Some IT managers may think that storing a few MP3s on the company server is no big deal, unless bandwidth is affected. But there is a deeper issue regarding MP3s and other large media files stored by users on your network—copyright infringement. Copyright experts warn that severe penalties await organizations that are charged with storing copyright material on company servers and PCs.

Copyright attorneys say that storing copyright material is illegal and IT managers should adopt a policy against copyright as a defense against litigation.

Determining what is illegal
Not all MP3 and media file downloads are illegal. Users may download and swap many files legally. For example, downloading music from the Web site of a local band may be legal, especially if the band is not under a recording contract and puts music on their site for free. But while some groups let fans download their music, others have legally charged swapping services for facilitating illegal activities.

In the spring of 2000, the Recording Industry Association of America (RIAA) and musical acts including Metallica and Dr. Dre, claimed that Napster’s services and those using it violated copyrights and became “musical pirates.”

According to Michael Overly, Esq. CISSP, a lawyer with Foley & Lardner in Los Angeles, your organization can run into trouble if it collects and stores similar illegally obtained material.

For instance, an organization cannot use or store copyright material that was collected without permission from the person or group that owns the copyright.

“If I give you a file and you put it on your computer and it infringes somebody’s copyright, you’re liable. That’s it. There is no further analysis,” he said.

David Radack, an intellectual property attorney with Eckert Seamans Cherin & Mellott, LLC in Pittsburgh, agreed. “If you are taking something that’s not been legally obtained, then the person who uses it, or the person who has it stored in their computer, is infringing the copyright,” he said.

Copyright material includes more than some MP3s. Copyright-protected videos, photographs, text, graphics, and designs are other examples of media files that are illegal to download and store.

When you’re liable
Prohibiting the downloading of illegal copyright material should be a top priority for managers, because typically the organization is held liable and not individual users. Ultimately, the organization is responsible for how users use company equipment and what is stored on it.

Managers in large organizations should be especially aware of how and what kinds of material are housed on servers because of the potential that thousands of illegal files could be stored.

“The thing that businesses need to keep in mind is if an employee downloads something that infringes somebody else’s copyright, [the company is] liable,” Overly said.

The fair use clause
The fair use doctrine is one exception to use restrictions on copyright material. But copyright experts warn that you probably cannot use fair use as a defense when faced with litigation.

Fair use is the idea that you can take a portion of copyright material and use it for personal reasons. For example, a professor might copy a piece of research from a book and hand it out to students. This type of action, while still illegal, will probably not lead to litigation.

But if the professor copies and distributes information as a way to let students avoid buying the textbook, he has stepped beyond the fair use doctrine and has affected the market for that book.

Likewise, downloading one song or an entire CD from the Web may make you less likely to buy the CD. Then you have effectively ruined the market for that CD, Radack said.

How to protect the organization
Establishing a media policy can help protect your organization if it is hit with a copyright lawsuit. While a policy cannot stop litigation if your organization is found guilty of storing copyright material, it can prove that the organization took a proactive stance against keeping copyright material. This proof may lower the amount of damages paid if the organization is found guilty of storing copyright material.

“If you have a policy and you’re trying to enforce it and you’ve got a couple of people…who were violating the policy…it looks better than having no policy at all,” said Radack.

But there are other reasons to use a policy. A media policy that stamps out MP3s for copyright reasons may immediately benefit your organization in terms of how much bandwidth will be available to users.

“Businesses, when they actually do the calculations of potential risks of litigation vs. the drain on resources, find that the cost associated with the drain on resources is more substantial than potential liability [that] they’ll face,” said Overly.

“We had one large client that has just under 30,000 employees say that they are more concerned about impact on resources than they are about liability,” he said.

How do you keep users at bay?

Tell us what strategy you use to curb user behavior and keep users away from building private music collections on company equipment. Drop us a line or start a discussion.