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E-Commerce Technology and the Law: What You Need to Know

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When you hear the word ‘e-commerce,’ you may feel your eyes begin to glaze over. Odds are you personally use e-commerce technology, maybe even in your everyday life, whether you’re ordering a textbook for school or having wings and fries delivered to your door before you pull an all-nighter. What’s there even to think about?   Well, if you’re considering a career in law, it’s important to understand how issues surrounding e-commerce technology may come into play.  

What is e-commerce technology?

Did you know that the concept of ‘e-commerce’ was first invented way back in the late 1970s? If you thought it started with eBay in the 1990s, turns out, you’re a few decades off. In fact, the original iteration of e-commerce started with a British man named Michael Aldrich who was sick of making regular trips to the grocery store. In a weirdly productive response to his personal frustration and laziness, he invented a way to advertise goods and services on TV and let viewers place their orders via the telephone line. Apparently, this ‘teleshopping’ was the start of e-commerce and has led to a global online shopping market size of approximately $844 billion in the U.S. by the end of 2020. Not bad, Michael, not bad. 

How is e-commerce technology evolving?

E-commerce, now formally defined as commercial transactions conducted electronically on the internet, is everywhere. And it’s not just used for online shopping websites. It’s built into Facebook, Instagram, TikTok, you name it. Any product or service today that doesn’t have some form of online transactional presence is fighting a losing battle, particularly in a pandemic world where online shopping grew by 30% between the first and second quarters of 2020. Companies that don’t have an e-commerce presence struggle to keep up with their competitors, and those that do need to wrangle the multitude of legal issues that could come their way. 

The list below doesn’t cover every legal issue relevant to e-commerce, but it goes to show that e-commerce (while still a little bit eye-glaze-y) is very juicy when it comes to legal implications. 

1. Intellectual Property and Trademarks 

If a company is selling a product or service, they’ll want to place their logo and company branding all over their website. To do this, they need to protect those logos and branding through trademarks. Further, successful e-commerce companies don’t just sell the products, they surround it with content that gets purchasers like us excited about clicking “Add to cart.” All of these fall under the umbrella of intellectual property and trademarks. 

How you can make a difference:  Protecting your intellectual property and trademarks is essential for every growing company. Otherwise, there could be copycat sites popping up in no time, and dealing with this can be an incredibly messy process, especially if there are multiple jurisdictions involved. The other side of this protection? Making sure you never infringe on other company’s intellectual property by unintentionally using their content or images. If that happens, it could cost hundreds of thousands, even millions, of dollars.

2. Data Security and Privacy

Most of you have had to provide your name, address, and credit card details when making a purchase online. Wouldn’t it be terrifying if all of those details were leaked across the interwebs, giving anyone access to your private information? What about those ‘cookies’ that you’re asked to accept on most every site these days? These cookies track your movements across the website, which can provide the company with a lot of useful data that’s then used to sell you more. Data Security & Privacy issues are one of the biggest issues e-commerce companies face and if they get it wrong, they can face irreparable reputational damage. Think of the $5 billion settlement between Facebook and the Federal Trade Commission because Facebook (allegedly) disclosed to third-party advertisers the data of Facebook users who had turned their profiles private. 

How you can make a difference:  This area of law is massively growing. Our ability to obtain data and rely on it for commercial decisions has never been like this before and it’s posing a multitude of challenging (but fascinating) legal questions.

3. Product Liability and Litigation

As with any company that provides products or services that can be consumed or used by customers, there is the risk of product liability issues and potential litigation. This can be quite complex in the web of e-commerce where some companies sell the products of third-party vendors, in addition to those they create themselves. 

How you can make a difference: What happens if there’s a defect with one of the products and it causes injury? What if there are systemic defects that require a full product recall? Who’s responsible then? This side of e-commerce can get quite messy, which is why there are many firms in the U.S. specializing in product liability disputes. 

4. Regulatory Compliance

The unfortunate reality of almost any company out there is that there is always some form of regulatory compliance that must be considered. This can feed into things like the quality of the goods and compliance with practices on how the goods are created, supplied, and distributed. 

How you can make a difference:  Companies might hate it (and some really, really do), but it can actually be a lot of fun piecing together the regulatory framework as an attorney.

5. Competition & Antitrust

When you have an online marketplace that not only has various suppliers vying for the same or similar types of consumers but also large companies working to grow even bigger, it’s inevitable that there will be antitrust considerations. What does it mean if Amazon, which started out as online-only, starts opening physical stores throughout the U.S. and they then purchase book publishers and sellers? What about Apple working with publishers to increase the prices of e-books available on its platform? 

How you can make a difference:  When the lines between online vs physical stores start to blur, the definition of suppliers becomes murkier, and the data about competitors becomes more readily available. This creates a complex antitrust minefield that keeps the Federal Trade Commission (and some attorneys) up at night.

6. Employment Law

Transitioning to an online and cross-border marketplace means companies can tap into global employment networks. While a massive benefit to the companies, there are also legal implications to this. To the extent they have them, employment rules can vary across different jurisdictions. Some countries might have a high minimum wage while others have a very low minimum wage (or none at all). 

How you can make a difference: The difference in rules and the enigmatic frameworks that can facilitate the employment networks can lead to abuse by some companies that go beyond just employment law issues. Believe it or not, modern slavery continues to this very day and remains one of the most complex yet rewarding areas of the law.