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Electronic Commerce: Legal Issues.
Electronic commerce is one of the newest and fastest developing business environments. One of the advantages of online business, as outlined by Reinsch (p167, 2005) is the ability for businesses too access larger markets. One location can serve the world with fast customer relations, less transaction and manpower costs, smaller start up costs, ease of reinvention and upgrade, greater consumer access and low barriers to entry.
While these advantages attract businesses and consumers alike, there are a number of disadvantages. One of these disadvantages includes the legal environment surrounding e-commerce.
Reinsch argues that the cyber legal environment is an unknown, and can only be known once a law suit develops (p167, 2005). This is due to the fact that businesses on the internet are subject not only to the laws from their country of origin, but also potentially subject to many international laws.
The kinds of legal barriers cyberspace has delivered exist primarily in areas of intellectual property, security (including consumer protection), copyright, free speech, gambling, privacy and taxation (McGraw Hill, 2003).
Perhaps the most relevant legal landmine on the Internet are the rights to intellectual property. Mykytyn and Mykytyn in The importance of the law in e-commerce strategies (2005) include copyright, trademark, defamation and patents as part of the intellectual property subgroups.
Mykytyn notes that one of the biggest shifts towards protecting intellectual property has been the ability to place patent protection on software (2005). One of the landmark cases on this is in the U.S, where Amazon.com sued Barnesandnoble.com. Barnesandnoble.com was accused of infringing on Amazon.com's "1-click ordering system" patent awarded in 1999, and Amazon.com now has the right to allow other companies use the system if they receive royalties.
Copyright is also another major issue for e-commerce. Software, articles and even advertising on websites for instance can be construed as a copyright infringement, if the appropriate permission and authority is not granted. One of the biggest issues in internet copyright laws at the moment is the downloading of web content, such as music files and movies.
The internet has no physical borders and is always changing. Furthermore, a clear advantage has risen from the lack of regulation, that being the boom in economy, particularly in the U.S (McGraw-Hill, p 260, 2003). There are fears if strict regulation was placed on the internet, and was successful, there would be significant economic losses.
From these barriers and possible legal landmines, another area has developed. There is a sense of uncertainty and hesitation to create an internet start-up, because of the many possible legal nightmares. In his article Potential of custom in overcoming legal uncertainty in global electronic commerce, Polanski (2002, p1) addresses these issues.
Polanski argues that the current model for addressing e-commerce restricts rather than encourages electronic commerce. The current attitude towards e-commerce legal issues provides too many possible outcomes, including possible negative outcomes. This is because the laws are uncertain, untested and hard to apply (2002, p1).
Anonymous (2003) “MNEs, globalisation and digital economy: Legal and economic aspects�?, Managerial Law, vol.45, Iss.112, p 5.
Mykytyn, K., and Mykytyn, P., (2005) “The importance of the law for e-commerce strategies�?, Information Systems Management, vol.22, p 50-57.
Polanksi P., and Johnston, R., (2002) “Potentioal of custom in overcoming legal uncertainty in global electronic commerce�? JITTA: Journal of Information Technology Theory and Application, vol.4, Iss. 2, pg 1 – 17.
Queensland University of Technology, School of International Business (2004) Introduction to e-business Australia: McGraw-Hill & QUT Custom Publication, ISBN 7777772570.
Reinsch, R (2005) “E-commerce: Managing the Legal Risks�? Managerial Law, vol.47, Iss.112, p 167.
--SophieUhlhorn 16:31, 24 Oct 2005 (EST)
