Avoiding Copyright Infringement Liability

• Posted by Geoffrey G. Gussis on January 8th, 2005


• Filed in IT/Software/Internet, Intellectual Property, Risk Management & Compliance

In an increasingly digital world, information sharing through email, the Internet and corporate intranets and extranets has led to significant productivity gains for many companies.  Forwarding content to a friend or colleague can often be accomplished through a few clicks of the mouse.  Indeed, many companies have replaced large sections of their libraries with shared CD towers that enable access to enormous amounts of data from every company desktop.  As many companies have learned, however, increased access can lead to unanticipated exposure to intellectual property infringement liability.

The risks are real - a jury returned a nearly $20 million verdict against Legg Mason for willfully infringing the copyrights of Lowry’s Reports, Inc., which publishes the Lowry’s Market Trend Analysis email newsletter.  In the suit, Lowry’s alleged that its registered works were systemically copied and placed on Legg Mason’s corporate intranet for use by all of its brokers.  Legg Mason argued that the infringement was inadvertent and the fault of a few low-level employees - arguments that the jury considered and found to be less than compelling to say the least.  Legg Mason’s motion for a new trial, which was based in part on the fact that Lowry’s actual damages were less than $60,000, was denied.

In his decision, United States District Judge William D. Quarles stated that there is no requirement in copyright law that statutory damages strictly relate to actual damages suffered.  This decision points out the importance of having an effective compliance program in place, as a company may not be able to dig itself out of a problem simply by paying past due license fees.

The Copyright Clearance Center has published an excellent guide, Copyright in the Digital Workplace, which can help you get started on analyzing your company’s existing exposure.  The guide contains survey results that may be a bit alarming - when asked what they have or haven’t done regarding obtaining copyright permission to reprint or republish copyrighted information, 64% of employees either "haven’t thought much about it" or "haven’t done anything", believing that someone else on their staff is taking care of it.  Only 8% of employees report obtaining permission on their own.  Make sure you read until the end - the guide has a series of questions concerning risk factors for your organization that may prove helpful in identifying current compliance issues.