Want to stay current on e–commerce law? Sign up for Email Newsletter.
Court Finds Company Liable For Employees Unauthorized Distribution of E-newsletter
In a decision that may have broad ramifications for many knowledge-based companies, a U.S. Federal Court for the district of Maryland recently granted summary judgment against financial services firm Legg Mason Wood Walker ("Legg Mason") for the unauthorized distribution of a newsletter by its employees. An employee of Legg Mason's research department held a single paid subscription to a daily and weekly newsletter published by Lowry's Reports ("Lowry's"). Subscriptions to the newsletter were not available on a corporate or group basis in order to protect the confidentiality of its contents where its value resided. In contravention of Lowry's subscription agreement, the newsletter was regularly distributed by fax to branch offices, posted on the Legg Mason Intranet (accessible by hundreds of Legg Mason brokers) and distributed via email to all members of the Legg Mason research department over a period of about ten years.
The District Court Judge had no trouble finding Legg Mason vicariously liable for the infringing acts of its employees, even though their conduct directly contravened express company policy. This finding was based on the determination that Legg Mason had the right and ability to supervise its employees and had an obvious and direct financial interest in the exploitation of the copyrighted material. The Court also found that even though Legg Mason had express company policies prohibiting the impugned conduct of its employees, this was irrelevant because U.S. copyright liability attaches regardless of a defendant's knowledge or intent.
On the question of damages, the Court found both for and against Legg Mason on two separate issues. First, the Court found that Legg Mason could not be held to account for any profits resulting from the unauthorized distribution of the newsletter because the causal link between the infringing conduct and Legg Mason's revenue was too remote and speculative. Second, the Court refused Legg Mason's argument that it was only guilty of "innocent infringement", and thus liable only for statutory damages of $200 per infringed work, because a proper notice of copyright appeared on all of the infringed material.
For a copy of the case, visit:
http://www.mdd.uscourts.gov/Opinions152/Opinions/Lowrys_op0703.pdf