Rosetta Stone, the economy, and software licensing copyright infringement by employees.

JUMP TO EMPLOYER COPYRIGHT LIABILITY PODCAST

Introduction

Here is a recent topic that come up in one of my conversations with intellectual property counsel representing the Business Software Alliance (“BSA”).  I was asking why one of the software programs they want audited from one of my clients was Rosetta Stone?  The copyright lawyer specialist told me that “you would be surprised how many employees are using Rosetta Stone software to learn a second language on their employer's dime, while basically trying to beef up their resume for their next job.”

The BSA lawyer continued, “many times the software is downloaded illegally without the employer's knowledge, but the employer often fails to have a social media policy in place, and no training programs to explain the seriousness of federal copyright infringement for using unlicensed software.”

Being an Attorney that loves to educate people, I decided I would write a blog post on this topic.

What is Rosetta Stone software?

Rosetta Stone is software that helps you learn a language.  Some languages that they offer include:

• Arabic
• Chinese
• Dutch
• Filipino
• French
• Russian
• Greek
• Hebrew
• German
• Latin
• Italian
• Japanese
• Spanish

There are alot of people that swear by their software as being one of the best to learn a foreign language.

Why employees are downloading the software behind their employer's back?

Some of my personal opinions as to why employees would want to download this software while at work include the following.

1.  Many jobs can be boring with a lot of free time (having “too much time on your hands”) will lead many employees to look for things to do.  One of those might be to try to learn a second language.

2.  Bosses might not show up at the office very often (for example, many bosses are either too busy to come in and supervise everything that's going on in the office, or they might be a lazy employer who just doesn't really feel like coming in on certain days, or coming in at all).  When the “cats are away the mice will play” as the old saying goes.

3.  Employees are not taught about Copyright law in most high schools, universities or colleges (intellectual property law takes a back seat to things like Algebra, History, Science, Geology, Astronomy etc.).  In my opinion, schools should do more to teach people about copyrights, trademarks and patents.  Why?  Intellectual property is an important part of the business world, as you can see if you have your kids watch shows like “Sharktank” which talk about these topics (the sharks usually getting the most excited about entrepreneurs who have federal patents).  It is hard to understand why teaching business skills is so low on the totem pole.  At any rate, without understanding intellectual property laws, this ignorance can lead to software licensing infringement at the workplace (everyone knows about the copyright infringement warning on movies, but do they have the same level of awareness when it comes to downloading software such as Rosetta Stone)?  This highlights the importance of having a social media policy, and training your employees on the risks of illegally downloading software without paying the license fee.

4.  Job wages are not increasing in any meaningful manner.  When employees don't see the silver lining to the job (often in the form of increased wages and bonuses), they tend to get antsy and want to look around to “see what's out there” in the job market.  By rewarding your employees financially, they may get more into the cause, and spend less time doing things like practicing their spanish, or chinese language skills on the job.

5. Some employees may be “multi-tasking” (functional at their jobs, but also able to learn a language while working).  While many employer's might applaud this intellectual capacity, they might also prefer to have the employee focus all their time and attention to the job they are being paid for.  When the employee puts all their energy into just one project, the chances for new ideas, and increased productivity are present.

6.  Some employees have “one foot out the door” and they know they are leaving.  They may be targeting a specific job that requires them to know a foreign language (which most likely leads to them making more money).  So while they wait to apply for their next job, they are busy “building their resume” so they can become more marketable in the job market.

These are probably the main reasons.  Keep in mind, I realize this is not a scientific study, but having worked in many different types of jobs from the age of 12 on, these are just some of the reasons I believe might be motivating employees to learn a second language while at work.

Rosetta Stone software enforcement efforts

Rosetta Stone takes its intellectual property rights very serious.  Here are a few notable events involving enforcement of their IP rights:

1.  Rosetta Stone reaches settlement with 10 companies and individuals (recommending all software be purchased from authorized resellers)

2.  Settlement reached with 77 infringers  (distribution of counterfeit software – California and Arizona locations comprise some of the settlement companies)

3.  Avvo posting discussing Rosetta Stone being removed off eBay

4.  Selling software purchased from a Chinese liquidator draws letter from Rosetta Stone

5.  Rosetta Stone settles piracy lawsuits  (relating to unauthorized copying, downloading, sharing & selling counterfeit Rosetta Stone language-learning software)

What is a social media policy and does your company need one?

The smart employer has a “social media policy” that explains what an employee can and cannot do while on the clock.  Of particular importance would be a section that discusses copyrights, and explains how most software (whether CD ROM, or downloaded “from the cloud”) is subject to federal copyright laws, and how all software has to be properly licensed and paid for.  This creates awareness on the part of employees.  Your social media policy might also include penalties for illegal software downloading, and might also prohibit the use of products such as Rosetta Stone at least on the job.

Here is a link to a sample social media policy.

Can an employer be held liable for the software piracy and copyright infringement of it's employees?

Under the doctrine of “Respondeat Superior” (which means “let the master answer“) an employer could be sued for acts of copyright infringement committed by it's employees in the course and scope of employment.  This theory of liability was discussed in Jeewarat v. Warner Bros. Entertainment, Inc. (2009) 177 Cal.App.4th 427, 434 [98 Cal.Rptr.3d 837, 843].

“The doctrine of respondeat superior imposes vicarious liability on an employer for the torts of an employee acting within the scope of his or her employment, whether or not the employer is negligent or has control over the employee. As a matter of policy it is considered fair to allocate to the costs of doing business a loss resulting from a risk that arises in the context of the employment enterprise…….where the question is one of vicarious liability, the inquiry should be whether the risk was one “that may fairly be regarded as typical of or broadly incidental” to the enterprise undertaken by the employer……accordingly, the employer's liability extends beyond his actual or possible control of the employee to include risks inherent in or created by the enterprise.” The answer might be different is the copyright infringer is deemed an “ independent contractor” as opposed to an “employee.” (for example, if you hire architect to help your business construct improvements to your commercial property and they infringe the Autodesk CAD software, the employing company will not usually be held liable).  The contractor will in most cases be deemed an “independent contractor” and not an “employee” and thus the doctrine of respondeat superior, will probably not apply.

What about the doctrine of “contributory infringement” under Copyright law, could this hold an employer liable for the copyright infringement of company employees?

 This is another legal theory that might apply where an employer is encouraging the use of illegal software (using software that is not paid for).  We see this quite frequently in our BSA software audit cases.  Here is what the law says on this point:

“One infringes contributorily by intentionally inducing or encouraging direct infringement, and infringes vicariously by profiting from direct infringement while declining to exercise a right to stop or limit it…. although the Copyright Act does not expressly render anyone liable for infringement committed by another, (See  Sony Corp. v. Universal City Studios, 464 U.S., at 434, 104 S.Ct. 774), these doctrines of secondary liability emerged from common law principles and are well established in the law.”  See  Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd. (2005) 545 U.S. 913, 930-31 [125 S.Ct. 2764, 2776, 162 L.Ed.2d 781]. This is a legal doctrine that might be asserted against an employer so this needs to be understood.

Top five tips to avoid a BSA or SIIA audit and subsequent federal copyright infringement lawsuit.

1.  Discuss the proper use of software with your employees (ongoing training is also important)

2.  Create and enforce a social media policy that addresses illegal software usage

3.  Create a safe and secure place where all receipts for licensed software is kept

4.  Reward your good employees, be a “hands on” boss and keep the workplace interesting

5.  Routinely monitor your employees workstations to see if they are using illegal software (your IT team can do this).  If it were my company, I would not “bury my head in the sand.”  In most cases, Courts have held employees have no reasonable expectation of privacy on their work computers.

Contact a software licensing law firm

To contact an intellectual property lawyer call us at (877) 276-5084.  We will also respond if you fill out the form below.  Keep in mind, we have very flexible and affordable fee arrangements.