Employer Beware! — Liability for Employee's Dissemination of E-mail Newsletter

In Lowry's Reports Inc v Legg Mason Inc et al, two related financial services companies were found to be vicariously liable for copyright infringement as a result of the acts of an employee.   The employee re-distributed e-mail newsletters containing a daily stock market analysis originating from the plaintiff, Lowry's Reports, Inc. Lowry offered the newsletters by e-mail to subscribers, but only to individuals (not institutions), and required subscribers not to make unauthorized copies nor to disseminate the newsletters or their content.   The defendants' employee, after procuring a subscription, posted the newsletters on the defendants' intranet and later distributed copies of the newsletter by e-mail to other employees.   An existing company policy prohibited copying of such copyrighted materials by employees. The US District Court in Maryland ruled that the activities of the defendant's employee infringed the plaintiff's copyright.   The defendant was found to be vicariously liable for copyright infringement because it had, first, the right and ability to supervise the infringing activities, and, secondly, it has an obvious and direct financial interest in exploitation of the copyrighted material.   The fact that the employee's actions contravened company policy did not bear on liability, but it could influence the amount of damages and costs to be awarded. For the court's decision, see: http://www.mdd.uscourts.gov/Opinions152/Opinions/Lowrys_op0703.pdf. Summary by:   Peter Wang