Employers' Liability For Copyright Infringement

• Law Firm: Lee Hishammuddin Allen & Gledhill
• Subject Matter: Intellectual Property, Compliance, Copyright
• Author: Mr Chng Keng Lung and Teo Kah Min
• Published date: 02 May 2023

Installation of a software without a valid license is a copyright infringement. In Malaysia, section 13 of the Copyright Act 1987 makes this clear by conferring exclusive rights to software developers and owners to reproduce, communicate and distribute copies of the software to the public. No other person may exercise those exclusive rights unless with the owner's consent.¹

The position is less certain in cases where an employee, without the employer's knowledge, uses a software without a valid license or engages in some other form of unauthorized use or distribution.

In this regard, to what extent are employers liable for the actions of their employees, more so in the context of copyright infringement?

Malaysia recognises the principle of vicarious liability whereby an employer may be held liable for the actions of their employees. To establish vicarious liability, it must be shown that the employee was acting in the course of their employment, and that there was a sufficient connection between the employees' actions and their duties and responsibilities.² However, the extent to which this principle applies to copyright infringement is, as noted above, less than certain.

The recent Singapore High Court case of Inzign Pte Ltd [2023] SGHC 50 would shed some light. Here, the employer was held vicariously liable for its employee's infringing act of installing an unlicensed software program. As a result, the employer was ordered to pay damages. The key takeaways from this case are -

• Employers can be vicariously liable for copyright infringement committed by their employees in the course of their employment.³
• Employers have a duty to take reasonable steps to prevent and monitor possible copyright infringement by their employees.⁴
• Once found liable, employers may be required to pay damages to the copyright owner.⁵

The case serves as an important reminder for employers to take proactive steps to monitor and prevent possible copyright infringement by their employees, which include -

• Educating and training employees: Employers should educate their employees on the importance of using licensed software and the consequences of software infringement.⁶
• Using software asset management tools: These tools assist...