Intellectual property: The growing factor for virtual businesses

To reduce the amount of counterfeiting in e-businesses, business owners must protect themselves from Intellectual property infringement

Gone are the days when going to “work” or running a “business” meant getting all bedecked, travelling to a building and spending the whole day there getting the job done. In today’s world, not all the people you see working from the table next to yours at a coffee shop are freelancers or self-employed and all of them thank the concept of “Virtual business” for this newfound sense of work freedom.

The Wikipedia definition of the term goes as follows:

“A virtual business employs electronic means to transact business as opposed to a traditional brick and mortar business that relies on face-to-face transactions with physical documents and physical currency or credit.”

The onset of the Internet opened the floodgates for virtual business. Almost 10 years ago, any company outsourcing its work to people working in another city could be called “Virtual” while the recent buzz regarding the term is all about allowing some employees to “work remotely”, and while the meaning of the phrase has changed dramatically over the years, the growth factor and adaption of its meaning has been nothing but positive.

Intellectual property: The growth factor

Currently, e-commerce is one of the biggest profit-making businesses in India. Some of the popular e-business companies in India today are Amazon, Flipkart, Myntra, Home Shop 18, OLX, etc. All of these e-businesses work on certain business models in which their online presence – website and app, is of paramount importance.  But the question still exists as to why these electronic businesses need Intellectual property protection?

While the growth of Internet has served as the biggest boon for the domain, it also serves as a bane in disguise, as with the advancement in information technology, providing protection has only become more and more convoluted with all the information present online and just a click away from being monkeyed. Intellectual Property laws come into play to prevent this unrestrained copying and to protect the distribution of any material online without getting it licensed from the original owner.

One of the most intelligent uses of Intellectual Property Rights for business growth has been exhibited by the world’s leading US-based e-business company which sets forth an example for all the e-businesses out there as to how IPR can fuel their growth. The one thing that the owners of Amazon realized differently was that the evident increase in the number of internet users needs a solution for their website to cater to such traffic efficiently and tool(s) need to be designed for it. Amazon realised the need to protect such tools and their capabilities from infringement once they go out in the market.

According to our research, Amazon has filed more than 17,000 patents globally to protect such tools and other business methods till now. Out of these, roughly 20% protect the business methods adopted by Amazon.

How can virtual businesses ensure Intellectual Property Protection?

A virtual business’s biggest asset is its website for promoting its business for sales generation. Websites are the most common targets for infringement lawsuits and if you are not cautious about it, you might end up losing your IP rights or be liable for infringement of the IP rights of others.

The risk of a company’s website’s look and feel being copied increases as the revenues begin to spike. The different components of the website that can be protected under IP are: Search engines or technical internet tools, software, website design, creative content, Business names, logos, product names, domain names, screen displays, graphic user interfaces (GUIs), hidden aspects of website (such as confidential graphics, source code etc.) all of which are protected by one or the other form of IP rights.


According to new data from Juniper Research, E-Commerce is expected to reach over $8 trillion by 2020, with the top industries in the market being computer and electronics.  Protection of tangible property is an easier task, the enforcement of similarly stringent protection for non-tangible assets is not an easy feat. With 63.2% of faked goods coming from China, the Chinese government is particularly under pressure to make more of an effort to fight against IP infringement.

While many other countries are also taking the necessary measures to reduce the amount of counterfeiting in e-businesses, it is still largely up to business owners to protect themselves from IP infringement. Also, while behemoth e-commerce companies such as Flipkart and Snapdeal can spend exorbitant amounts of money to sue counterfeiters, small and medium-sized e-business owners might end up struggling to do so, making it more important for them to hedge themselves using IP.

Amit Effectual High

By Amit Aggarwal, Co-Founder and Director, Effectual Services


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