Digital Copyright Infringement: A Hidden Risk

Employees today are active online in a dizzying number of ways. They often send hundreds of e-mails a day and may also post to industry blogs, communicate via social media, conduct webinars or participate in other online forums. In each instance, a copyright violation can be just a mouse click away. It’s a hidden risk that far too few employees understand.

Sharing electronic information has become a mainstay of corporate life, and as a result the risk of digital copyright infringement has grown exponentially. Something as simple as forwarding an e-mail attachment can result in seven-figure settlements. The lawsuits seldom make headlines because companies involved are understandably shy about publicizing their missteps, but those who keep a close eye on copyright related cases say they are increasingly common and offer a litany of cautionary tales.

Consider the law firm that illegally distributed an electronic newsletter and settled for well over $1 million. Forwarding industry newsletters cost a family business nearly $500,000, put a communications firm on the hook for $1 million and set a real estate firm back almost $2 million. Most cases settle (discreetly, for the defendants’ sake), but for defendants that choose to fight in court, the consequences are even harsher. Legg Mason, which distributed content online from a copyright-protected subscription to Lowry’s Financial Reports, decided to litigate with dire results. A jury awarded Lowry’s nearly $20 million in damages.

Such stiff penalties often come as a shock to the unwary. One senior law-firm litigator who frequently represents publishers on digital copyright violation cases, notes that many companies remain in the dark when it comes to the magnitude of the risk. “When I tell them they’re talking about statutory damages and exposure to millions of dollars in judgments, they express great surprise,” he says.

Because each issue of a publication is a separate copyrighted work, damages can accrue quickly if infringement becomes a habitual practice. The exposure for infringing a weekly publication for a year is nearly $8 million—for a daily it’s almost $40 million. That’s big money—even for major corporations—and for smaller businesses such damages are potentially catastrophic. 

Still, it’s just as easy to comply with copyrights as it is to violate them, and as with any hidden risk, the best remedy is an ample dose of sunlight. “Relatively simple best practices can greatly diminish your exposure,” the litigator says. “Meaningful employee education, periodic polling of employees about copying, realistic evaluation of subscription needs and taking out an appropriate license from the Copyright Clearance Center will work.”

The bottom line is that companies need to take control of the issue and raise awareness of the risks inherent in digital copyright violations to stay in the clear. Whether that duty falls to the legal, IT or HR department will depend on the size and type of the business, but the goal is universal: To use ample education and appropriate licensing to enable employees to take maximum advantage of the internet’s attributes, without falling victim to one of its more pernicious risks.

Developing a comprehensive copyright policy is a great first step. To help you get started Copyright Clearance Center offers 10 Tips for Creating an Effective Copyright Compliance for your Organization. To receive a copy, register here.

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