Compliance & Ethics Professional - Society of Corporate ...

y Thomas W. KirbyComputers and copyrights:A continuing source ofavoidable liability»»When employees share copyrighted materials, employers can take a huge hit—sometimes millions of dollarsfor something as simple as passing around an electronic newsletter to a few colleagues.»»Not all copyright cases settle.»»Under the “statutory damages” provision of the Copyright Act, a court is not limited by actual damages,but may award up to $150,000 in statutory damages for each work the defendant has willfully infringed.»»Courts are not shy about using the power of imposing statutory damages.»»Relatively simple best practices can greatly diminish your exposure.KirbyKindergarten teaches us to share, andcomputers make sharing quick andeasy. But when employees sharecopyrighted materials, employers can take ahuge hit—sometimes millions of dollars forsomething as simple as passing around anelectronic newsletter to a few colleagues.Let me give a few examplesfrom my recent experience representingelectronic newsletter publishers.The names are confidential (at leastin part because of the embarrassmentthat can be caused by companies’ violationsof the law and of the rights ofothers), but here are the basic facts:··Specialized lawyers in a national firm gotimpatient passing along a single paper copyof a newsletter and began forwarding theelectronic version simultaneously to thegroup. The firm settled quickly for well overa million dollars.··The founder of a modest family businessstarted grooming his two adult childrento take over. As part of their education, hebegan emailing them copies of his industrynewsletter. The firm settled for almost half amillion dollars.··A communications executive began forwardingan electronic newsletter to othersenior executives. The firm settled for a milliondollars.··Employees in a large real estate firm foundseveral newsletters useful and beganforwarding them to colleagues. The firmsettled for almost two million dollars.··The manager of a small consumer sales divisionforwarded a specialty newsletter to thepresidents of the division and the parent companyto help them understand how the fieldwas developing. After paying an estimatedmillion dollars in defense costs to its lawyers,the company also paid a $500,000 settlement.Of course not all copyright cases settle.Legg Mason 1 elected to litigate in defense of theactivities of research employees who had posteda subscription to Lowry’s Financial Reportson the firm Intranet and otherwise passed itaround. Legg Mason claimed my client’s actuallosses were tiny, but the jury awarded nearly$20 million in statutory damages.Compliance & Ethics Professional March/April 2012+1 952 933 4977 or 888 277 4977 | www.corporatecompliance.org 59