has introduced a maximum cap limit of 35% to use from the equity-issuance proceeding (25% towards unidentified acquisition) for acquisition where there was no regulation before the amendment.6 SEBI is of the view that raising funds for unidentified acquisitions leads to ambiguity in IPO objectives. Limits are also imposed on the existing investors of the company to sell their shares through OFS (Offer for Shares). The purpose of doing this is to instil confidence in the investors and can also let pre-IPO investors look for an alternate form of selling their shares.

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From 1st April 2022, half the anchor investors should have a lock-in period of 90 days from the previous existing 30 days. While the remaining half will go through a 30 day lock-in period. This is done with the intention to make investors stay invested for a longer period and to provide confidence to the other investors. SEBI had proposed to introduce a minimum price band in all public issues, with the upper one at least 5% more than the floor price, so that the process will be more dynamic and flexible with the final price falling within or outside the scope of price band depending upon the demand.7 Regulations have also been done to preferential shares by relaxing pricing norms and lock-ins requirements for promoters, to make it easier for companies to raise funds.

Conclusions

India has become a global hotspot for IPOs. Global investors are also eyeing IPO’s in India. India has generated triple-digit annualised profit through IPO’s. IPO’s offer the biggest opportunity to raise funds for a company. Some IPO’s are a success and some can tank at the market. All of this depends upon the market sentiments. The LIC of India is coming out with the biggest IPO during the month of Feb/Mar 2022 with an issue size of Rs.1 lakh crores.

Some of these provisions which are done by SEBI are in the wake of frenzy number of IPO’s going public and due to high valuations in the markets. To keep a tab on companies and to curb their regulations these changes are placed so that the capital markets are not impacted in the long term. Hopefully, with these changes, the current year IPO’s does not get impacted due to these regulations.

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Categories
Blog Intellectual Property Law

Role of IP in E-Commerce

By: Syeda Fauzia

Introduction:

What are Intellectual property Rights?

Intellectual Property Rights (IPR) would refer to anything and everything that is the conception of the human mind which creates an exclusive right bestowed upon the person over the creations of their intellect. According to the Oxford Dictionary, “intellectual property is an intangible property as a result of human creativity.” Intellectual Property is of various kinds, few significant ones being Copyrights, Trademark and Patents. IPR also include inventions of a product or process, a start-up business, creating new music or lyrics of a song and many more.

What is E-Commerce? 

Electronic Commerce or E-Commerce as simply told is where commercial transactions are conducted through online mode. These would include conducting or establishing businesses, exchanging goods and services or both primarily over the internet. Examples For E-commerce would include platforms such as: Amazon, Swiggy, Zomato and so forth.

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How are IPR and E-commerce interlinked? Let’s find out!

In today’s world, economies are constantly growing and changing. Internet as such plays a vital role in the development of the same. That being the case, it is necessary to understand that IPR plays a crucial role in the process of conducting e-commerce business and its impact in the virtual world. It is necessary to keep a tab on E-commerce along with the technology infrastructure in such a manner that the value of the intellectual property is not disregarded. It is crucial than ever that there needs to be a constant process of improvement in this technicality of internet access.

The methodology to understand the role of Intellectual Property in E-commerce is based on certain aspects. They are:

  1. Protection of business

IPR plays an important role in safeguarding the core business interest of a company including all its affiliates/subsidiaries, its domain in the corporate world. More fully against unfair competition amongst the businesses. In case there is no application of IPR or the IPR laws are not abided by, it will lead to severe violations of IPR and the consequences will surely affect the goodwill of a Company. That means to say that IPR plays a significant role in the digital economy. Without IPR in place, anything and everything can be pilfered. It may extend from design to software. The Owners may be perplexed by such duplication and stealing and then the same being floated over the virtual domain. The Owners will never be recognized for their unique innovations.

  1. Safeguarding the ownership of the factors involved in the business development.

There would be several factors that enable a company to be structured and with Intellectual Property law in place, especially for the e-commerce transactions helps to safeguard the digital and technical components which are critical to the company. For instance, there can be software that is connected to networks/routers, software designs, software programs, HTML codes etc. All these factors may be available in different forms and may contain an intellectual property right that not only needs to be protected but to be continued to be protected. This will enable E-commerce to run efficiently and smoothly. Thus, the IPR coated E-commerce safeguards these important factors which are essentially the enablers.

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  1. Protection of IPR

Every E-Commerce business recognizes IPR on all such creations/innovations especially the patents, copyrights, marks and trade secrets. A product that is developed by a company or an individual and commercializing the product involves the development of a variety of technologies so as to protect the product in the public domain. In such cases, the companies/individuals turn up to technology providers who will enter into licensing Agreements wherein certain rights are given for a certain period of time and for a specific purpose. The License Agreement facilitates the owner of the product to safeguard his intellectual property rights in his products by way of acceptance of the owner’s standard terms and conditions wherein the IPR protection is deemed a material term of the contract.

  1. Preservation of patent portfolios and trademarks

If a business has to capture the market in the e-commerce arena, IPR creation becomes an impeccable asset to the Company. The Company will own the portfolio of such intellectual property eg: by Patent or trademark registration. This enhances the company’s credibility and of course will lead to significant development in the company’s financial position as the online business world catches the company that shows their business in the light of the preservation of their patent portfolios and trademarks.

IPR and E-Commerce

Several Companies believe in the fact that their intellectual properties are worthy to a great extent such that the protection of the tangible assets owned maybe a secondary priority. This is very much true in the global market and with the recent happening of online businesses because the intellectual property rights and the law that exists with regard to the same enables the companies from keeping their trade secrets protected and disallows any unfair competition.

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IPR plays an important role in E-commerce in today’s digital economy. The laws that govern the IPR has brought businesses globally to function by supporting new creations but also guarding the tedious inputs that are gone into by the creator of such intellectual property. The laws pertaining to Intellectual Property Rights allows the law to block others from stealing the Intellectual property of the owner. So that there is no impact on the financial position of the inventor and their struggle in bringing the goodwill in the b2b market which is available in the electronic network.

Fundamentals of IPR in e-commerce:

E-Commerce is a great enabler of a business. However, it is the owner who is solely responsible for protecting intellectual property rights. If the owner while revealing the intellectual property to the public or in any media through E-commerce fails to protect it beforehand. This becomes fatal and gives scope for the others to use the owner’s intellectual property unfairly much before filing for its protection. There may not be any legal solution that the owner can adapt and also leaving the culprits to walk away freely with no reprimand whatsoever. No trade secrets can be protected once it is in the public domain. The owner loses all his rights against the virtual world. Eg secrets of a Software algorithm if shared, then such software algorithms cannot be protected.

Breach of Intellectual property

Any website that involves transactions that are mostly buying or selling online is a part of E-commerce websites. Companies while doing e-business may knowingly or unknowingly tend to violate the intellectual property rights by displaying the images, designs or even products of other companies. The most common example is that of Chinese products that look similar but are just a duplication of the original product. Such companies should carefully ensure that they do their due diligence effectively to avoid any infringements of the owner’s intellectual property rights and also that they do not violate the laws that protect the intellectual property in the country of origin of the product.  They should be able to show that the sale is on an original development and that the intellectual property owner is well aware and there is permission to sell in the online platform.

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Protection of IPR under E-commerce

IPR in retail and e-commerce deals with buying and selling products through a physical shop and a website, respectively[1]. In retail also a owner needs to protect his intellectual property rights. Iit is no different that is for E-commerce and should various types of intellectual properties. The following states the usual IPR in E-commerce.

Various patent models protects E-commerce like search engines etc. Patent Law or the Copyrights Act depend from country to country and their IPR laws may be divergent in application. Eg. A website design protected by copyright law. The copyright protection is available under the copyright law for the graphics, designs, materials, audio or video clippings, photographs etc. Therefore the companies in e commerce world can protect their database under such copyright laws as applicable in their specific country.

Protection of brands:

Features that are posted on their application and/or their websites under the Trademark Law. the Intellectual Property Rights also encompasses protection of webpages, displays that are computer-generated, graphics, graphical user interfaces. This may also be protected under at the Industrial Design Laws as per the applicability in their respective country.

There would be certain websites which will have hidden characteristics like graphics that are confidential in nature, source codes, flow charts, data structure, algorithms, various technical descriptions, manuals, contents etc to name a few, are entirely protected under various Trade Secret Laws and opens up the various other laws in protection of such intellectual property rights.

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Conclusion:

In today’s world there is no denying of the fact that achievement of fair and ethical compliance of online businesses and practices cannot be accomplished without the effective use of Intellectual Property Laws. The society is more relying on e commerce and not only the E- businesses development wherein the retail activity is drastically reduced. Like the pandemic struck economy wherein the E-commerce led to significant growth in the virtual market. Making it more diverse and dynamic approach of online platforms.

As the growth of online business expands the Intellectual Property Rights facilitates the companies to protect and monitor their trade activities that are especially to maintain secrecy. IP rights in e-commerce also allow IPR owners to claim a share of the company’s profits. The Implementation of intellectual property rights will focus on the features that are exclusive and are unavailable to others and thus making the implementation of E-Commerce activity in the public domain successfully. The Legal protection of intellectual property rights brings in sturdiness in the usage of intellectual property which helps in not only in licensing, contracting, outsourcing but also helps in building strategic relationships, developing new concepts which in return enhances the sales and E-Commerce business by bringing in features that are unavailable to its competitors. This enables a healthy competition in the internet world and bringing in profits to the right owners of the intellectual property. Therefore Intellectual property stands as a guard to the E-Commerce and enhances fair play in the economy while adopting right measures of protection if Intellectual Property Rights.

 [1] What’s the Role of Intellectual Property in Ecommerce? (thebalancesmb.com)

 

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Blog Intellectual Property Law

The Chancellor, Masters & Scholars of University of Oxford and Ors.Vs. Rameshwari Photocopy Services and Ors

Delhi High Court

Judges: Justice Pradeep Nandrajog and Justice Yogesh Khanna

Applicable law: Section 52 of the Copyright Act, 1957

Did you know: A reproduction of a copyrighted work by a teacher or pupil in the course of instruction is allowed and is not an infringement of the copyright

Where it all began:

  1. University and Photocopy Shop were photocopying excerpts from the publications of the plaintiffs and were issuing/selling the said compilations in the form of course packs
  2. The world famous publishers alleged that such publication and sale constituted a copyright infringement and filed a case to require the University of Delhi and the photocopy shop to obtain a license.
  3. The Hon’ble single bench of the Delhi High Court dismissed the suit and an appeal was filed by the publishers before the division bench.

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Legal issue: Whether the right to reproduce work by a teacher or a pupil in the course of instruction is absolute or there are any conditions attached to such a right?

Publisher’s arguments: There are restrictions of fair use that apply to reproduction of materials by teachers and pupils and a license is necessary

University’s arguments: There are no restrictions that apply to the right of reproduction ad no infringement has occurred in this case.

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Judgment in the case:

  1. The court held that it only has to be seen is whether the work used was necessary for achieving the purpose of educational instruction- if it is there will be no infringement
  2. There is no adverse impact on the market of the books because the students still have access to the books in the library.
  3. It was held that the phrase ‘course of instruction’ used in the section will not be limited to just teaching in the classroom but will also apply to the entire program of education
  4. Because the university was not engaged in profit-making the activitiy could not be termed a publication.
  5. The appeal was dismissed and it was held that the preparation and distribution of the course packs was permitted and not an infringement of copyright. The case was sent back to the Single Bench for decision on the question whether whether the course packs were necessary for the educational instruction or not. The suit was finally withdrawn by the publishers

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Significance

The judgment in the case is hailed as a big victory for promoting the access to education. Many writers and academicians, many of whom were infact associated with the publishers, from all over the world condemned the filing of this suit and asked the publishers to withdraw it.