New legal tangle: Pirated music moves into workplace

Illegal music trading on college campuses may get all the headlines, but the practice has moved into the working world. And unlike student swapping, workplace piracy is about more than just one person's Internet habits. Left unchecked, the problem can expose employers to significant copyright liability, clog their computer resources, and drag down employee productivity.

Although companies have made progress addressing the issue, the specter of workplace trading still lurks on many corporate networks. As a result, companies must learn to deal with the problem, legal experts say.

"A piracy lawsuit against a company would send such a strong message to the infringers of the world that I can't imagine the music industry not jumping at it if they had the chance," says Michael Friedman, a New York entertainment attorney whose firm helps employers handle and avoid copyright infringements on their systems. "It's a fine line for companies that want to address the problem - they don't want to stick their necks out too far and get in trouble themselves, but they don't want to be overly intrusive into the privacy of the people they employ."

The problem of workplace music swapping came to the fore a year ago, when the Recording Industry Association of America (RIAA) sent a letter to members of the Fortune 1000. The letter warned of the potential for legal action and the problems that trading can create - from lost efficiency to overtaxed computer systems.

So far, the RIAA's approach to workplace trading has mirrored its other campaigns: educate the public about the risks and, when necessary, enforce copyrights under the law. According to association officials, that tactic seems to be working.

"We're at a point now where most responsible companies out there 'get it,' " says Matt Oppenheim, RIAA senior vice president, noting that enforcement actions against corporations have been few and far between. "They don't want to expose themselves to copyright liability, they don't want their networks opened up to viruses and confidentiality breaches, and they don't want to see their employees downloading music when they should be working. There's been huge progress in the last couple of years."

To further reduce the possibility of a lawsuit, companies can take advantage of guidelines offered by the Digital Millennium Copyright Act, says Jeff Karp, a technology attorney in Washington, D.C.

Those steps include establishing a companywide usage policy that addresses illegal downloads, creating mechanisms to ensure that the policy is enforced, and responding to any infractions that come to their attention.

Following these provisions essentially insulates the company by transferring liability back to the individual user, Mr. Karp says. "A large part of the problem is that many people don't realize what they're doing is wrong."

Even so, employees can listen to music on their computers and stay within the law. Karp suggests bringing CDs from home or downloading music from legal Web services like Apple's iTunes. "Playing a CD on a computer is no different than putting it in the CD player at home," he says. The trouble starts when those songs are loaded onto a network and shared among users.

The potential for legal action is just one problem for businesses facing music piracy. By some estimates, Internet downloads clog over 40 percent of computer servers in the United States - slowing company websites, overtaxing internal systems, and sapping hours of worker productivity.

To address these issues, a number of software packages are available to help monitor network users, restrict the kinds of files that can be downloaded (allowing, say, PDF documents but not MP3 music files), and generally help officers enforce their computer-usage policies.

At the end of the day, "the primary motivation for a company to [look into anti-piracy measures] is often corporate productivity," says John Matera, president of Cobion Corp., a Massachusetts firm that develops software that helps companies manage their internal networks. "Employees that simply aren't doing what they're supposed to do can be a huge burden on the company."

But such tools can create as many problems as they solve - from encouraging an atmosphere of mistrust in the workplace, to overstepping the bounds of employee privacy, says Milton Olin, former chief operating officer of Napster, who now works as an entertainment attorney in Los Angeles.

He suggests officers look closely at their own corporate culture before taking any drastic new step to control their information technology (IT).

"It's all about finding the appropriate standard for your organization," he says. "These days, most IT folks know what is going on with their networks. But it's taking that knowledge and not doing anything about it - that's the problem."

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