It is not uncommon for employers to issue devices to employees but have little monitoring on what is installed in the device or how the device is being used. On the flip side, employees often feel that there is no room to breathe when the employer is constantly monitoring the activities of the company-issued device. However, there is importance for employers to ensure that they control and know how the company-issued device is being used, lest they be found liable for the acts of their employee done through the company-issued device. The case of Siemens Industry Software Inc v KB Engineering Coatings Sdn Bhd [2024] MLJU 3638 clearly demonstrates such importance.
Brief Facts
The plaintiff, who is the owner of the copyright of a computer software called NX12 (“Software“)that is registered in the US Copyright Office, discovered and alleged that the defendant had infringed on the Software intellectual property rights. This prompted the defendant to conduct an internal investigation, which revealed that an employee of the defendant had used the Software on the defendant’s laptop for personal purposes.
The plaintiff’s compliance partner then conducted a site visit at the defendant’s premises and found a cracked copy of the Software on the defendant’s laptop.
This led to a legal suit filed by the plaintiff against the defendant for an infringement of copyright, claiming injunctive relief and monetary compensation for the alleged infringement.
Decision of the Court Of Appeal (On Issue Of Vicarious Liability Of Defendant)
The Court of Appeal held that the use of the unlincensed or cracked Software amounted to an infringement of the plaintiff’s copyright.
Of more importance to this article is the Court of Appeal’s decision on vicarious liability.
Firstly, the Court of Appeal held that the defendant’s innocence or lack of knowledge of the downloading and/or use of the Software, as the Software was downloaded and used by the defendant’s employee without the knowledge of the defendant, was immaterial. A lack of intention or lack of knowledge about the infringement cannot be used as a defence in a copyright infringement suit.
Secondly, as the counterfeit Software was found on the defendant’s laptop that was used by the offending employee during his employment, the Court of Appeal held that the defendant should be held vicariously liable. The Court of Appeal rejected the submission that the employee’s use of the counterfeit Software was for personal educational use on the basis that such submission was not supported by any documentary evidence.
What This Means For Employers
Employers must be vigilant and aware on how their devices provided to their employees are used. The presence of a cracked, pirated or unlincensed software or application in an employer-issued device may open the employer to litigation for infringement of copyright. In such cases, unless there is strong evidence to establish personal use of the pirated software or application and that such use was not in the course of duty, employers are likely to be held vicariously liable for the infringement. That being said, even with strong documentary evidence, it could still be an uphill task considering the fact that the unlicensed software or application was found in an employer-owned device. Hence, it is recommended that employers have in place internal mechanisms to avoid exposure to such unnecessary and avoidable litigation risk.
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