Lack of supervision of employee, laptop led to problems for unauthorized download
In the case of Siemens Industry Software Inc. (formerly known as Siemens Product Lifecycle Management Software Inc) v. Inzign Pte Ltd  SGHC 50, Singapore’s General Division of the High Court (GDHC) ruled that an organisation may be vicariously liable for its employees’ acts of copyright infringement.
This decision concerned the unauthorised download and use of a computer software by an Inzign’s employee. The employee had downloaded an unlicensed version of Siemens’ software onto an unused laptop found at the workplace with no administrative controls. The employee had wanted to use the software to obtain practice and become more skillful in using the software.
The employee’s acts were subsequently discovered by Siemens through an automatic reporting function built into the software. Siemens then brought a claim of copyright infringement against Inzign.
The GDHC had to decide whether Inzign was liable for copyright infringement. In this regard, Inzign could be either primarily liable or vicariously liable:
- Inzign could be primarily liable under section 31(1) of the Copyright Act 1987 (the equivalent of section 146(1) of the current Copyright Act 2021) if it had carried out, or authorised, the infringing acts.
- Alternatively, Inzign could be vicariously liable for the infringing acts of the employee. The issue of whether vicarious liability extended to copyright infringement had not previously been considered by the Singapore courts.
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Was Inzign primarily liable for the employee’s actions?
The GDHC found that Inzign was not primarily liable for copyright infringement on the basis that it did not carry out the infringing acts or authorise the infringing acts. This decision was made in view of the following factors:
- The acts were carried out by the employee and could not be attributed to Inzign as they did not fall within the scope of any authority that Inzign had conferred on the employee. Inzign also did not authorise or sanction the acts of the Employee.
- Inzign did not have power to prevent the employee’s acts. Inzign may have facilitated the acts by failing to account for the laptop or install administrative controls on the laptop. However, these were insufficient to demonstrate that Inzign had control over the Employee’s acts, especially where the acts were carried out without its knowledge.
- Inzign did not have actual or constructive knowledge of the copyright infringement, or the likelihood of such infringement occurring.
Notably, the GDHC concluded that Inzign had no primary liability for copyright infringement, despite finding that Inzign had failed to take reasonable steps in preventing the Employee’s acts. While Inzign had an anti-software piracy policy, its implementation of this policy had fallen short in preventing the Employee’s acts.
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Was Inzign vicariously liable for the employee’s actions?
Although the GDHC did not find Inzign primarily liable for the employee’s acts, it found that Inzign was vicariously liable. This is because of the contractual employment relationship between Inzign and the employee. Additionally, there was a sufficient connection between this relationship and the infringing acts, supported by the following factors:
- Inzign’s mismanagement of the laptop created and enhanced the risk that the employee could commit the acts.
- The acts were committed in the context of the employee’s employment for Inzign’s benefit as the purpose of his acts was to improve his performance at work.
The GDHC also noted that its finding of vicarious liability was supported by two policy considerations. First, Inzign was best placed and able to provide compensation to Siemens, especially since the Employee was unlikely to possess sufficient financial resources. Second, imposing vicarious liability on Inzign would incentivise other employers to take steps in reducing the incidence of copyright infringement by their employees.
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Organisations may be vicariously liable for their employees’ acts of copyright infringement. The GDHC has made it clear from this decision that organisations may be held vicariously liable for the infringing acts of its employees. Organisations should be aware that copyright holders are fully entitled to seek relief from an organisation for its employees’ acts of copyright infringement. Therefore, it is important for organisations to put in place appropriate intellectual property policies - in particular, an anti-software piracy policy.
Importance of operationalising intellectual property policies. From a risk perspective, organisations should note the importance of not only having strong intellectual property policies (in particular, anti-software piracy policy), but also ensuring that such policies are operationalised well. For example:
- Organisations ought to regularly communicate the importance of respective intellectual properties and draw employees’ attention to such intellectual property policies (including anti-piracy software policies);
- Organisations should regularly review the IT assets that they possess, including laptops and mobile devices. This ensures that organisations are kept apprised of the software or applications that may be installed on such IT assets.
- Organisations will need to ensure adequate supervision of their employees in the course of their work. In Inzign, the employee was found not to have been given adequate supervision in the course of his work, even though the employee had access to company’s resources.
Catherine Lee is a senior partner in Dentons Rodyk’s Intellectual Property & Technology practice group and Head of the Trademarks, Franchising and Distribution practices in Singapore. Desmond Chew is a partner in Dentons Rodyk’s Intellectual Property & Technology practice group in Singapore. The authors acknowledge practice trainee Chieng Hui Jie for her contributions to this article.