You had better think twice before you send a copy of the great article you just read to your entire staff; you could end up entangled in copyright infringement litigation. A California-based market research company recently settled complaints brought against it by the Software & Information Industry Association (SIIA). The company had been internally distributing a variety of third-party owned content including market research reports, news articles and other information. Many companies engage in the same practice and as a result, it doesn’t occur to most people to obtain permission or a license to use the content unless it is going to be used externally. Even if the disseminator of the content knew that technically they should obtain permission prior to use, it’s only being distributed internally, so who’s going to know? That position works fairly well, until one of your employees blows the whistle, which is exactly what happened in this case.
The SIIA has recently developed a new Corporate Content Anti-Piracy Program, and this case is the first settlement under it. Previously the SIIA had been primarily focused on corporate use of counterfeit or pirated software, so this marks a significant expansion of their scope. This matter was settled with a payment of $300,000 by the market research firm. No figures for what rights to the content would have cost were made available, but the SIIA indicated that the settlement amount was far more than what it could have been obtained for. Don’t think your employees (or former employees) would blow the whistle? The individual whose tip resulted in this settlement was paid $6,000, so you might want to think again. For that kind of pay-out there will be plenty of takers.
How would a professional liability policy respond? (We’ll assume it provides copyright coverage, but that isn’t always the case.) It probably would not provide coverage in the case above for a couple of reasons. First, the information was used internally as opposed to externally, so it is questionable whether or not the content was used in the performance of professional services for others. If some of the unlicensed content was used externally in the course of providing services or if some of the content actually made it into their product or service, that would be another matter. Second, the SIIA is an entity that oversees licensing/administration of intellectual property (IP) rights. Claims made by such organizations are generally excluded. If the claim were brought by the actual holder of the rights to the IP, that would be different.
SIIA has been extremely aggressive on the issue of software piracy and counterfeiting, so there is no reason to doubt that they will be equally as zealous on corporate content. This isn’t a new area of exposure, but it is now under the microscope. Corporations are going to have to place increased emphasis on rights management of all content, not just their own. As part of the settlement, the marketing research firm agreed to create an internal employee and executive training program on the use of third party content. Traditionally such programs are common within the media industry where content is king, but companies in all industries need to take a cue.