Employees and employers beware of file copying - 1 December 2006

Q1: An employee has been threatened with prosecution for illegally downloading songs off the internet in volume. As his employer are we liable in any way?

A1: There has been a great deal in the press recently about file copying, file sharing and song swapping, with people downloading files illegally for personal use. Whilst legal downloads were worth more than £570m in 2005 and are growing fast according to The International Federation of the Phonographic Industries (IFPI), illegal downloads are also increasing. In an effort to crack down on this, 19,400 people have so far been sued for illegal song-swapping.

Many music industry representatives are calling for an increase in the scale of court cases because, at the moment, people still don't think it's going to be them who are targeted. But both individuals and employers should beware – because it could be you. Individuals can be prosecuted for illegal file copying under the Copyright and Regulated Rights Regulations 2003.

Whilst the 2003 Regulations were brought in principally to deter serial abusers of copyright (mainly commercial counterfeit organisations), they also apply to individual users. Anyone scripting software to enable their legally purchased copy of a DVD to be played on an mp3 device, falls foul of the clause stating they ‘manufacture or deal’ in a device that is a form of decryption software. He/she then becomes just as likely to prosecuted as one of the file-sharing organisations. Many consumers don’t see that downloading a song illegally is theft of its creator’s copyright. But the fact is that this illegal activity deprives artists of their lifeblood, i.e. royalty income.

Many employees use office PCs to download files, whether in work or break times. If the music industry decides to crack down further, they may well target employers who are not deemed to be taking action against this criminal activity in their workplace. Employers not taking steps to prevent this will not only expose themselves to the risk of criminal prosecution but the employee in question will also be found liable. Employers should protect themselves by incorporating the activity as expressly forbidden in a written IT Code of Conduct and should include such conduct in their standard contract documentation, to include employee’s statements of terms, as being an example of gross misconduct.

There are also calls by the music industry for internet service providers (ISPs) to be sued if they do not crack down on their customers who flout copyright rules. Any company running websites that facilitate downloading or file sharing needs to alter its terms and conditions of use to protect itself against such illegal activity. If they don’t, they risk being prosecuted, or at least, being taken to Court and required to disclose their customers’ identities.

Some music industry figures think the copyright legislation is too harsh and that file-sharing and song swapping should be decriminalised. But whilst the level of income lost to illegal activity continues to rise, it is unlikely that decriminalisation will happen. In the meantime, both individuals and employers should take the issue of illegal file copying, sharing or swapping seriously. In the US, individuals have received fines of several thousand dollars. As an individual or an employer, you may be the next to be targeted.