The Intellectual Property Protection in the E-commerce

5.4 The Intellectual Property Protection in the E-commerce

The transaction objects and activities in the e-commerce will possibly be related to the traditional intellectual property. For example, the online transaction of software, music, articles and VCRs may be related to copyright; besides, there is also the problem of legal protection of the database of network companies. Nowadays, the intellectual property disputes that have occurred or are occurring have fully proved that the intellectual property protection in the e-commerce is an un-ignorable legal field.

5.4.1 Legal Problems Brought forth by Domain Names

At the end of 1960s, with the birth of the Internet, domain names came into being for the convenience of contact between the interconnected computers. With the development of the Internet, as symbols of liaison between people in the virtual society, domain names, just like telephone numbers, become an indispensable part in people’s daily life in the civilized society. When the 21st century comes, domain names are honored as the “online trademarks” for their huge commercial value. It is for this reason that the legal problems brought forth by domain names have become the first ones in the study of legal problems in e-commerce.

Domain names are the key to gaining commercial value in the running of the e-commerce websites and their commercial opportunities lie in the netizens who visit to the websites. According to the latest Nelson Weekly investigation, Internet users visit 9.5 websites for 8.5 times and each time for about 29 minutes on average within one week. The websites visited for commercial purposes rank

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as follows: Yahoo, AOL, MSN, Microsoft, Lycos, Excite, Go, Times Warner, Alta Vista and Amazon. Domain names are signboards to attract visitors and the commercial value of particular domain names is positively proportional to the domain name click rate. An unknown domain name can hardly arouse visitors’ desire to pay any visit. For this reason, how to make their domain names well known to the world becomes a puzzle lots of network companies are racking their brains to solve. Some of them, in order to raise the fame of their websites, take the names of celebrities or the well-known enterprises as their domain names, thus leading to a series of legal conflicts, which are mainly between the domain names and the name rights or commercial mark rights protected by the traditional laws. These legal conflicts include the following:

1. The legal conflict between domain names and name rights

The value of domain names in e-commerce lies in their fame. It needs more time and space to establish the fame of a domain name in the virtual society than in the real life society. In order to grasp the online commercial opportunity in time, many network companies register the names of famous enterprises or people as their domain names. The disputes thus incurred have turned quite common now.

In cyberspace, people illegitimately register other people’s names as their domain names, raise the fame of their websites by taking others’ advantage, or wait after illegitimate registration for a good price or claim huge ransom. For whatever reasons, they do so just for the seeking of commercial benefits, which shall be taken as the infringement upon others’ name rights in real life society.

2. The legal conflict between domain names and enterprise name rights

(1) The conflict between domain name registration and the system of enterprise name registration: The domain name registration administration in our country does not conduct inspection over whether the domain name the registration applicants choose has conflict with others’ enterprise names. This not only provides opportunity for illegitimate registration, but also renders difficulty for the judicial departments to judge whether any names of the enterprises registered in China are used as domain names.

(2) The conflict between domain names being global and enterprise names being regional: It is provided for in the Provisions on Administration of Enterprise Name Registration that the registered enterprise names may enjoy the exclusive right within certain areas. The regionlization of the enterprise names can be regarded as the narrowest in the field of the intellectual property. However, the dominating right of the domain names gained in the cyberspace has no regional limit. Thus the domain names’ being global has brought forth the legal problems of laws applicable for the protection of enterprise names by all countries based on their characteristics of being regional.

(3) The conflict of domain names being unique and enterprise names belonging to different industries: In our country the enterprise names are registered according

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to different industries. Meanwhile the uniqueness of domain names means that the management system of domain names will allocate a unique address code to each computer connected to the net whose external code (i.e., domain name) is also unique. This means that once a domain name is input through a network terminal, the website represented by this domain name can be spotted. Enterprise names are the symbols in real life, while domain names are those of virtual enterprises. Both have the same functions, but in two different environments, two separate legal systems are adopted for the protection of each in our country. Domain names are adjusted by the Interim Measures Governing the China Internet Domain Name Registration, which only regulates the registration and examination and approval of Internet domain names and guarantees the uniqueness of domain names in the network environment, but does not cover the unity of domain names and enterprise name rights in real life society. Due to the peculiarity of domain names, conflicts arise between them and the traditional enterprise names as the latter belong to different industries. The same enterprise names registered in different regions can live in peace, but the right-holders of the same enterprise names in different industries in cyberspace will have to fight fiercely for the registration of the only one domain name. Whoever registers the domain name first will exclude all others from registering the same domain name again.

3. The legal conflict between domain names and trademark rights

The voluntary registration principle set forth in the Trademark Law of our country requires that trademarks enjoy the exclusive right and legal protection only after registration. Without registration the trademarks can also be used, but are not protected by law.

(1) The conflict between the dominating right of domain names globally and the regionalness of the exclusive right of trademarks: The principle of trademarks being regional means when the trademarks are used lawfully within the territory of a nation, they will be entitled to the protection of that country’s law. Yet domain names are global, not subject to the restrictions of regions. Therefore, when the trademark registrant uses online a trademark protected according to the regional principle as the global domain name, conflict arises.

(2) The conflict between the uniqueness of domain names and categorization of trademarks. According to the Trademark Law, the protection of registered trademarks is only limited to those registered ones upon verification and the product range verified. It is legal and without infringement of others’ legal rights if two enterprises use the same trademark on different commodities which belong to different classification in the classification form. Yet in the Internet environment only one enterprise can use that trademark.

(3) The conflict of domain names and well-known trademarks: The well-known trademarks are protected by the trademark legal system in our country. Yet such protection only adapts to the real society; there are no laws to protect the domain names in network environment. Whether the special protection of well-known

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trademarks can be extended into the cyberspace and what barriers there are to extend the legal system protecting the well-known trademarks into the cyberspace become two major issues requiring coordinated solution both by the intellectual property legal circles in all countries and the World Intellectual Property Organizations.

4. The conflict between domain names and other domain name rights

The uniqueness of the administration of domain name registration and the principle of “first come, first served” hinders the domain name registrant from registering the same domain name. However, as computers have much higher sensibility to recognize differences than human eyes have, they can recognize any minute differences between domain names accurately. Therefore, any domain names with the smallest difference from other ones can be registered. By taking advantage of this property, some ill-purposed people register the domain names which have little difference from or very similar to the pronunciation or letter or character combinations of famous trademarks in real life to misguide consumers. This situation, in light of the fair competition in market, should obviously be avoided.

5.4.2 The Coordination of the Conflicts Between Domain Names and Intellectual Property

Domain names have brought forth lots of legal problems, which have led to the most disputes in e-commerce and aroused the attention of all countries and even international organizations which are actively taking measures to solve the problems.

1. Define the legal status of domain names

It is controversial whether domain names shall be protected as a new intellectual property object or as a trademark. It is hard to coordinate the conflicts between the intellectual property and domain names. The American government has proposed a basic legal orientation of “domain names in compliance to trademarks” and classified the dispute between domain names and trademarks into domain name disputes and domain name embezzlement.

2. Establish the communication and coordination channel between the domain name registration mechanism and the legal system of intellectual property protection

Once the legal status of domain names is determined, the coordination between the legal system governing domain names and intellectual property will turn clarified. Presently, the coordination is only restricted to domain names and the

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symbolic objects in intelligence property. Facing the increasing conflict between domain name and intelligence property, the international community and organizations are taking active measures to seek solutions.

3. Proposals concerning domain names by the international community

In November 1996, in order to solve the increasingly serious domain name problems, the domain name registration and administration institutions in the international community and the international organizations on intellectual property established the Internet Ad Hoc Committee (IAHC), an ad hoc working group to specialize in the study of how to resolve the problems arising in the field of domain names. On Feb. 4th, 1997, IAHC published a suggestion pamphlet named “Final Report of the International Ad Hoc Committee: Recommendations for administration and Management of gTLDs”, which includes the following issues:

(1) Concerning the selection of domain name registrar, IAHC holds that territorial principle shall be applied.

(2) Concerning the problem of new top domain names, it is held that a competition-based mechanism should be established to allow all the domain name registrants to enter the market freely, avoiding monopoly.

(3) Concerning the domain name registration and the solution of domain name disputes, IAHC, whose historical mission is to coordinate and solve the domain name disputes in cyberspace, specifies the contents that applicants should provide in their application, detailed information concerning the communication between the applicants and usage of domain names, a deputy designated for application of the domain name registration and relevant affairs, agreements that disputes which occur between trademarks and domain names shall be subject to designated jurisdiction, and the clauses concerning mediation and arbitration.

(4) About the measures governing the effectiveness of domain names, IAHC advises that the secondary domain names should be renewed once a year, that is, the domain name is effective only for one year and it should be renewed every year. Besides, in the renewal registration application any change of the items shall be verified and updated accordingly, assuring the constant effectiveness of the information of the registrants known to the registry.

(5) Concerning the selection of the dispute solutions, the IAHC suggests that the secondary applicants registering under the general top domain names under the administration of CORE should include in their application a standard clause stipulating that when disputes occur, online mediation shall be accepted according to the mediation rules of the arbitration and mediation center under the WIPO or binding summary arbitration procedures shall be adopted.

(6) Concerning the mediating mechanism of domain name disputes, the IAHC proposes to establish such a mechanism as to ensure that owners of internationally- known intellectual property are entitled to register or empower others to register the corresponding names as their domain names. The court of domain name administration mediation should be composed of experts from the fields of

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intellectual property and Internet domain names, and its composition and mediation procedures shall be formulated by the arbitration and mediation center under the WIPO.

Concerning a separate “.tm” domain, the IAHC suggests that such a “.tm” domain shall be added under the ISO3166 national code to be used specifically for trademark registration; and the two systems of “.tm.ISO3166” and “.tm.int” shall be established to ensure the registration of trademarks in this field as domain names.

5.4.3 WIPO’s Coordination About the Conflicts between Domain Names and Intellectual Property

WIPO has attached great attention to the conflicts between domain names and intellectual property and performed a lot of relevant coordination ever since 1996. On Apr. 30th 1999, the organization published “The Management of Internet Names and Address: Intellectual Property Issues”, which includes the following five aspects:

1. Measures to avoid domain name conflicting in the registration phase

(1) Conclusions of agreements between registration institutions and registrants. (2) Payment of registration fees. (3) Retrieval before registration. (4) Suspension procedure in registration.

2. Measure taken towards inaccurate and insecure information

WIPO suggests that the registration institutions establish automatic data verification systems to verify the information provided by the registration applicants on line, or verify the authenticity of the address provided by the applicants by sending e-mails to the address and request the confirmation from the applicants of the received e-mails.

WIPO suggests to establish domain name cancellation procedures, by which the registration institutions can cancel the registration in case the intellectual property is infringed upon by the domain name registration or after confirming that the information provided is not accurate upon request by the third party to the dispute when the registration institutions fail to contact the domain name owners according to the provided contact information.

3. Measures concerning uniqueness

The uniqueness of domain names is a necessary condition of the Internet. To ensure this, the coexistence of similar domain names may invoke some problems such as trademark conflict. WIPO holds that it is not suggested to mandate the

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registration institutions to provide guidance websites or other similar service for those domain names with some common constitutional elements, but it encourages clients to take the initiatives into consideration that the measures solving the problems of sharing similar domain names will be good.

4. A globally unified mechanism to solve domain name conflicts

WIPO has proposed five suggestions concerning this issue: to solve the conflicts with existing judicial action mechanism; to establish an accommodative dispute solving mechanism; to apply mandatory administrative procedures; to malicious registration and to apply voluntary arbitration and mediation mechanism.

WIPO suggests that the remedial methods of the mandatory administrative procedures are restricted in three circumstances: first, cancellation of the registered domain names; second, transfer of the domain names to the third party; third, the sharing of the cost involved in the procedure.

5. Protection of famous and well-known trademarks

WIPO suggests exclusive right be granted to famous and well-known trademarks to avoid registration by others, and meanwhile the exclusive right not only exist when the domain names are the same as the famous or well-known trademarks, but be extended to the case that the domain names are similar to the famous or well-known trademarks. A unique institution in charge of the administrative procedures will, by forming an ad hoc panel made of 3 persons chosen from the expert pool from all around the world, deal with the case to decide whether to render the verdict of granting the exclusive right according to the complaint made by the trademark owner who claims infringement of his famous or well-known trademark. The expert panel should first confirm if the trademark is famous or well-known in accordance with the draft treaty on the protection of well-known trademarks proposed by the Committee on the Law of Trademarks, Industrial Design and Geographical Indication. Then the panel should confirm that the unauthorized third party is trying to register as its domain name the famous or well known trademark or its similar design. Once the expert panel makes a decision of exclusive right, the owner of the trademark can cite this decision in the administrative procedure, and request cancellation of the registered domain name which is similar to the trademark. Of course, if the applicant to register the domain name can raise evidence to prove the legitimacy of the registration, the registration can be maintained.

5.4.4 Copyright Issues in E-commerce

Ever since the birth of the first copyright law in the world—the Statute of Anne in Britain — in 1710, copyright protection has evolved from the protection of publishers to the protection of the author, distributor and users, as printing,

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electronic and digital technologies are developing rapidly. That is to say, copyright in its general sense includes the neighboring right connected with it. In our country copyright is also termed as the right of writing, with the same meaning. Because copyright covers wider extent than other intellectual property, there are more complicated copyright problems in e-commerce.

1. Conflicts between services in e-commerce and traditional copyright

The Internet has brought us to the information era. When people enjoy the information service, conflicts between information service and traditional copyright have come with it, which makes the legal circle at a loose end.

Conflicts between online entertainment and copyright: The conflict between the American online entertainment company MP3.com and other traditional entertainment companies have invoked plenty of thoughts concerning online entertainment, the detailed discussion of which can refer to the International Trade and Law.

Online movies and copyright: With the development of technologies, a new technology named MP4 is becoming more mature. Like its counterpart MP3, it adopts a compressive technology; what’s different is that it can compress images while compressing sound, which facilitates the propagation of images on line. When traditional copyright comes to the era of network, there should be some integration. The realization and protection of the benefits of movie producers and actors/actresses and the definition of the transmitters’ legal status are key problems that should be addressed in the network copyright issues.

2. Online bookstores and copyright

The new publishing mode on line enables the customer to get a new book printed with the high-speed digital technology in the online bookstore in a short period of drinking a coffee, which costs almost the same as the published copy. “We never dare think of making money for printing only 5 or 10 books in the past, but presently it has come true with the electronic books printed immediately for sale. The publishing industry will become more active with this kind of book.” The mode of electronic publishing has been a fashion in America, but there’s been no solutions to the concerning copyright issues.

3. Copyright protection of databases

Database is an important foundation of e-commerce. All procedures in e-commerce, including query and purchase of raw material, the exhibition, order, storage and transportation of products, involve the support of databases.

The focus of database copyright protection is whether to protect it as a traditional copyright or as a new and independent legislative object. EU committee suggests that the database be protected as a compilation defined by the Berne Convention. This suggestion draft was passed. The European Parliament and the European

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Council on March 11th, 1996, which provided it being carried out before Jan. 1st, 1998 in all member countries.

4. Current status of database protection in the US

The US is also seeking new means to protect database as it failed in protecting it as a traditional copyright. The protection means in the HR3531 proposal are similar with that for the database directives in the EU. Then the means in the HR2652 and HR354 proposals are further away from the EU proposals. Yet all these proposals have not passed the final stage of legislation. However, the differences in the legislated protection will be very profound to other countries, since US and EU are both powerful in the database industry. With the development of Internet and e-commerce, there are more and more appeals for the legislation of database protection. However, a single country or only a few countries providly legal protection to the database with the fast-growing Internet in the information era; it needs global cooperation and unanimous acknowledgement of the principle of database protection. Otherwise, any legislation in a certain region or a country concerning the Internet database piracy will be far too much inadequate and useless.