Copyright Infringement on the Web: A Cautionary Tale

By Eric S. Freibrun, Esq.

As a natural consequence of its academic and scientific roots, the culture of the Internet revels in the free flow of information and its ready accessibility to anyone seeking it. There seems to have evolved from this a sort of Internet mythology that holds that the net is, and should be, an unregulated free-for-all, and that anything that can be digitized and placed on it is free for the taking -- intellectual property rights be damned.

As an example of how damaging this mindset can be, consider the story of a small software publisher that discovers its products are being distributed -- without its permission or knowledge and without receiving any compensation -- from someone else’s site on the Web.

This was the situation faced by a client of my firm, a small software publisher which I’ll call "XYZ" because a lawsuit has been filed. For XYZ, the consequences have been near-catastrophic. XYZ’s principal products, which it distributes solely through mail order, and in demo form from its Web site, are original copyrighted compilations of unique public service-related clip art images.

XYZ noticed that beginning in around July, 1995, its sales of its clip art products began to severely and inexplicably plummet -- threatening to put XYZ out of business if drastic steps were not taken. This sales free-fall was baffling, as sales prior to this point had been on the rise. In about late March, 1996, XYZ discovered that its principal clip art products were being distributed since at least July, 1995, as freeware from another party’s Web site. The site made no mention whatsoever of XYZ. An examination of the clip art files available from this site revealed that they appeared to have been copied directly from XYZ’s product disks -- the filenames, file size data, dates of creation, even the order of the files in each compilation, were all identical to XYZ’s clip art files.

The value of intellectual property such as software, which can take years to develop, may be destroyed in a matter of days or even hours once it is disseminated worldwide over the Internet. (Note 1) The risk to software publishers and other copyright holders is only likely to increase given the Internet’s 175% annual growth rate. (Note 2) In XYZ’s case, the unauthorized distribution over the Web of its copyrighted programs created a tremendous economic burden. XYZ not only lost substantial sales revenue, but was forced to take emergency steps to develop new products sooner than anticipated and to hire attorneys to enforce its copyrights.

Under U.S. copyright law, the copyright owner (usually the creator of the work) has the exclusive right to copy, modify, distribute, display and publicly perform the copyrighted work. The unauthorized copying and distribution over the Web of XYZ’s copyrighted software was a clear infringement of its copyrights. To make matters worse, several major Internet search engines pointed to the infringer’s site as a source from which potential customers for XYZ’s clip art could download files for free -- the same software they would otherwise have to license from XYZ. This continued even after XYZ’s files were taken off the infringer’s Web site because of the time delay between updates of the various search engine operators’ indexes.

XYZ has filed a copyright infringement law suit in Federal Court against the operator of the Web site that copied and distributed XYZ’s software, and the Internet service provider on whose computer the site resides. The suit seeks an injunction against further unauthorized copying and distribution of XYZ’s software and monetary damages as a result of the infringement.

How can damages to a software publisher be calculated in a case like this? Under the Copyright Act, registration of the copyrighted work is a prerequisite to filing a copyright infringement suit. A plaintiff has a choice of recovering either actual or statutory damages. Statutory damages can be as high as $100,000 per copyrighted work where the infringement was willful. Actual damages in XYZ’s case might be measured by the number of downloads of its software from the defendant’s Web site, which contained a counter showing the number of visitors to the site beginning from a specified date. Each unauthorized download was a lost sale for XYZ. In addition, according to the Software Publishers Association, for each unauthorized copy of a software program that can be identified, there are several other "pass-along" copies that will never be discovered but still represent lost sales to the publisher.

XYZ’s case is a cautionary tale to software publishers and would-be infringers alike. The pain, both financial and emotional, can be severe when one’s business can, in effect, almost be destroyed overnight by events beyond one’s control. But so can the penalties for infringement under the Copyright Act. Obtaining legal recourse, however, need not break the bank, as some law firms will assist aggrieved plaintiffs by reducing their fees and taking infringement cases on a partial contingency basis.

Existing laws do apply to govern conduct on the Internet. While they may need to be amended in some cases to address new situations that arise due to new technologies, those whose rights are violated on the Internet are by no means without legal remedies.
____________________________________________________________________________ Footnotes:

1. Oral Statement of William J. Cook Before the House Judiciary Committee Court and Intellectual Property Subcommittee Continued Hearing on the NII Copyright Protection Act, February 8, 1996.

2. Id.

Attorney Eric Freibrun specializes in Computer law and Intellectual Property protection, providing legal services to information technology vendors and users. Tel.: 847-562-0099; Fax: 847-562-0033; E-mail: eric@freibrun.com.

Copyright © Eric S. Freibrun, Esq., Law Offices of Eric S. Freibrun, Ltd. All rights reserved.