Legal; Beware: copyright infringement via e-mail.

Employers have reasons well beyond inflammatory content to keep tabs on e-mail messages. A Maryland financial services company learned the hard way that even seemingly innocent internal exchanges can result in huge liabilities. In October 2003, a jury in Baltimore federal court found that the company had will-fully infringed on the copyrights of a newsletter covering stock market conditions. The damages awarded? A whopping $20 million.

The financial services company had purchased three $70 subscriptions to the highly regarded newsletter; a subscription agreement prohibited subscribers from making reproductions. Company employees, however, systematically distributed copies of the newsletter on the company's intranet to more than 1,000 co-workers. The publisher sent a cease-and-desist letter, and the firm agreed to stop distributing the newsletter internally. When the infringement continued, however, the publisher sued.

Why so much? The damages were so high for two reasons. First, every e-mail transmission was a new "infringing copy," and there were thousands for every issue. Second, the jury considered the infringement "willful," which led to enhanced penalties as specified under the copyright act.

How e-mail increases the risk. Before e-mail, organizations that wanted their employees to benefit from educational resources typically purchased enough subscriptions for everyone to receive an individual copy or they routed limited subscription originals through the workplace. Today, managers and employees alike are accustomed to exchanging mountains of documents electronically, often in haste, and without deliberate thought about the legality of the transmission. Each electronic transfer is the legal equivalent of a photocopy.

Lessons for subscribers. Read your subscription agreements carefully and fully understand the terms and limitations of your license. Don't assume that the doctrine of "fair use" permits you to distribute newly created copies.

Lessons for employers. Adopt appropriate written policies to ensure that your organization complies with its subscription agreements and with the law. Then, with thorough training, make sure that your staff understands and follows them.

In copyright law, the employer still may be liable even if it was unaware of the infringement, particularly when the employer has an obvious and direct financial interest in the exploitation of the material, such as saving on subscription fees. Consider regular monitoring of employee activities to ensure actual compliance with the company's stated policies.

Put some disciplinary teeth into your policies and then train your managers to enforce them rigorously. It is also advisable to train employees on the specifics of your policies and, more important, on how to stay on the right side of the law when exchanging educational and other resources.

Lessons for publishers. If you publish a subscription newsletter or e-zine, be sure to perfect and protect your copyright. To perfect the copyright, register the work. To protect your copyright from infringement, include language in your subscription agreement specifying that subscribers are prohibited from distributing the newsletter in electronic or print format. Clearly state the terms of your license agreement with each subscription, including the number of permissible copies.

--Revised and reprinted with permission from Patricia S. Eyres, author, attorney, and president of Litigation Management and Training Services, Inc., Long Beach, California; [e-mail]

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