E-commerce

Why should I consider intellectual property issues in undertaking e-commerce?

IP is a crucial element of e-commerce. More than other business systems, e-commerce often involves selling products and services that are based on IP and its licensing. Music, pictures, photos, software, designs, training modules, systems, etc. can all be traded through e-commerce, and IP is the main component of value in the transaction. IP is also important because the things of value that are traded on the Internet must be protected, using technological security systems and IP laws, otherwise they can be stolen or pirated and whole businesses can be destroyed.

IP is also involved in making e-commerce work. The systems that allow the Internet to function software, networks, designs, chips, routers and switches, the user interface, and so on are often protected by IP rights. Trademarks are an essential part of e-commerce business because branding, customer recognition and goodwill - the essential elements of a web-based business - are all protected by trademarks and unfair competition law.

E-commerce and Internet-related businesses may also be based on product or patent licensing. This is because so many different technologies are required to create a product that companies often choose to outsource the development of some components or share technologies through licensing arrangements. If every company had to develop and produce all the technical aspects of its products independently, the development of high-tech products would be impossible. The economics of e-commerce depends on companies working together to share, through licensing, the opportunities and risks of the business. Many of these companies are SMEs.

And finally, a great deal of the value of e-commerce-based businesses is usually held in the form of IP- so the valuation of an e-commerce business will be affected by whether it has protected its IP rights. Many e-commerce companies, like other technology companies, have patent portfolios, trademarks, domain names, software or original databases that are by far their most valuable business assets.