Protecting Your Intellectual Property in eCommerce

by Rachel Scava | Sep 23, 2020 | eCommerce Accounting

Innovation drives the free-market economy. As you execute your unique business idea or launch a new product, overwhelming excitement to let the world know what you’ve got abounds! While wanting to shout from the rooftops is okay, there’s another crucial responsibility on your part: You’ll need to effectively protect what you’ve worked so hard to create. In other words, you will have to secure the intellectual property (IP) rights for your brand.

While the rise of eCommerce has provided our clients with more channels than ever to sell products and services, there are also more opportunities for individuals to copy your designs, or steal your trademarks. Therefore, protecting IP becomes especially important when running an eCommerce business.

In this guide, you’ll acquire some insightful tips to protect your intellectual property in eCommerce. But before that, it’s important to understand what intellectual property is and how it applies to the eCommerce industry.

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What is Intellectual Property (IP)?

While there’s no universally accepted definition of intellectual property, the World Intellectual Property Organization (WIPO) classifies IP into two categories: industrial property and copyrights. Industrial property helps protect trademarks, inventions, commercial names, etc., whereas copyright aims to safeguard creative efforts such as literary or artworks.

IP covers both tangible and intangible goods. Examples of tangible goods include books, art, films, etc., while intangible goods include processes and ideas. Apart from logos and slogans associated with a brand, brand personas, voices, and likenesses also come under the IP umbrella.

If at any point in time, you discover that another entity is selling any of your intellectual property, you’ll have grounds for legal action. Your major challenge, however, is to prove that the IP rights belong to you and that the copy is close enough to be deemed as IP theft.

Your legal right to the IP should be more clear-cut if you protect your work through all three components of IP, including copyrights, trademarks, and patents. Let’s take a look at each of them individually:

Copyright: Protects unique, tangible works of art produced by a person. It can include books, films, poetry, software, paintings, and songs. As a copyright holder, you have exclusive rights to reproduce the piece, publicly display, perform, distribute, or sell the work, and produce derivative works. You don’t need a registration to be a copyright holder. Yet, it’s advisable to officially register so that you can exercise your legal rights for protection against infringement.

Trademarks: These are brand names, logos, and slogans that make a business recognizable and distinguish it from others. Registration is not necessary for a trademark to exist, but again, you should certainly register to set up legal ownership as well as the right to exclusive use. You need to keep filing the necessary paperwork to ensure that the trademark remains valid, and the brand name or logo that you continue to use is associated with your business. They will expire if you don’t fulfill this critical obligation.

Patents: These help to protect your rights to a process, machinery, or an invention, preventing other entities from producing or selling the invention or adopting the process in the country in which the patent is held. There are different types of patents, and depending on the type issued, they can be held between 15 and 20 years.

Protection of Your Brand on an International Scale

If you’re running a growing eCommerce business, there might come a time when your mark becomes well-known and registered in the US. To protect sellers’ intellectual property, the International Trade Administration (ITA) of the US Department of Commerce established a Privacy Shield Framework.

Even if you have no current plans to take your business global, you should certainly know where you might need protection and file for rights in those countries right away. When you begin trading internationally, you should have protection not only in countries where you plan to do business but also in countries that are known sources of counterfeit items.

Even though there aren’t any deadlines to register a mark, waiting too long can provide others an opportunity to register the mark before you. When that happens, there may be no way to recover your mark, so it’s advised to register or file promptly.

US Trademark Law

A trademark is a word, name, symbol, slogan, or a combination of these that distinguishes and identifies the source of products that represent an index of quality. For businesses selling services, the same function is served by Service Marks.

While some countries don’t protect service marks, the US offers protection of a mark if it has become popular through domestic or international use. Registering of a mark is not a necessary requirement for the protection of a mark in the US, but in most countries, trademark rights can only be obtained through registration. Several countries even require local use of the registered mark for the registration to stay valid.

The rights issued by a US trademark registration, patent, copyright, or mask work registration extend only across the US. Other countries may provide greater or lesser rights than those provided under US law.

Keep in mind that no international trademark, copyright, or patent exists. No guaranteed worldwide protection of the intellectual property is available, and copyright protection majorly depends on national laws. Yet, certain international agreements and treaties define certain minimum standards for enforcement and protection on a global level.

Tips to Protect Your Intellectual Property in eCommerce

While trademarks, copyrights, patents can offer some security, they don’t provide complete and/or guaranteed protection. You might still come across emerging copies, resulting in unauthorized exploitation of your IP, regulatory penalties, and financial liability. Here are some tips to protect your intellectual property in eCommerce:

Secure Your Website Content

The content on your website is valuable to build and retain a sustainable customer base for your business. One of the top tips to protect your intellectual property in eCommerce is to safeguard the content and information on your website as well as your social media pages from unauthorized commercial exploitation by someone.

Use symbols such as ®, ©, and/or ™ in connection with noticeable placements of copyrights and trademarks as well as register IP with the applicable authorities to attain ownership and receive better rights.

On your website, issue conditions and notices for any display or use of your IP by third parties. To ensure that no confidential proprietary information is mistakenly disclosed, be sure to review publishable material prior to publishing or display.

Carefully Set Up Written Agreements

When working with online service providers, such as contractors providing web hosting, design, digital marketing, and other services, carefully negotiate all written contracts. Pay particular attention to provisions and clauses associated with IP ownership, confidentiality, and information security, SEO practices, and third-party rights clearance.

The Terms of Use

When formulating the online Terms of Use, be sure to utilize the appropriate protective provisions. To mitigate legal risks, explicitly post properly customized notices on websites and social media profiles. Here are some aspects to cover in these notices:

  • Forbid the users from posting content regarded as ‘inappropriate’;
  • Disclaim responsibility for third-party ads and user-generated content;
  • Limit your business’s liability for any harm to users caused by a website or a webpage use;
  • Reserve the necessary rights to maintaining the security of the website or a webpage.

In addition, the Communications Decency Act of 1996 provides safe harbor protection to interactive computing service providers against civil liability for defamation and other claims when those providers are not content providers. You’ll need to set up a strict policy of acceptable content and implement a takedown procedure to remove offensive or harmful content posted by third party users.

Avoid Copyright and Trademark Infringement

Copyright infringement in terms of the use, reproduction, display, and distribution of content on the website and social media remains one of the biggest concerns for eCommerce firms due to the ease with which material can be acquired and re-posted on the internet.

For protection from copyright infringement, seek immunity from the Digital Millennium Copyright Act of 1998 (DMCA) that issued valuable safe harbors for internet service providers. You’ll not only need to familiarize yourself with the requirements of these harbors but also take certain steps to achieve immunity from claims of copyright infringement.

However, when it comes to avoiding trademark infringement, no safe harbors against infringement claims are available. You need to stay cautious to not misuse third-party marks. What you can do is demonstrate an effort in good faith to avoid unauthorized use by committing to a takedown policy and following it. You may also obtain consent for using marks.

Also, keep in mind that actions taken by your employees can also expose your business to liability in specific circumstances. That’s why it’s equally important to formulate guidelines outlining employees’ authorized use of the company’s social media business profiles, websites, computer equipment, and publishable data or content.

Ensure Information Security

eCommerce is highly data-intensive and small pieces of information can lead to massive changes and results. Whether it’s about the industry or your customers, data can make or break the game for your eCommerce business. This is particularly important when laws associated with privacy policies are considered.

To protect stored or access sensitive data linked to your eCommerce website, you’ll need to implement an information security program that aligns with the standard recognized by the federal law and other industry-related law requirements. All your data handling procedures must also comply with the practices outlined in a website privacy policy.

Consider the Jurisdiction of the Areas You’re Selling to

The internet has turned the world into a global village where you can transmit tons of data and information to other countries with a single click. When your trading activities stretch beyond the national boundaries or even out of your state, your business becomes subject to the laws and regulations of those countries or states.

These normally include rules for intellectual property rights and apply to eCommerce too. Clarify the governing law, forum, or venue to refine the scope of jurisdiction and limit your online business activities to only those areas in which your eCommerce business is prepared to adhere to the applicable regulations and laws.

Carry Insurance

Among the most valuable tips to protect your intellectual property in eCommerce is to consider insurance. This should also protect you from IP infringement claims against you, information security breaches, and specific website-related activities including banner ads, use of meta-tags, hyperlinking and framing.

Final Word

Almost every business is now using websites and social media platforms to market their brands, sell products and services, reach and communicate with customers and other businesses, and carry out business transactions.

While eCommerce businesses face more or less the same legal issues that traditional brick-and-mortar firms are confronted with, they must also address other challenges that are unique to running businesses in the electronic environment. One such challenge has to do with securing intellectual property rights, something that’s more complicated in the digital business landscape.

The above-explained tips to protect your intellectual property in eCommerce should be a great resource to ensure complete protection. Yet, most of these guidelines will only help to protect your business within the country you’re located in.

Even though Google search engine regulations and international agreements can offer some security, complete protection is not guaranteed on an international scale. Nevertheless, robust global protection is expected as we head into the future!

At Fully Accountable, we take pleasure in guiding you through the best eCommerce practices, in addition to helping you run your back office like a profit center. You work hard to protect your intellectual property, and we work hard to increase your profit margin! Schedule a call with one of our digital experts to see how a Fractional CFO can drastically increase your ability to scale and grow your business, with no strings attached.

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Rachel Scava is the COO of Fully Accountable - a back office solution for outsourced accounting and finance services. Fully Accountable provides full back office services for eCommerce and digital based companies that are looking to grow and scale. Rachel has dedicated her career to helping entrepreneurs and owners reach their highest potential through human ROI. Having discovered that one of the most challenging things for any business is building a high performing team, Rachel has developed processes and procedures to help companies build, train and measure team members that become major assets to the organization. Rachel believes in the theory of Super Employee’s where you can turn any ordinary team member into an extraordinary one. Her passion is people and yours can be too!


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