Copyright Law and the Web, Part 2: Who Are the IP Police?

Part 1 of this two-part feature discusses the oftentimes confusing legal landscape of the Web's intersection with copyright laws. Part 2 looks at who polices the Web to spot and stop incidents of intellectual property abuse.

The Internet has made it much simpler for companies to reach potential customers. However, this wide open channel has come at a cost. Companies now expose more of their assets to outsiders who can misuse them. While the law helps -- at least to a degree -- companies increasingly find they need to take steps to monitor and protect their digital assets.

Daily, corporations put time, money, and effort into differentiating themselves from competitors. Once that work is done, they want to make sure that knock-off businesses do not arise and render all of their hard work meaningless by ripping off designs, logos and trademarks.

Copyrighting products and ideas helps them reach that goal. Registering a copyright or trademark gives businesses the ability to receive monetary compensation, and even potentially recover attorneys' fees and court costs, should an entity violate their intellectual property.

Who Benefits From Copyright Laws?

Currently, the Digital Millennium Copyright Act protects corporate digital assets. The goal of laws like the DMCA is to protect those who create items that may have commercial value. Theoretically, because creators are given exclusive rights to their works and a claim on whatever profit arises from them, they're more likely to create new works and be willing to share them with others. The public benefits because there is a wide dissemination of different works.

But copyright laws have at least one big catch. Though there are some criminal and international trade sanctions for copyright infringement that can be brought about by the U.S. government in certain circumstances, enforcing a copyright is most typically the responsibility of the copyright owners themselves.

"Laws do not prevent works from being replicated; they only provide the copyright owners with the option to take legal action should such transgressions take place," Mark Rasch, managing director at FTI Consulting, told TechNewsWorld.

Consequently, companies need to decide how they will guard their corporate assets, and in most cases, legal recourse is their last option. The process begins with an awareness of a possible infringement. A corporation then has its legal team verify that an infringement has occurred. They usually then fire off a notice to the transgressor and threaten legal action. Sometimes a violation may be inadvertent, and the offender rectifies the problem by reaching a suitable reuse agreement with the copyright holder or by removing the questionable material.

When Threats Don't Work

The more difficult problems come from willing transgressors, and those problems manifest themselves in various forms. One is the sale of counterfeit goods. Trademark violators have established bogus Web sites advertising name brands for a fraction of their typical costs, and these businesses are booming. Online protection company MarkMonitor estimates about US$119 billion in knockoff goods were sold on the Web in 2007, up from $84 billion in 2006.

Buyers of these goods are sometimes aware that they're fake and simply want to pay a low price for what at first glance appears to be a designer product. Others may think they're simply getting a great deal . In some cases, unscrupulous online sellers will charge near the price that the true product commands and instead ship a cheap knockoff. Regardless of the circumstances, in they eyes of brand owners, the transactions amount to a third party capitalizing on intellectual property to which he or she holds no rights.

These items are being sold via a wide range of channels, from city street corners to online auction houses. Reputable e-commerce and online auction firms generally cooperate with companies who feel their sites are being used to push bogus merchandise. Most take measures against such behavior, including banning transgressors from doing further business with them.

Corporations often push these sites to be more proactive in weeding out the counterfeiters themselves. This difference of opinion was at the heart of a lawsuit that Tiffany brought against eBay (Nasdaq: EBAY) in 2004. Last July, U.S. District Judge Richard J. Sullivan ruled that eBay is not liable for trademark infringements "based solely on their generalized knowledge that trademark infringement might be occurring on their Web sites." Tiffany has appealed that ruling, but for now, it appears copyright- and trademark-owning corporations will have to hunt down counterfeiting goods themselves.

However, that depends somewhat on where the trade is taking place. Prior to Sullivan's July decision, a court in France came to a very different conclusion regarding counterfeit goods on eBay.

Who Can Stop Phishers?

Phishing is another nefarious activity that often runs afoul of copyright law. Here, scammers infringe on company copyrights (sending bogus e-mail messages with trademarked logos and building fake Web sites) hoping that customers feel safe enough to hand over their personal information, such as credit card numbers, bank account data, or Social Security numbers. This information is then used to perpetrate identity theft.

While companies are not directly impacted by the crime, they can have a detrimental effect on a company's image, especially if the company fails to address the issue. "Even though customers understand that the phishing notes are fake, they think that the company being phished has a responsibility to try and stop them," Michael Barrett, chief information security officer at PayPal, told TechNewsWorld.

That's easier said than done. The Internet's anonymity, its ever-expanding breadth, and the influx of cyber criminals -- ranging from rank amateurs to organized crime syndicates -- have made it difficult for corporations to safeguard their brands. "So many new Web sites emerge daily that companies have trouble tracking use of their brands in cyberspace," Margie Milam, Vice President, General Counsel at MarkMonitor, told TechNewsWorld.

Experts in Scouring the Web

Because policing has become so complex, corporations have turned to third party experts, such as iCopyright and MarkMonitor. These companies provide services like online trademark protection, antiphishing solutions, and online channel protection. In addition, companies are beefing up their IT staffs with individuals whose job is to scour the Web and protect the company's assets.

The challenges of protecting copyrighted materials are expected to grow in the coming years, and this change may lead corporations to ask whether there's a better way to protect corporate assets.

"I am betting heavily on the premise that all digital content will be instantly licensable with a few clicks and that most of those licenses will be free, but will ensure that the creator/publisher can monetize its investment via ads, branding, user intelligence, link-backs, and other mutual exchanges," Mike O'Donnell, President and CEO iCopyright, told TechNewsWorld. "Eventually, copyright compliance will be immediate, and copyright problems as we know them will not exist."

Copyright Law and the Web, Part 1: A Hazy Intersection