Recording industry turns up the volume on copyright infringement

Risk & Insurance, Oct 1, 2003 by A.S. Berman

Employers had better confiscate those MP3 players at the front lobby or they'll likely be hearing from the Recording Industry Association of America whose member companies began filing suit in September against people who illegally download digital music files.

Once the dust clears, however, employers are likely to be the ones caught in the crossfire.

Experts say companies that don't take steps to rid their networks of illegal music files are leaving themselves open to lessons both costly and catastrophic. "The problem with copyright infringement is the strict liability," says Barbara Weil Laff, an intellectual property and employment law attorney with Ireland, Stapleton, Pryor & Pascoe in Denver.

Penalties for copyright infringement can run to $150,000 per work, be it a music file or piece of software. One company, Integrated Information Systems of Tempe, Ariz., has already entered into a $1-million settlement with the RIAA for allegedly allowing employees to download music files.

And as the Arizona settlement shows, if the files are downloaded at the office, it is the company that pays.

In the case of illegal software copies, Laff says, damages can drop from $150,000 to simply paying for a license to use the application.

All this talk about litigation may chill a risk manager's spine. But, as Mark Czarnecki, of The Benchmarking Network, points out: "It's a significant problem, but it is controllable."

A computer and Internet monitoring system can help companies spot illegal downloads before litigation takes place, or at least lower the cost of a judgment. The Electronic Frontier Foundation, an electronic-privacy advocacy group, also provides a searchable database of file-sharer user names That have been targeted for potential legal action by the RIAA (www.eff.org/IP/P2P/riaasubpoenas/).

But, Laff notes, simply detecting illegal file-sharing activity on your network isn't enough.

The files themselves must be removed immediately to demonstrate a willingness to comply with the law.