B2B exchanges are more exposed to liability than traditional online service providers, according to one report. In fact, it could be just a matter of time before the courts have a legal marketplace minefield on their hands.
"This whole area is untested. B2B exchanges are more exposed to litigation than traditional online service providers," Maddock Lonie & Chisholm Solicitor, Bernard Tan told ZDNet.
Tan's research thesis on the liability of such marketplaces revealed the exchanges were more liable than traditional service providers due to a higher level of control, supervision, and contribution held by the facilitator.
"They [B2B exchanges] get very involved in the transaction process, because of that, they have more knowledge and contribution. If something goes wrong they are liable and can be sued," Tan said.
Litigation cases in the past have shown there is enormous liability for traditional service providers - mainly ISPs - in terms of copyright, such as the infamous Napster case.
The factors of liability include whether the facilitator has control of users, the extent of knowledge of infringements, to what extent they contribute to the infringement, and whether they get direct financial gain.
However, the level of control, supervision, and contribution by the facilitator of B2B exchanges is much greater than the traditional service providers, according to Tan.
Some B2B exchanges offer whole range of services, right down to inspecting goods, or having a direct link with the company's administration systems.
There is, however, uncertainty as to whether the facilitators of B2B exchanges will benefit from direct financial gain if infringements occur, which may not make them liable in some instances.
However, in the Napster case, the company was still found to be liable even though no fee was charged, Tan said.
Furthermore, B2B exchanges provide all the administrative facilities for aggregated buyers and sellers, which he believes could create a minefield of liability if certain parties pull out of transactions or the goods aren't delivered.
"One of the factors which made service providers liable, was the control admission [of the facilitator] and the supervising of transactions," Tan said.
