Jeff Neuburger

Think before you forward! Controlling subscriptions to electronic newsletters.
May 29, 2007

Today, many professional newsletters are delivered electronically.  Because it’s so easy to do, it’s tempting for a company to obtain only a single-user electronic subscription to a professional newsletter and then forward it to around the office, thereby saving the cost of a more expensive group license.  This practice may save money in the short-run, but it is likely a violation of the single-user subscription agreement and could potentially open up the company to liability for copyright infringement, including large monetary damages. 

Damages for copyright infringement

Under the federal Copyright Act, copyright protection extends, among other things, to “literary works,” which, for our purposes, includes an electronic newsletter. Courts have held that forwarding an electronic newsletter to another reader is the same as making a copy on a copy machine and it constitutes copyright infringement unless the person forwarding the newsletter has permission to make copies. So is posting the newsletter on a company intranet.

The penalties for copyright infringement can be severe. A copyright owner (in this case, the publisher of the newsletter) can seek an injunction to prevent further infringement or actual damages against the infringer. More importantly in some cases, the copyright owner can request “statutory damages” which can range between $750 and $30,000 per violation, with the maximum raised further to $150,000 in cases of willful infringement.

A case in point

Several years ago, a financial publisher sued a large brokerage firm that had a single-user license to its daily financial newsletter. The publisher showed at trial that the brokerage firm employees had posted the newsletter on the company intranet every day for years, thereby making it available to everyone at the brokerage firm. The employees also circulated electronic copies of the newsletter, and distributed it by fax as well.

The jury awarded the financial publisher almost $20 million in statutory copyright damages, some of that for willful infringement that took place after the publisher demanded that the copying be stopped. The damages were awarded though the brokerage firm argued that it had a company policy against copyright infringement, and that the employees were violating that policy when they forwarded and posted the newsletter.

The case was Lowry’s Reports, Inc. v. Legg Mason, Inc., 271 F. Supp. 2d 737 (D. Md. 2003).

Lessons learned

• A business can be liable for large statutory damages awards for forwarding and otherwise copying electronic newsletters without permission, even if it is employees who are doing the copying, and violating company policy when they do it.
• It’s not enough to have a policy against unauthorized copying of copyrighted newsletters, that policy must be effectively enforced to avoid potential liability.

One final lesson: It is dangerous to think that no one will ever find out about this kind of copying simply because it takes place internally. How did the financial publisher find out about the copying? A former employee of the brokerage called the publisher and told them.

Posted by Jeff Neuburger on May 29, 2007 | Comments (0)