Monthly Archives: January 2014

Legal Issues In E-Commerce In India

Legal Issues In E-Commerce In IndiaEstablishment of a successful e-commerce business is not limited to merely putting an idea onto a website. There are many more issues that must be addressed by an e-commerce entrepreneur before his/her e-commerce venture becomes a successful one. These include legal issues as well that range from e-commerce compliances to brand promotion and protection. Even the domain name protection strategy is an essential part of successful e-commerce venture.

E-commerce is one of the most profitable business ventures in India these days. Not only its present growth is good but even its future and projected growth is tremendous. However, e-commerce in India is also required to be conducted in a legally permissible manner.

A dominant majority of e-commerce venture never survive the second year of their establishment. Further, many e-commerce websites are shut down due to legal violations. For instance, many Bitcoins exchanges in India have temporarily suspended their services due to legal uncertainty in this field. Some of them have even been targeted by law enforcement agencies of India for possible violation of Indian laws.

E-commerce websites operating in India are required to follow many laws of India including the Information Technology Act, 2000 (IT Act 2000). As per the IT Act, 2000 these e-commerce websites operating in India are Internet intermediaries and they are required to comply with cyber law due diligence requirements (PDF) as well.

The legal requirements for undertaking e-commerce in India also involve compliance with other laws like contract law, Indian penal code, etc. Further, online shopping in India also involves compliance with the banking and financial norms applicable in India. For instance, take the example of PayPal in this regard. If PayPal has to allow online payments receipt and disbursements for its existing or proposed e-commerce activities, it has to take a license from Reserve Bank of India (RBI) in this regard. Further, cyber due diligence for Paypal and other online payment transferors in India is also required to be observed. M-health laws and regulations in India must be followed by those who wish to explore this upcoming and remunerative field.

With the active use of electronic commerce in India the electronic commerce dispute resolution in India is also required to be strengthened. The present litigation system of India is not conducive for the growth of e-commerce in India and online dispute resolution in India is more appropriate for such purposes.

Finally, for those who wish to engage in cloud computing, virtualisation and other Internet based services in India, they comply with techno legal regulations of India. Cloud computing legal and regulatory requirements in India for businesses and entrepreneurs are still evolving. Nevertheless they must be followed by the cloud computing business community of India. Virtualisation and cloud computing service providers in India must not only follow the encryption laws of India but they must also ensure cyber law due diligence in India. This is more so when the cyber law due diligence for companies in India has become very stringent and foreign companies and websites are frequently prosecuted in India for non exercise of cyber due diligence.

In short, the highly profitable e-commerce segment of India must be explored only after complying with the laws governing the respective e-commerce segment. There is no single set of laws and regulations that govern all e-commerce segments and every e-commerce segment is governed by different laws.

Domain Name Protection In India: An Essential E-Commerce Strategy

Domain Name Protection In India An Essential E-Commerce StrategyA domain name is no more a mere web address. With increasing number of individuals and companies using domain names to conduct both online and offline businesses, the importance of a stable and retainable domain name has increased manifolds. A domain name is stable and retainable if it is not in violation of various laws and rules as prescribed in relation to domain name registrations. If it violates the norms as prescribe by international domain name registration rules or any other local laws, the domain name may be suspended, deleted, forfeited, transferred or seized. Investing in a potentially disputable and controversial domain name is a bad e-commerce strategy that every entrepreneur must avoid.

Most of the e-commerce businesses predominantly rely upon the strength of a domain name and for a successful implementation of any e-commerce business domain name protection is very important. E-commerce businesses are also required to comply with e-commerce laws of India to remain on the right side of the Indian laws.

Domain names have the tremendous potential to create brands and trademarks. They may also result in violation of the brands and trademarks of others. While every entrepreneur must keep in mind that he/she is not infringing the rights of others yet he/she must also be ready to fight back to protect his/her own goodwill, brand and reputation that he/she has earned and acquired through constant and continuous use of his/her domain name.

Many big companies, especially technology companies, regularly indulge in threatening and coercing the genuine domain name holders to part away their domains. This process is known as reverse domain name hijackings that every genuine domain name holder must fiercly resist and fight back against. Most of the times the genuine domain name holders surrender the domain name due to fear of legal actions. In reality, the law is in their favour and they can force even the biggest companies to cease troubling them and bear the legal costs spent for fighting the case.

Domain name protection in India is also facing the conflict of laws in cyberspace. For instance, domain name dispute resolution mechanism of ICANN is not suitable for domain name dispute resolution in many cases. Further, domain name dispute resolution at ICANN also does not respect the laws of other countries, including India. The domain name protection in India must be free from ICANN’s influence.

As per the Information Technology Act, 2000 and the Information Technology (Intermediary Guidelines) Rules, 2011, an Indian domain registrar who is accredited to ICANN and operating in India is an intermediary and it is required to follow cyber law due diligence requirements (PDF) to escape Internet intermediary liability in India. Such registrar cannot escape its liability under Indian law by citing the ICANN’s agreement. Google’s Online Defamation case has proved that such an approach is not only defective but is also prone to legal actions in India. India government must enact a clear cut law to ensure domain name protections in India so that ICANN’s procedure cannot defeat the rights and interests of Indian domain name holders.

Bitcoin Exchanges Operating In India Must Comply With Indian Laws To Be Legal

Bitcoin Exchanges Operating In India Must Comply With Indian Laws To Be LegalBitcoins legal issues are vexing the Bitcoin community of India for long. Some have taken precautionary measures and have preferred to wait till there are clear cut regulatory norms. However, others like BitQuick.in have taken the risk of being prosecuted by launching their website in India without sufficient compliance with Indian laws.

Whatever the strategy one must follow, the Bitcoin community must comply with Indian laws. Among the Bitcoin entrepreneur community, a large segment belongs to Bitcoin exchanges. For some strange reason these Bitcoins exchanges of India believe that they are not required to comply with Indian laws because they are just medium to deal in Bitcoins.

However, they have easily forgotten that these Bitcoin exchanges of India are required to follow many laws of India including the Information Technology Act, 2000. As per the IT Act, 2000 these Bitcoin exchanges operating in India are Internet intermediaries and they are required to comply with cyber law due diligence requirements (PDF) as well.

For instance, BitQuick.in provides in its terms and conditions that Sellers are responsible for following their own regulations in their own legal jurisdictions. BitQuick.in is not responsible for Bitcoins sellers and buyers adherence to financial regulations. In short, Bitcoins has placed the entire legal burden and risk upon the buyers and sellers of Bitcoins.

Further, if the law enforcement agencies of India have to ascertain who are the buyers and sellers of Bitcoins and are they complying with Indian laws, they have no mechanism to do so. Naturally, they would be left with little option but to sue the Bitcoin exchange and its owner itself.

The Bitcoin community has not learnt anything from the past legal actions taken by the Enforcement Directorate (ED). These actions of the Bitcoins exchanges operating in India would only put them in the bad books of law enforcement agencies of India. It would also be difficult for them to ward off the allegations of money laundering, hawala transactions and funding of terrorist activities that is very probable in these circumstances.

Another significant requirement on the part of Indian government would be to block the websites of Bitcoin operators who are not only flouting Indian laws but are also targeting Indian citizens by keeping their servers abroad. These websites should be blocked on the similar lines on which multi level marketing (MLM) companies’ website should be blocked in India. This is so because Bitcoins exchanges having server abroad may not be approachable even with the help of mutual legal assistance treaty (MLAT) between India and other countries like United States.

Just like fraudulent MLM regulations, regulations of Bitcoins exchanges located outside India but having Indian business connections must also be regulated by Indian government. Indian government should not allow these foreign Bitcoin exchanges operating in India to take advantage of the conflict of laws in cyberspace. If this is not done, even the Bitcoins exchanges operating from foreign soils would also flout Indian laws like Google, Facebook, Etc are doing.

However, the ultimate solution to the problems of Indian cyberspace is to formulate techno legal measures to regulate Indian cyberspace. This way foreign companies as well as foreign Bitcoin exchanges operating in India would be sufficiently regulated and they would not be able to take Indian laws for granted anymore.

Online Medicine Sales In India And Legal Risks And Regulations For E-Commerce Websites

Online Medicine Sales In India And Legal Risks And Regulations For E-Commerce WebsitesThe online sale and purchase of prescribed drugs and medicines in India is still a neglected area as far as regulations are concerned. Till January 2014 we have no dedicated online pharmacies laws in India and telemedicine laws in India. The cyber law trends and development in India 2013 (PDF) provided by Perry4Law have also highlighted this aspect.

As a result illegal and unregulated online sales of prescribed medicines in India have increased a lot. This fact also came to the knowledge of Indian government and now online pharmacies websites of India are under regulatory scanner and punishment may follow.

In fact, the fast growing and uncontrollable number of online pharmacies, mostly based abroad, has posed a serious challenge to State drug control authorities. They are simply not in a position to regulate the affairs of these online pharmacies that are openly violating the laws of India.

The Drugs and Cosmetics Act, 1940, and the Drugs and Cosmetics Rules, 1945, have clear guidelines on the sale of Schedule H and Schedule X drugs. These can be sold only on prescription and there are specific rules, including for labelling. Even bar-coding of primary level packaging of export consignment of pharmaceuticals and drugs have been prescribed by India. The requirement of affixing barcodes on Primary Level packaging will take effect from 01.07.2014.

Individuals and companies selling pharmaceutical products through website are also required to comply with various laws. These include laws related to medicines and pharmacy profession and cyber law of India. Surprisingly most of the online pharmacies stores and websites in India are not aware about the cyber law due diligence requirements and Internet intermediary liabilities. As a result they are violating the provisions of Information Technology Act, 2000.

In the absence of clear cut policies and guidance, e-health in India is facing legal roadblocks. Till now we do not have any dedicated e-health laws and regulations in India. The legal enablement of e-health in India is urgently required. In United States, the Health Insurance Portability And Accountability Act Of 1996 (PDF) and Health Information Technology for Economic and Clinical Health Act (HITECH Act), etc are some of the laws that take care of medico legal and techno legal issues of e-health and telemedicine. Laws like these are missing in India.

There is also a gross deficiency of data protection and privacy laws in India. Thus, private data and health records can be leaked by these online pharmacies with little grievance redressal and compensation mechanism. It is high time for Indian government to regulate illegal and unethical online pharmacies operating in India.

Online Sale And Purchase Of Prescribed Drugs And Medicines In India

Online Sale And Purchase Of Prescribed Drugs And Medicines In IndiaThis is the updated version of our previous article on online sales and purchase of prescribed drugs and medicines in India. Many stakeholders have shown great deal of interest in opening of online pharmacies in India. However, lack of knowledge about the applicable laws and their proper compliance has forced them to postpone their entrepreneurial dreams for the time being.

As on date we have no dedicated telemedicine laws in India and online pharmacies laws in India. But different laws of India govern the telemedicine and online pharmacies aspects in India.

However, till now the telemedicine and online pharmacies laws in India and their legal implications and liabilities are not clear to online pharmacies website owners. Similarly most of the online pharmacies stores and websites in India are not aware about the cyber law due diligence requirements and Internet intermediary liabilities.

As a result illegal and unregulated online sales of prescribed medicines in India have increased significantly. Now online pharmacies websites of India would be brought under regulatory scanner and punishment may follow for those who do not comply with the legal requirements in India.

Online sales and purchase are governed by electronic commerce transactions. We have no dedicated e-commerce laws and regulations in India. However, a basic level legal e-commerce framework has been provided by the Information Technology Act, 2000 (IT Act 2000) that is the cyber law of India.

While we have basic level e-commerce legal framework in India yet e-health related legal framework is missing. For instance, e-health in India is facing legal roadblocks. Till now we do not have any dedicated e-health laws and regulations in India. The legal enablement of e-health in India is urgently required.

When technology is used for medical purposes, it gives rise to medico legal and techno legal issues. In United States, the Health Insurance Portability and Accountability Act of 1996 (HIPAA), Health Information Technology for Economic and Clinical Health Act (HITECH Act), etc are some of the laws that take care of medico legal and techno legal issues of e-health and telemedicine.

As far as India is concerned, we have no dedicated e-health and telemedicine laws in India. Even essential attributes of these laws like privacy protection, data protection, data security, cyber security, confidentiality maintenance, etc are not governed by much needed dedicated laws. Ordinary commodities can be comfortably sold through e-commerce websites. However, health related commodities, especially prescribed medicines and drugs, are not easy to manage in an online environment. This is the reason why we have almost nil online sales of prescribed drugs and medicines in India as on date.

We need a dedicated law regarding e-health in general and online sale and purchase of prescription drugs in particular. The laws that deal with sales of prescribed medicines and drugs were enacted many decades ago when information and communication technology (ICT) driven innovative e-commerce methods were not within the contemplation of the legislature. Naturally, these laws are silent about their applicability to online sale and purchase of prescription drugs and their online trading.

Till now many e-health players are not aware whether the present laws allows or disallows the buying and selling of medicines through websites. Though over-the-counter products are no problem, online trade of prescription medicines is a sensitive issue. There are far too many issues involved regarding safety and authenticity of online drug stores.

Most western countries have allowed online sale of medicines. Even China has recently allowed opening of online medical stores for its pharmaceutical industry when about 20 companies were given licenses in this regard and they are doing well. In India, most players are afraid of engaging in online sales of prescribed medicines because of the uncertainty in the legal framework. Time has come to enact a dedicated law that allows online sales and purchase of prescribed drugs and medicines in India.