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Skeletons in Your Intranet Closet: Legalities of Content Use

By Paul Chin

Originally published in Intranet Journal (07-Oct-2005)

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EULA isn't a Hawaiian belly dancer. EULA stands for End-User License Agreement, a legal contract between the manufacturer or author of a software application and the end-user. An EULA specifies the terms under which end-users can use the software and often prohibits them from making copies of it and passing it on to others.

Although most users, upon installing commercial software, click the "I Accept" button without actually reading the EULA, they know well enough that they're not legally allowed to give the software to others. But what about content? It's photocopied and handed out to multiple readers; it's e-mailed to a user's entire address book; and it's posted on an organization's intranet.

Technology has made content distribution so easy. What you're technologically able to do with content, however, is quite different from what you're legally allowed to do with it. Content, like software, has a similar EULA. Most content that doesn't originate from within your company belongs to someone else and is copyrighted. If it ever gets out that your organization is making use of content that oversteps the boundaries imposed by the copyright holder, it can land your company in a lot of legal hot water.


Background: Copywhat?

The term copyright is overused and rarely understood. We have all heard about copyright infringement from the recent media coverage concerning peer-to-peer file-sharing programs. But few truly understand what that funny looking "c" with the circle around it really means, and fewer ever bother to read copyright agreements for intellectual property owned by others before using it.

The term copyright is exactly what it implies: the right to copy. A copyright is an exclusive legal right to control the reproduction of an original piece of material work. Each one of these works—whether it be the written word, music, movies, or computer programs—is bound to the person or organization who created it.

Copyright laws were put in place to protect the creators of an original piece of material work from unauthorized duplication and transmission of their works. Only the owner of the copyright—usually the original creator or an employer who commissions a third party to create a work—has the authority to reproduce the work or to grant permission to others to do so.

Typically, copyright of any original material work is automatically secured by the creator of the work as long as they reside in a Berne Copyright Convention country, a Universal Copyright Convention country, or a country that's a member of the World Trade Organization. While there's no formal requirement for copyright registration, it's usually in the best interest of the creator to do so. In the event of litigation where copyright is in question, the onus would be on the creator to prove that they are the copyright holders of the work.

Copyright laws and terminologies may differ slightly from country to country, and it's not necessary to understand every minute detail of the copyright laws in your country. What is necessary, however, is that you understand the copyrights associated with all information gathered and posted on your intranet.


Additional Information on Copyrights

Australian Copyright Council's Online Information Centre

Canadian Intellectual Property Office (CIPO)

Copyright Clearance Center

The UK Patent Office & The UK Intellectual Property Portal

United States Copyright Office

Universal Copyright Convention

World Intellectual Property Organization (WIPO)



Is This Legal?

Intranets are home to many forms of content, all developed or collected from various sources. Your understanding of where this content comes from and how you're permitted to use it will make the difference in determining whether content use is legal or an infringement upon a third party's copyright.

Internal knowledge assets are developed in-house by employees of the company, therefore, the copyright of this intellectual property belongs to the organization. But external information sources require a lot more care and attention. You must be fully aware of the source of all intranet content as well as your legal right to use, reproduce, and distribute this content. Material that's openly available to the public such as Internet content shouldn't be mistaken as content that's yours to do as you wish. Even though it's on the Internet for the world to see, the copyright still belongs to someone, and if this someone isn't you or your company, you're not permitted to reproduce it without consent.

It's the responsibility of intranet owners to understand and comply with the copyrights associated with the information they gather and post onto their intranet or e-mail to others. But it seems as though this is a responsibility few are taking to heart. According to a 2004 corporate survey conducted by the Copyright Clearance Center:

Intranet owners need to do away with the notion that an intranet is like Las Vegas: What happens in an intranet stays in an intranet. Finding a valuable piece of Internet content and tucking it away on the corporate intranet thinking that no one on the outside will ever know it's there is a very dangerous attitude. If it ever gets out that the company is making illegal use of copyrighted material—whether by an ex-employee with an ax to grind or leaked by carelessness—they could find themselves fighting a very lengthy and costly legal battle. This is something that smaller operations might not be able to weather. The cost of litigation and, should they be found guilty of copyright violation, the damages they must pay to the copyright holder could very well sink their entire operation.

Even if copyrights are unintentionally violated, it can still result in legal action. Take for example the case of Lowry's Reports, Inc. v. Legg Mason, Inc. Legg Mason, a financial services firm based in Maryland, had subscribed to a financial newsletter published by Lowry's Reports but failed to abide by the terms of the license agreement. Although duplication and re-transmission were prohibited under the terms of subscription, Legg Mason employees posted the newsletter on the company's intranet and sent multiple copies via e-mail and fax to other members of the organization.

Lowry's Reports sued Legg Mason for copyright infringement. In the ensuing legal battle, Legg Mason argued that their employees made a simple good faith mistake and didn't fully understand the implications of the technologies they were using—in this case, the intranet, e-mail, and faxes—to distribute the newsletter. Lowry's Reports countered stating that the fault lay not with the individual employees who distributed the newsletter, but rather with the company as a whole for having given their employees the technological means for copyright infringement without first educating them on how to use this technology legally.

As a result of the proceedings, a Baltimore Federal Court jury found in favor of the plaintiff, citing the defendants had willfully violated the copyrights of Lowry's Reports, and awarded punitive fines totaling approximately $20 million (Note: This matter was later argued before the U.S. Court of Appeals on the grounds that the fines were "grossly excessive"; but before the court issued its decision, both parties reached a settlement).

Intranet owners and content managers need to realize that they can't simply cut-and-paste information onto their intranet or send it all over the company without first understanding the copyrights associated with the content. It doesn't matter whether copyright violation occurs unintentionally or deliberately; in the eyes of the law it might not make a difference. The case of Lowry's Reports, Inc. v. Legg Mason, Inc. is a clear indication that ignorance of the law is no defense.


Understanding Information Sources

Anyone involved with intranet development and management knows that information comes from any number of sources. It can come from publicly available Web sites and print publications, internal knowledge experts, or information subscriptions. Most, if not all, information that comes from a third party is protected by copyright. In order to prevent copyright infringement, it's good to know where your content comes from and what you're allowed to do with it:

Public Domain and Creative Commons Licenses
The public domain, as defined in Wikipedia, "comprises the body of knowledge and innovation (especially creative works such as writing, art, music, and inventions) in relation to which no person or other legal entity can establish or maintain proprietary interests." This basically means that the right of ownership of belongs to the public at large, and anyone may make use of this material.

There's also a movement in the content world similar to that of open source in software. Creative Commons (CC), a non-profit organization, aims "to build a layer of reasonable, flexible copyright in the face of increasingly restrictive default rules." The CC Web site allows copyright holders to grant some of the rights to their works (while retaining certain other rights)—the written word, computer graphics, photography, music, films—to the public in the spirit of public domain or open content licensing terms. By using a CC license, the creator of a work maintains copyright while allowing others to copy and distribute the works. However, certain conditions can still be applied to works using CC licenses. If no conditions are applied by the creator, it's considered public domain.

Developed Internally (Internal Knowledge Assets)
Internal knowledge assets (IKAs) are developed in-house and the copyright belongs to the organization. And as the copyright holder, the organization can do what it wants with the content: post it on their intranet, print it in hard copy format, or burn it onto CD-ROM. But IKAs are sometimes developed with heavy use of external information sources. Intranet owners are responsible for determining whether the copyrighted material used in the development of IKAs is plagiarism disguised as research.

Publicly Available Content
While the Internet has broken down the geographic barriers concerning distribution of content, it doesn't give you permission to duplicate this content internally. Any original material obtained from a third party—whether on a Web site, printed publication, or audio recording—is copyrighted. And reproduction of this material without the copyright holder's consent can be construed as a willful violation of copyright.

In most cases, linking directly to an external article on the copyright holder's Web site is perfectly fine (unless otherwise specified) since there's no duplication or retransmission of content. But copying and saving the article on an intranet for internal use is clear infringement. If you're unsure about whether it's legal to post a certain piece of content on your intranet, always err on the side of caution and don't use it—at least not until you can obtain proper permission from the copyright holders.

Content Vendor Subscriptions
There are many third-party information vendors who provide content by paid subscription. Most vendors offer these subscriptions based on site licenses or per subscription. Every vendor's licensing agreement is going to be different, but in general terms, a site license usually allows the subscriber to use, reproduce, and distribute the content for one site regardless of how many employees are at that site.

Per subscription licenses, on the other hand, are based on individual usage of the content, similar to that of software seat licenses. Many per-subscription licenses don't allow the content to be posted on an intranet unless additional licenses are purchased. Even though the physical content exists as a single copy, it will be retransmitted across the entire company where every employee is a potential user.

Subscription license agreements vary from vendor to vendor, and many do offer pricing plans for both site licenses as well as per-seat licenses to accommodate different company needs. Regardless of the license chosen, it's crucial that subscribers fully understand the terms of the agreement before they use this material on their intranet.

Unconventional Means
The legalities of using information gathered through "unconventional means" such as intelligence—real cloak-and-dagger stuff—is not always easy to define. Sometimes a very fine line separates legal business intelligence activities from unlawful industrial espionage. The issue of using intelligence to gather information will be the topic of an upcoming Intranet Journal article.


Closing Thoughts

Copyright isn't something that should be taken lightly. Even good faith mistakes can be punishable by the law—a violation is a still a violation. You should always make it a point to fully understand the copyrights associated with the information you gather from publicly available resources such as the Internet. And take the time to read the license agreements for any content subscriptions you may have. Never post something first and ask questions later. If you don't know whether you can use a piece of copyrighted content or don't understand a condition in a license agreement, consult with a corporate lawyer or copyright attorney—or simply ask the copyright holder for permission to use their content. Nothing is lost by asking.

In future installments of this series on the legalities of content use, I'll be discussing issues surrounding the principle of fair use and the legal implications of using material gained from intelligence activities.


Copyright © 2005 Paul Chin. All rights reserved.
Reproduction of this article in whole or part in any form without prior written permission of Paul Chin is prohibited.