Web E-Commerce
Ch. 7 Lecture Notes

Objective #1: Explain various laws that apply to ecommerce activities.

  • Due to the nature of the Internet, a business must that uses ecommerce must follow laws in countries and jurisdictions. Ebay has had issues in France and Yahoo and Google in China.
  • The location of a company's headquarters and its web server(s) may be in different states or countries making it confusing to determine which laws apply. Off-shore gambling and even pornography are examples of this issue.
  • It is wise to include a warranty disclaimer on a website where goods or services are sold. The warranty disclaimer must be conspicuous and easy to read. It can protect the seller from implied warranties that exist otherwise.
  • It is wise to include a terms of service (ToS) set of rules about the use of and information on a website in order to protect the company. The ToS limits the website owner's liability.

Objective #2: Understand and explain the issue of copyright, patent, and trademark infringement with regard to content on a web site.

  • A copyright is a right granted by the government to an author for a literary or artistic work. You cannot copyright an idea.
  • A copyright by an individual applies to the life of the individual plus 70 years. For a company, it lasts for 95 years from the date of publication or 120 years from the date of creation whichever comes first.
  • It is no longer required that you officially register something for a copyright though you can do so if you'd like. Anything that you create is automatically copyright even if you don't include a copyright notice somewhere in it.
  • Web pages are copyrighted because they arrange elements of words, graphics, and HTML tags in a way that makes them original.
  • Technically, viewing (i.e. downloading) a web page is considered "fair use" of a copyrighted web page and thus allowed. If you use the web page or content in any way under the terms of fair use, you must provide a citation to avoid plagiarism.
  • Napster overstepped this line on fair use and lost a $26 million lawsuit in 2001.
  • A patent is an exclusive right to make, use, and sell on invention. The U.S. gov't grants a patent for 20 years. A patent for a design for an invention lasts for only 14 years. An invention must be genuine, novel, useful, and not obvious with regard to the current state of technology.
  • Patents are difficult to obtain for software developments. Often, the technology changes so quickly that the patent wouldn't be worth protecting. Plus, it's fairly expensive to obtain a patent.
  • A trademark is a distinctive mark, device, motto, or implement that a company affixes to the goods it produces. A service mark is similar but it applies to services. A trademark or service mark can be registered with a state or the Federal gov't.
  • You cannot use another company's trademark or logo in a website without express permission of the owner.
  • Cybersquatting occurs when someone registers a domain name that is the trademark of another person or company and hopes to sell that domain name back to the person with the trademark. In the meantime, the cybersquatter can make money off the domain name, especially through advertising. The Anticybersquatting Consumer Protection Act has prevented cybersquatting since 1999 and allows for damages of up to $300,000. The World Intellectual Property Association (WIPO) settles domain disputes under its Uniform Domain Name Dispute Resolution Policy. However, when the domain name is a generic term, the domain registrant may not be forced by the courts to give the domain name to a trademark holder. For example, Sting (lead singer for The Police) was forced to settle out of court in order to obtain the domain name sting.com.
  • Namestealing occurs when someone illegally changes the ownership of a domain name. Must domain name registrars go to great lengths though to prevent namestealing. Often, a signed letter on a company's letterhead must be faxed to a registrar in order to officially change the ownership of a domain name.

Objective #3: Explain methods for protecting online intellectual property.

  • It can be difficult to protect digital information when it is placed on a web server. Digital watermarks can be used in a graphic or audio file. Without being easily noticed or changing the quality of the digital file, a sequence of bits (1's and 0's) can be embedded in the file to prove authenticity.
  • Digital Rights Management (DRM) schemes are proposed by various companies to give consumers the rights and restrictions to using and making copies of music files.
  • Web designers must be careful not to use names or multimedia content (especially logo's) without the express permission of the trademark holder. They must also be careful when using edited versions of multimedia content created by others, even for creative reasons. Even the use of a name on a website may imply a relationship between two companies or cause confusion with customers.

Objective #4: Explain taxes related to ecommerce.

  • Goods that are sold via ecommerce to consumers in the state where a business is established must include state sales tax. It is the responsibility of out-of-state customers to keep track of and pay use tax. Many state governors have pushed for laws that will allow & require businesses in their states to collect state taxes on goods sold to out-of-state customers.