UNIT 3

E COMMERCE AND LEGAL ISSUE

What Are Contracts?

The term “contract “is defined in sec 2(h) of the Indian contract act ,1872 as AN AGREEMENT
ENFORCEABLE BY LAW IS A CONTRACT; thus for the formation of a contract there must
be –

1. An agreement, and
2. The agreement should be enforceable by law.

What are e-contracts?

E-Contract is an aid to drafting and negotiating successful contracts for consumer and business e-
commerce and related services. It is designed to assist people in formulating and implementing
commercial contracts policies within e-businesses. It contains model contracts for the sale of
products and supply of digital products and services to both consumers and businesses.

An e-contract is a contract modeled, executed and enacted by a software system. Computer

programs are used to automate business processes that govern e-contracts. E-contracts can be
mapped to inter-related programs, which have to be specified carefully to satisfy the contract
requirements. These programs do not have the capabilities to handle complex relationships
between parties to an e-contract

An electronic or digital contract is an agreement “drafted” and “signed” in an electronic form.

An electronic agreement can be drafted in the similar manner in which a normal hard copy
agreement is drafted. For example, an agreement is drafted on our computer and was sent to a
business associate via e-mail. The business associate, in turn, e-mails it back to us with an
electronic signature indicating acceptance. An e-contract can also be in the form of a “Click to
Agree” contract, commonly used with downloaded software: The user clicks an “I Agree” button
on a page containing the terms of the software license before the transaction can be completed.
Since a traditional ink signature isn’t possible on an electronic contract, people use several
different ways to indicate their electronic signatures, like typing the signer’s name into the
signature area, pasting in a scanned version of the signer’s signature or clicking an “I Accept”
button and many more.

FORMS OF ELECTRONIC CONTRACTS

There are two ways through which commercial contracts can be entered electronically.]

A common and popular method is through the exchange of electronic mail ‘e-mail’.

The other method of contracting is using the World Wide Web or ‘website’.
 E-mail contract- A contract can be entered into and concluded following the exchange of a
number of e-mails between the parties. Here the e-mails serve the same purpose as normal
letters, had a contract been negotiated through letters written by both parties.

Contract through websites- There are many and varied kinds of E- Contracts but these three
are the elementary one, which we assent to or dissent to, in our everyday life. (16) Contracts
through websites are further into following kinds:

Online contracts can be of three types as underneath:

1. Shrink-wrap agreements

Shrink wrap contracts are usually a licensing agreement for software purchases. In the case of
shrink-wrap agreements, the terms and conditions for access to such software products shall be
enforced by the person buying it, with the initiation of the packaging of the software product.
Tightening-up agreements are simply the agreements that are accepted by users, for instance,
Nokia pc-suite, at time of installing the software on a CD-ROM. Sometimes, after loading the
product onto your computer, additional conditions may only be observed and then, if the buyer
disagrees, he has an opportunity to return the software product. The shrink-wrap Agreement
provides protection by exonerating the product manufacturer of any violation of copyright or
intellectual property rights as soon as the purchaser tears the product or the coverage for
accessing the product. However, the validity of shrink-wrap agreements does not exist in India
with a stable judgment or precedent.

2. Click or web-wrap agreements

Click-wrap contracts are web-based contracts that require the user’s consent or consent through
the “I Accept,” or “OK” button. The user must accept the terms of use of the particular software
with the clickwrap agreements. Users who disagree with the terms and conditions cannot use or
purchase the product after cancellation or refusal. Someone almost regularly observes web-wrap
agreements. The terms of use shall be set down before acceptance by the users. For instance,
online shopping agreement, etc.

3. Browse-wrap agreements

A browsing wrap agreement can be called an agreement which is to be binding on two or more
parties through the use of the website. In case of an agreement on browsing, an ordinary user of a
given Website is to accept the terms and conditions of use and other website policies for
continuous use. We usually witness such kinds of online contracts in our daily lives. Although
this online agreement is becoming common in all of our businesses, there is no precise judicial
precedent regarding its validity and enforceability. Other countries, such as courts in the USA,
have dealt with those online agreements and held that both Shrink-wrap Agreements and Click-
Wrap Agreements are enforceable as far as the general principles of the contract are not violated.
Other types of online agreements include contracts for employment, contractors, contracts for
consultants, sales and resale agreements, distributors, non-disclosure agreements, software
developer and licensing agreements and contracts for source-code escrow.

Employment Contracts

The Information Technology is determined by manpower in Indian context and thus

employment contracts are vital. With a high erosion rate as well as the confidentiality
involved in the work employment contracts become crucial.

Consultant Agreements

The normal requirements of Indian Contracts Act of 1872 will apply on any consultant
agreement. But particularly in Information Technology industry where the infrastructure to
function is low and connectivity is very high consultancy with experience marketing and
business development and technology development is a very dominant mode of contract.

Non-Disclosure Agreements

Non-Disclosure Agreements are part of IT contracts, which identify binding agreements

with employees apart from the standard confidentiality agreements. The Indian Contract
Act 1872 has provisions for the same and it undertakes importance in an industry which
is purely knowledge based and one which can be easily repeated ruining the business.

ESSENTIALS OF AN ELECTRONIC CONTRACT

As in every other contract, an electronic contract also requires the following necessary
requirements:

1. An offer requirements to be made

In many contacts (whether online or conventional) the offer is not made directly one-on-one. The
consumer ‘browses’ the available goods and services showed on the seller’s website and then
chooses what he would like to purchase. The offer is not made by website showing the items for
sale at a particular price. This is essentially an invitation to offer and hence is revocable at any
time up to the time of acceptance. The offer is made by the customer on introduction the
products in the virtual ‘basket’ or ‘shopping cart’ for payment.

2. The offer needs to be acknowledged

As stated earlier, the acceptance is usually assumed by the business after the offer has been made
by the consumer in relation with the invitation to offer. An offer is revocable at any time until the
acceptance is made.
 Processes available for forming electronic contracts include

I. E-mail: Offers and acceptances can be exchanged entirely by e-mail, or can be collective with
paper documents, faxes, telephonic discussions etc.

II. Web Site Forms: The seller can offer goods or services (e.g. air tickets, software etc.) through
his website. The customer places an order by completing and communicating the order form
provided on the website. The goods may be actually delivered later (e.g. in case of clothes, music
CDs etc.) or be directly delivered electronically (e.g. e-tickets, software, mp3 etc.).

III. Online Agreements: Users may need to take an online agreement in order to be able to avail
of the services e.g. clicking on “I accept” while connecting software or clicking on “I agree”
while signing up for an email account.

3. There has to be legal consideration

4. There has to be an intention to create lawful relations

5. The parties must be able to contract.

6. There must be free and unaffected consent

7. The object of the contract needs to be lawful

8. There must be conviction and possibility of performance

LEGAL ISSUES IN ELECTRONIC CONTRACTS

For an electronic contract to be legal there are 5 basic requirements:

1. Authenticity - identification of the contracting parties

2. Offer - indication of the subject of the contract
3. Non-repudiation – nobody can change the contract after it is signed
4. Writing and signature – the contract should include the valid signatures and date of activation
5. Confidentiality
First and most importantly, electronic contracts can take many forms. For example, an email
conversation with clear offer and acceptance can be considered a binding contract. This means
that the terms of the contract are stated in the email communication, messages, presented offers,
etc. between client and supplier.
Even if an electronic contract does not contain all of the elements listed above it can be deemed
as the base for legal claims.
Another soaring issue is that when you sign traditional contracts you can see the person doing it,
and make sure that they have the authority to get into contractual relationship. Online, anyone
can become anyone and you can never be sure if the person agreeing is not impersonating an
authority. According to legal regulations, electronic contracts are binding only for the person
actually signing them at the time.
However, one of the most argued issues is what counts as a signature. There is no clarity on what
qualifies and the law can be bent greatly here. Electronic signatures are applicable for most
electronic contracts provided that intent can be proven and that the authorized person was
actually the one signing the contract.
The e-commerce contract has the same binding and legal power as the traditional contract but
sets new rules in the general contract law. The environment in which electronic contracts are
developed is dynamic – from emails to offers and attached documents – all are evidence for the
terms of an agreement online.

ISSUES RELATING TO E-CONTRACTS

Jurisdiction and Place of Execution of a Contract

Jurisdiction is a territory or sphere of activity within which a court or other institution’s legal
authority is extended. In the broader sense, it refers to the country or country whose legislation
applies during the period of interpretation of any contractual terms or in the event of a dispute.
The pace of execution of the contract normally determines this. A traditional contract shall be
concluded when contracting parties meet and execute the contract, usually at a predetermined
place and time, by placing the signatures on the document. This is not the case in e-contracts in
which the parties meet online and can be located at different places. Consequently, a strict
determination of the jurisdiction is lacking in the “place of execution”.

Capacity to contract- Indian Contract Act incapacitates a minor, a lunatic, a person of

unsound mind and a person in a drunken state of mind from entering into contract. The difficulty
in online transactions is that the competence of one party to contract is unknown to the other
party. The complex nature of e-contracts makes it impossible for one party to figure out whether
the other party behind the computer screen is competent to contract or not. It becomes crucial for
an online business portal to keep such possibility in consideration and qualify its website or form
stating that the individual with whom it is trading or entering into the contract is a major.
 Issue of consent- In a click wrap and shrink-wrap contract, the customers do not have any
opportunity to negotiate the terms and conditions and they simply have to accept the contract
before commencing to purchase. Section 16(3) of the ICA provides that where a person who is in
a position to dominate the will of another, enters into a contract with him, and the transaction
appears, on the face of it or on evidence adduced, to be unconscionable, the burden of proving
that such contract was not induced by undue influence shall lie upon the person in a position to
dominate the will of the other. So, in cases of dispute over e-contracts the entity carrying out the
e-commerce will have the onus to establish that there was no undue influence.

Probability of loss of data- The entity collecting data should have a privacy policy in place,
should always obtain consent from the provider of sensitive information and maintain reasonable
security practices and procedures. Unauthorized access to personal information and any misuse
of such personal information should be checked by the online goods/service providers.

Acts by computer programmes- It is a general principle of contract law that a party can be
bound by the acts of agents endowed with apparent authority to act on its behalf. An agent has
apparent authority if a party acts in such a way so as to make it reasonable for a third person to
believe that the agent is acting on its behalf. In the online world, a computer program may act as
an online agent, and a party will presumably be bound by offers and acceptances performed by a
computer or program acting on a party's behalf.

Interface with payment gateways- The IT Act has laid the foundation for strengthening
cyber security and data protection in India with introduction of section 43A that mandates body
corporate to implement "reasonable security practices" for protecting "sensitive personal
information".

Meeting of the minds of Parties: Consensus-ad-idem- Several issues arise whether a person
would be bound by the terms of a contract without reading it or without being able to negotiate
the terms, as is the case with standard form contracts where the customers are required to just
sign on the dotted lines. But then, the issue which needs to be addressed is that what would be
the terms of the contract and would the acceptance of the contract without even reading it be
classified as deemed acceptance?

Requirement as per The Indian Stamp Act-The Indian Stamp Act and different State
legislation mandate that documents in which rights are established or transferred must be
stamped. A document not properly stamped shall not be permitted as proof in a court of law, or
even a competent authority unless it was imposed (a fine of 10 times the amount of the required
stamping duty).However, documents cannot be stamped for an online contract until this date.

SPECIFIC EXCLUSIONS

In particular, the IT Act 2000 excludes from electronic transactions the following documents:

 Negotiable Instruments
 Power of Attorney
 Trust Deed
  Will
 Sale Deed or Conveyance deed with respect to the immovable property of any documents
relating to any interest in an immovable property.

CYBER CONTRACTS AND IT ACT

With the growing importance and value of e-contract in India and across the world, the different
stakeholders are continuously identifying and evaluating the nuances of legal outline relating to
it. The participation of different service providers in the transaction of e-contract, which includes
a payment gateway, the main website, the bank or card verification website, the security
authorization website and the final service provider which can also comprise the shipping agent
has made the E-contract business more complex. Therefore, the need for amendable it has
augmented. In India, till date there are no definite legislations or guidelines protecting the buyers
and sellers of goods and services over the electronic medium.

However, several laws acting in unification are trying to regulate the business transactions of E-
contract. They are as follows:

 Indian Contract Act,1872

 Consumer Protection Act,1986
 Information Technology Act,2000
 Indian Copyright Act,1957

Like any other types of business, E-contract business also works on the basis of contracts. It is
therefore, structured by the Indian Contract Act, 1872. Any valid and legal E-contracts can be
designed, completed, and enforced as parties replace paper documents with electronic
parallels.[6] The contracts are move in between the service providers or sellers and buyers.

Earlier, there was no definite law to regulate the intermediaries such as verification service
providers and shipping service providers to safeguard that the product or service is actually
delivered. However, the government has recently acquainted the Information Technology
(Intermediaries Guidelines) Rules 2011.

The actual scope of the security provided under these regulations would only be known after
judicial interpretation of the provisions. However, now it has been explained that even foreign
intermediaries delivered to provide service can be sued in India.

The payment gateways which footing a very important position as the primary processor of the
payment for the merchants were brought into the legal framework after proclamation of the
Payment and settlement Systems Act, 2007 (PSS Act, 2007). The PSS Act, 2007 as well as the
Payment and Settlement System Regulations, 2008 made under the Act came into effect from
August 12, 2008.[9] Further, the Reserve Bank of India, issued additional guidelines initiating all
such gateways and payments processors to register under the said act.

The authority of the transactions of E-contract is established under the Information Technology
Act, 2000 (IT Act, 2000). It explains the reasonable mode of acceptance of the offer. IT Act,
2000 also rules the revocation of offer and acceptance.[10] However, definite provisions that
regulate E-contract transactions conducted over the internet, mobile phones, etc. are vague. With
numerous cross border transactions also being conducted over the internet, specific law guarding
the Indian customers and Indian businesses are essential and Indian laws are gravely insufficient
on this issue.

Section (11) an electronic record shall be attributed to the originator—

(a) if it was sent by the originator himself;

(b) by a person who had the authority to act on behalf of the originator in respect of that
electronic record; or

(c) by an information system programmed by or on behalf of the originator to operate

automatically.

Section (12) Acknowledgement of receipt-

(1) Where the originator has not agreed with the addressee that the acknowledgment of receipt of
electronic record be given in a particular form or by a particular method, an acknowledgment
may be given by—

(a) any communication by the addressee, automated or otherwise; or

(b) any conduct of the addressee, sufficient to indicate to the originator that the electronic
record has been received.

(2) Where the originator has stipulated that the electronic record shall be binding only on receipt
of an acknowledgment of such electronic record by him, then unless acknowledgment has been
so received, the electronic record shall be deemed to have been never sent by the originator.

(3) Where the originator has not stipulated that the electronic record shall be binding only on
receipt of such acknowledgment, and the acknowledgment has not been received by the
originator within the time specified or agreed or, if no time has been specified or agreed to within
a reasonable time, then the originator may give notice to the addressee stating that no
acknowledgment has been received by him and specifying a reasonable time by which the
acknowledgment must be received by him and if no acknowledgment is received within the
aforesaid time limit he may after giving notice to the addressee, treat the electronic record as
though it has never been sent.

Section (13) Time and place of dispatch and receipt of electronic record.-

(1) Save as otherwise agreed to between the originator and the addressee, the dispatch of an
electronic record occurs when it enters a computer resource outside the control of the originator.
(2) Save as otherwise agreed between the originator and the addressee, the time of receipt of an
electronic record shall be determined as follows, namely :—

(a) if the addressee has designated a computer resource for the purpose of receiving
electronic records,—

(i) Receipt occurs at the time when the electronic, record enters the designated
Computer resource; or

(ii) If the electronic record is sent to a computer resource of the addressee that is
not the designated computer resource, receipt occurs at the time when the
electronic record is retrieved by the addressee;

(b) If the addressee has not designated a computer resource along with specified timings,
if any, receipt occurs when the electronic record enters the computer resource of the
addressee.

(3) Save as otherwise agreed to between the originator and the addressee, an electronic record is
deemed to be dispatched at the place where the originator has his place of business, and is
deemed to be received at the place where the addressee has his place of business.

(4) The provisions of sub-section (2) shall apply notwithstanding that the place where the
computer resource is located may be different from the place where the electronic record is
deemed to have been received under sub-section (3).

(5) For the purposes of this section, —

(a) If the originator or the addressee has more than one place of business, the principal
place of business, shall be the place of business;

(b) If the originator or the addressee does not have a place of business, his usual place of
residence shall be deemed to be the place of business;

(c) “usual place of residence”, in relation to a body corporate, means the place where it is
registered.
 UNICITRAL MODEL AND E COMMERCE

UNCITRAL Model Law on Electronic Commerce (MLEC), 1996

The Model Law was adopted in 1996 to facilitate the use of modern e- means of communication
and storage of information, such as electronic data interchange (EDI), electronic mail and
telecopy. Its main objective was to bring uniformity in national laws relating to e-commerce. It
has granted legal recognitions to data message and digital signature. It has encouraged national
legislators to adopt a set of internationally acceptable rules for validity of electronic commerce
by providing equal treatment to paper-based and electronic information. Significantly, such equal
treatment is essential for enabling the use of paperless communication, thus fostering efficiency
in international trade.

It is commendable to note that The MLEC was the first legislative text which adopted the
fundamental principles of non-discrimination, technological neutrality and functional
equivalence. In order to ensure that a document would not be denied legal effect, validity or
enforceability solely on the grounds that it is in electronic form it has laid down the principle of
non-discrimination. The principle of technological neutrality involves the adoption of provisions
that are neutral with respect to technology used. The principle of functional equivalence makes
electronic communications equivalent to paper-based communications.

This Law has been divided into two parts i.e., part I dealing with E-Commerce in General
consisting of 3 Chapters and part II consisting of Chapter 1 only. Significantly, Part I has
provided for the establishment of a functional equivalent for paper-based concepts such as
"writing", "signature" and "original".

Salient Features of MLEC

Important features of this Model Law are:

 First feature of this law is "electronic equivalence". Significantly, the Model Law does
not directly consider electronic communications valid but it provides that information or
documents will not be denied legal effect or enforceability solely because they are in
electronic format. Therefore, it conferred validity on e transaction indirectly.

 For achieving electronic equivalence, the model law provides various rules specifying
conditions which must be fulfilled for an electronic communication to constitute a legally
valid substitute for a conventional and paper-based communication. It provides that a
legal requirement to provide information or a document sent "in writing" is satisfied by
its electronic equivalent if it is in a form that can be subsequently accessed and used by
the recipient.

 Further, under the law electronic documents are treated as "original" documents if there is
a reliable assurance as to the integrity of the information and that the information is
capable of being displayed to the person to whom it is to be presented. Further, the
information must be complete and remain unaltered, apart from the addition of any
 endorsement and any change that arises in the normal course of communication, storage
and display. However, the question of reliability is to be determined in the light of all the
circumstances, including the purpose for which the document was created.

 It confers the validity on e-evidence as it provides that evidentiary rules do not deny the
admissibility of an electronic communication solely on the grounds that it is in electronic
form.

 Significantly, the law lays down the conditions for data retention. It provides that the
message must be retained in the format in which it was generated and any information
indicating origin, destination, date and time of the message is retained. Another important
condition for retention is that the information contained with the electronic message must
be accessible so as to be usable for subsequent reference.

UNCITRAL Model Law On Electronic Signatures (MLES), 2001

This Model Law was approved by the UNCITRAL and came into force in 2001. It’s main
objective was to grant legal recognition to e-signature and to bring uniformity in national
laws relating to e-signature. It consists of two Parts i.e., Part I consisting of 12 articles
and Part II, Guide for enactment of the MLES.

Salient Features of MLES

Model Law applies where electronic signatures are used in the commercial activities.
However, it does not override any rule of law intended for the protection of consumers.
Important features of this Model Law are:

 Significantly, the Model Law grants legal recognition to E-Signature as it provides that
where the law requires a signature of a person, then that requirement is met in relation to
a data message if an electronic signature is used provided that the signature is as reliable
as was appropriate for the purpose for which the data message was generated or
communicated. The reliability is determined in the light of all the circumstances,
including any relevant agreement.

 It defines electronic signature as "data in electronic form in, affixed to, or logically
associated with, a data message, which may be used to identify the signatory in relation
to the data message and indicate the signatory's approval of the information contained in
the data message." Significantly, two parties involved in data message are: Signatory i.e.
a person that holds signature creation data and acts either on its own behalf or on behalf
of the person it represents and relying party who may act on the basis of certificate or an
electronic signature.
  Further, an electronic signature is reliable provided it meets following four conditions:
the signature creation data are linked solely to the signatory; the signature creation data
was under the sole control of the signatory; any alteration of the electronic signature,
made after signing, is detectable; and where the purpose of the signature is to provide
assurance as to the integrity of the underlying information, any alteration of that
information must be detectable.

 It imposes duty on the signatories to use reasonable care to avoid unauthorized use of
their electronic signature. Therefore, where they become aware that the security of their
electronic signature has been compromised, they must notify any person that might be
affected without delay

Intellectual property rights are the legal rights that cover the privileges given to
individuals who are the owners and inventors of a work, and have created something
with their intellectual creativity. Individuals related to areas such as literature, music,
invention, etc., can be granted such rights, which can then be used in the business
practices by them.
The creator/inventor gets exclusive rights against any misuse or use of work without
his/her prior information. However, the rights are granted for a limited period of time to
maintain equilibrium.
The following list of activities which are covered by the intellectual property rights are
laid down by the World Intellectual Property Organization (WIPO) −

 Industrial designs
 Scientific discoveries
 Protection against unfair competition
 Literary, artistic, and scientific works
 Inventions in all fields of human endeavor
 Performances of performing artists, phonograms, and broadcasts
 Trademarks, service marks, commercial names, and designations
 All other rights resulting from intellectual activity in the industrial, scientific,
literary, or artistic fields

Types of Intellectual Property Rights

Intellectual Property Rights can be further classified into the following categories −

 Copyright
 Patent
 Patent
 Trade Secrets, etc.
Advantages of Intellectual Property Rights

Intellectual property rights are advantageous in the following ways −

 Provides exclusive rights to the creators or inventors.
 Encourages individuals to distribute and share information and data instead of keeping it
confidential.
 Provides legal defense and offers the creators the incentive of their work.
 Helps in social and financial development.

Intellectual Property Rights in India

To protect the intellectual property rights in the Indian territory, India has defined the formation
of constitutional, administrative and jurisdictive outline whether they imply the copyright,
patent, trademark, industrial designs, or any other parts of the intellectual property rights.
Back in the year 1999, the government passed an important legislation based on international
practices to safeguard the intellectual property rights. Let us have a glimpse of the same −
 The Patents (Amendment) Act, 1999, facilitates the establishment of the mail box
system for filing patents. It offers exclusive marketing rights for a time period of five
years.
 The Trade Marks Bill, 1999, replaced the Trade and Merchandise Marks Act, 1958
 The Copyright (Amendment) Act, 1999, was signed by the President of India.
 The sui generis legislation was approved and named as the Geographical Indications of
Goods (Registration and Protection) Bill, 1999.
 The Industrial Designs Bill, 1999, replaced the Designs Act, 1911.
 The Patents (Second Amendment) Bill, 1999, for further amending the Patents Act of
1970 in compliance with the TRIPS.

Intellectual Property in Cyber Space

Every new invention in the field of technology experiences a variety of threats. Internet is one
such threat, which has captured the physical marketplace and have converted it into a virtual
marketplace.
To safeguard the business interest, it is vital to create an effective property management and
protection mechanism keeping in mind the considerable amount of business and commerce
taking place in the Cyber Space.
Today it is critical for every business to develop an effective and collaborative IP management
mechanism and protection strategy. The ever-looming threats in the cybernetic world can thus
be monitored and confined.
Various approaches and legislations have been designed by the law-makers to up the ante in
delivering a secure configuration against such cyber-threats. However it is the duty of the
intellectual property right (IPR) owner to invalidate and reduce such mala fide acts of criminals
by taking proactive measures.
COPYRIGHT LAW UNDER CYBER

According to section 2(ffc) of the Copyright Act, a computer programme is a "set of

instructions expressed in words, codes, schemes or in any other form, including a machine
readable medium, capable of causing a computer to perform a particular task or achieve a
particular results". Computer software is "computer programme " within the meaning of the
Copyright Act.
This computer software is also subject matter of copyright protection under the Copyright Act.
Computer programmes are included in the definition of literary work under the Copyright Act.
Owner of the computer software possesses with various right including the right to grant
software licenses. Software licenses can be of various types.
Copyright in a work shall be deemed to be infringed
a. When any person, without a license granted by the owner of the copyright or the
Registrar of copyrights under this Act, or in contravention of the conditions of a license so
granted or of any condition imposed by a competent authority under this Act
• does anything, the exclusive right to do which is by this Act conferred upon the owner of
the copyright;
• permits for profit any place to be used for the communication of the work to the public
where such communication constitutes an infringement of copyright in the work, unless he was
not aware and had no reasonable ground for believing that such communication to the public
would be an infringement of copyright or
b. When any person
• Makes or sale or hire, or sells or lets for hire, or by way of trade displays or offers for
sale or hire or
• Distributes either for the purpose of trade or to such an extent as to affect prejudicially
the owner of the copyright; or
• By way of trade exhibits in public; or
• Imports into India.
VARIOUS FORMS OF INFRINGEMENT OF TRADEMARK THROUGH
CYBERSPACE

1.Cyber squatting
Various types of domain names disputes come for consideration before the courts all over
world. One of the most serious kinds of disputes has been about ‘Cybersquatting’ which
involves the use of a domain name by a person with neither registration nor any inherent rights
to the name. Trademarks and domain names being similar have been exploited by some people
who register trademarks of others as domain names and sell those domain names back to the
trademarks owners or third parties at a high profit. This is known as ‘cybersquatting’ which
means some person sitting on the property of another person. The practice of ‘cybersquatting’ is
abusive whereby one entity registers a domain name that includes the name or the trademarks of
another. This practice shows the importance of the role played by domain names in establishing
online identity.
2.Meta tags
Meta tag is an element of web pages that is also known as Meta elements. Meta tags provide
information about page descriptions, key words and other relevant data. Originally, Meta tags
were used in search engines to define what the page was about when the internet was in the
early stages, Meta tags were used to help the place web pages in the correct categories.
3.Software Piracy
It is also covered under sections of Indian Copyright Act. This is the illegal use of software by
copying and distributing them among organizations, groups etc for business personal use.

CHALLENGES FOR INTELLECTUAL PROPERTY IN CYBERSPACE

Although a good proportion of the information on the Web is in the public domain, that is,
freely available to use and copy, an increasingly significant amount is protected as intellectual
property. Many .com companies took the approach that it was initially more important to make
their products available freely, and thereby establish a market presence, and to address issues of
revenue and profit at a later stage.
The enthusiasm excited by the availability of so much online information, easily accessible
through browsing and hyper linking, contributed to a general expectation that this information
was free and its use uncontrolled. So, a key challenge is the expectation among many users that
information and intellectual property sourced or downloaded from the Internet should be free of
charge. Right owner such as film and music creators, software developers, authors and
publishers, are now exploring ways in which to make their products available online, while
protecting their rights and recouping their investment.
To some extent, the uptake of fee-based intellectual property services is dependent on the
efficient management of these rights, as well as the availability of workable and secure methods
of micro payments that would enable pay-per-unit purchases, and the building of consumer
confidence in online payment security, privacy and consumer protection. So, another challenge
is to make intellectual property rights holders feel secure and sure that they can protect their
property from piracy and control its use, before they will be willing to make it available online.
Peer-to-peer (P2P) networks enable millions of users to upload and share their music and film
files via the Internet, often infringing copyright in the works they trade. Difficult issues are
raised by the vast availability of intellectual property on the Internet, the ease of copying and
distribution of copies and the relative anonymity afforded to these digital transactions. Many
companies that continue to operate in the online environment have developed other business
models, often relying on advertising revenue or value-added service charges to finance their free
services and information. Surveys have shown that consumers are gradually becoming more
willing to pay for online content.

LANDMARK JUDGMENTS ON TRADEMARK AND DOMAIN NAMES

1) Yahoo! Inc. v. Akash Arora and another, 1999 Arb. L. R. 620 (Delhi High Court)
The first case in India with regard to cyber squatting was Yahoo Inc. v. Aakash Arora & Anr.,
where the defendant launched a website nearly identical to the plaintiff’s renowned website and
also provided similar services. Here the court ruled in favour of trademark rights of U.S. based
Yahoo. Inc (the Plaintiff) and against the defendant, that had registered itself as
YahooIndia.com. The Court observed, “It was an effort to trade on the fame of yahoo’s
trademark. A domain name registrant does not obtain any legal right to use that particular
domain name simply because he has registered the domain name, he could still be liable for
trademark infringement.”
2) Tata Sons Ltd & Anr. v. Arno Palmen & Anr
The Delhi High Court, in its recent judgment dealt with trademark protection for domain names.
The suit was instituted by the plaintiffs against the defendants seeking permanent injunction
against the defendants from using the trademark/domain name “WWW.TATAINFOTECH.IN”
or any other mark/domain name which is identical with or deceptively similar to the plaintiffs’
trademarks – “TATA” and “TATA INFOTECH”.
 UNIT 4

INTERNATIONAL PRESPECTIVE

BUDAPEST CONVENTION ON CYBER CRIME

The Convention on Cybercrime, also known as the Budapest Convention on Cybercrime or the
Budapest Convention, is the first international treaty seeking to address Internet and computer
crime (cybercrime)by harmonizing national laws, improving investigative techniques, and
increasing cooperation among nations. It was drawn up by the Council of Europe in Strasbourg,
France, with the active participation of the Council of Europe's observer states Canada, Japan,
Philippines, South Africa and the United States.

The Convention and its Explanatory Report was adopted by the Committee of Ministers of the
Council of Europe at its 109th Session on 8 November 2001. It was opened for signature in
Budapest, on 23 November 2001 and it entered into force on 1 July 2004. As of September 2019,
64 states have ratified the convention, while a further four states had signed the convention but
not ratified it.

Since it entered into force, important countries like Brazil and India have declined to adopt the
Convention on the grounds that they did not participate in its drafting. Russia opposes the
Convention, stating that adoption would violate Russian sovereignty, and has usually refused to
cooperate in law enforcement investigations relating to cybercrime. It is the first multilateral
legally binding instrument to regulate cybercrime. Since 2018, India has been reconsidering its
stand on the Convention after a surge in cybercrime, though concerns about sharing data with
foreign agencies remain.

Objectives

The Convention is the first international treaty on crimes committed via the Internet and other
computer networks, dealing particularly with infringements of copyright, computer-related fraud,
child pornography, hate crimes, and violations of network security.[8] It also contains a series of
powers and procedures such as the search of computer networks and lawful interception.

Its main objective, set out in the preamble, is to pursue a common criminal policy aimed at the
protection of society against cybercrime, especially by adopting appropriate legislation and
fostering international cooperation.

The Convention aims principally at:

 Harmonizing the domestic criminal substantive law elements of offences and connected
provisions in the area of cyber-crime
  Providing for domestic criminal procedural law powers necessary for the investigation
and prosecution of such offences as well as other offences committed by means of a
computer system or evidence in relation to which is in electronic form
 Setting up a fast and effective regime of international cooperation

The following offences are defined by the Convention: illegal access, illegal interception, data
interference, system interference, misuse of devices, computer-related forgery, computer-related
fraud, offences related to child pornography, and offences related to copyright and neighboring
rights.

It also sets out such procedural law issues as expedited preservation of stored data, expedited
preservation and partial disclosure of traffic data, production order, search and seizure of
computer data, real-time collection of traffic data, and interception of content data. In addition,
the Convention contains a provision on a specific type of transborder access to stored computer
data which does not require mutual assistance (with consent or where publicly available) and
provides for the setting up of a 24/7 network for ensuring speedy assistance among the Signatory
Parties.

Further, as conditions and safeguards, the Convention requires the provision for adequate
protection of human rights and liberties, including rights arising pursuant to obligations under
European Convention on Human Rights, International Covenant on Civil and Political Rights,
and other applicable international human rights instruments, and shall incorporate the principle
of proportionality.

OFFENCES UNDER THE CONVENTION

The Budapest Convention broadly attempts to cover crimes of illegal access, interference and
interception of data and system networks, and the criminal misuse of devices. Additionally,
offences perpetrated by means of computer systems such as computer-related fraud, production,
distribution and transmission of child pornography and copyright offences are addressed by
provisions of the Convention.

The substantive offences under the Convention can broadly be classified into “(1) offences
against the confidentiality, integrity and availability of computer data and systems; (2) computer-
related offences; (3) content-related offences; and (4) criminal copyright infringement.”

The Additional Protocol makes the act of using computer networks to publish xenophobic and
racist propaganda, a punishable offence. However, the full range of cyber crimes are not covered
under the Budapest Convention. These include cybercrimes such as identity theft, sexual
grooming of children and unsolicited spam and emails
 PROVISIONS OF THE CONVENTION

The treaty functions on a mutual information sharing and formal assistance model in order to
facilitate better law enforcement and lays down procedure to seek and receive such assistance.
Article 23 of the Convention outlines the general principles under which international
cooperation can be sought, as follows:

“Article 23 – General principles relating to international co-operation

The Parties shall co-operate with each other, in accordance with the provisions of this chapter,
and through the application of relevant international instruments on international cooperation in
criminal matters, arrangements agreed on the basis of uniform or reciprocal legislation, and
domestic laws, to the widest extent possible for the purposes of investigations or proceedings
concerning criminal offences related to computer systems and data, or for the collection of
evidence in electronic form of a criminal offence.”

It is clear then that assistance facilitated by the Convention relies on pre-existing cooperative
agreements between the parties. Thus, as also stated in Article 39 of the Convention, the
provisions only serve to supplement multilateral and bilateral treaties already effective between
parties. In addition, mutual legal assistance (MLA) between parties where no such mutual
arrangements exists, can be facilitated through procedures laid down under Article 27.