The Legal Aspect

The emerging new technology of

e-commerce is raking up a number of legal issues and calls for amendment of the Copyright

and Intellactual Property Rights (IPR) Laws. The problem, however, arises from the fact

that, while physical trade can effectively be taxed and the transactions protected

according to the existing legal framework, e-commerce falls outside the jurisdiction of

the existing laws. Hence, new problems are likely to arise in the area of cyberspace.

E-commerce can occur in four

environments, namely, business to business, business to government, business to consumer,

and consumer to consumer. The nature of the transactions changes dramatically in each of

the environments. Whatever be the environment, security of the channel is crucial to the

development of e-commerce in the country. The future of e-commerce depends on the security

in transaction. One of the main reasons that the technology is not catching up in India is

the fact that people find it hard to trust. In a recently held conference on

"Enabling E-commerce in India" in the capital, Naoshi Shima, VP, NEC Corp.,

said, "Nobody can trust e-commerce until companies in this business realize the

importance of building consumer confidence. This is very important since e-commerce is

mainly a private activity." Implementation of the legal aspect would lead to an

increase in security amongst the users.

The most reliable authentication

technique for general messaging is public key cryptography, that is, encryption and

decryption techniques. It involves the use of two keys—a public key and a private

key, both of which are mathematically linked. One key is used for encryption and the

corresponding key for decryption. Each user has a pair of keys of which the private key is

kept secret and the public key is open to all. However, cryptography may hamper national

security, as detection of espionage activities by government becomes more difficult. As of

now, there is no law regulating encryption. Permission is required from DoT to send

encrypted messages.

In this regard, digital signature

becomes important in promoting the cause of e-commerce since legal sanction is essential

for building confidence. Countries like Malaysia, Germany, and several states in the US

have enacted specific laws to deal with digital signature. Dr KK Bajaj of the NIC has

emphasized the need to legalize digital signature. He says, "Even if you don’t

know each other, you should be able to conduct business on the Net and that is possible

only through digital signature." India has carried out an international survey of

policies and laws relating to digital signature.

E-commerce has also opened up

entirely different dimensions affecting Copyright and related issues of IPRs. For

instance, different publishers in various countries have the right to sell a particular

book. A publisher starts selling the book from the Net. Now this would be an infringement

of the Copyright Law since selling the book to the people outside his country goes against

it. Similar problems are emerging because of the lack of specific laws addressing these

issues on the Net.

Another problem that is emerging

is that of cybersquatting related to the domain name. Cybersquatters are known to hijack a

company’s name and use it as their domain name. Indian courts have said that domain

names are similar to trademarks. Recently the trademark ‘Tanishq’, registered by

Titan Industries, was hijacked by a cybersquatter as tanishq.com.

Unless India makes quick changes

in its legal framework to accommodate e-commerce, it might miss on the global digital

economy. That it is vital to enter the global e-commerce scenario is evident from a few

examples. A new industry report projects that global e-commerce revenues will reach $95

billion in 1999 and will exceed $1.3 trillion by 2003. In 1996, Amazon, the first Internet

bookstore, recorded sales of less than $16 million. In 1997, it sold $148 million worth of

books to the Internet customers. People are not just buying books but also electronic

goods from the Net. For instance, in January 1997, Dell Computers was selling less than $1

million worth of computers per day over the Internet. The company reported reaching daily

sales of $6 million several times during the December 1997 holiday period. All the above

examples signify that we cannot afford to miss the e-commerce bus. The government should

get its act together and pass laws that would legalize e-commerce. Legal factor is crucial

in the development and success of this emerging technology. Parties must be able to use

authentication techniques to ensure that the business conducted over the networks is

secure and valid before the court of law. And, India needs to develop the laws fast so

that this opportunity is not lost.