Software Compliance Legal Issues – D & O liability
“Cases have held that all participants in copyright infringement are jointly and severally liable as tortfeasors.Screen Gems-Columbia Music, Inc. v. Metlis & Lebow Corp., 453 F.2d 552, 554 (2d Cir.1972); Gershwin Publishing Corp. v. Columbia Artists Management, Inc., 443 F.2d 1159, 1162 (2d Cir.1971). A corporate officer may be held vicariously liable:(1) if the officer has a financial stake in the activityand(2) if the officer has the ability and right to supervise the activity causing infringement. Van Halen Music, 626 F.Supp. at 1166-67; Warner Bros., Inc. v. Lobster Pot, Inc., 582 F.Supp. 478, 482 (N.D.Ohio 1984).”
“First, the Court will discuss the direct financial interest that Defendant Jack Burke, Jr. (“Burke”), the corporate officer in this case, has in the infringing activity. The Court notes that Defendants admit that the corporate Defendant has for the past thirty years, and still does, own and operate the Champions Golf Club……Defendant Burke is one of the founders of the Champions Golf Club, Inc. (“Champions, Inc.”)…….Burke has been the president and a director for thirty years and is the majority shareholder of Champions, Inc. (Burke Deposition pp. 7-8, 10). Burke receives a salary from the corporation (Burke Dep., p. 19). The evidence is clear that both Defendants have a direct financial interest in Champions Golf Club.
“Second, the Court will consider Burke’s ability and right to supervise the activity which caused the infringement. Defendant Burke directs the operations of the club and is listed on the club’s Texas Alcoholic Beverage Commission license as the “person responsible” (Burke Dep., pp. 20-22, and Exhibit 1). He is responsible for the hiring and firing of the various heads of departments at the club, including the manager in charge of food and beverages (Burke Dep., pp. 22-23). Burke is in charge of the day-to-day operations of the club and has final approval of all decisions involving the club (Burke Dep., pp. 24-26). If the members of the club did not like the music being played in the club’s restaurant, Burke would ensure that the music was changed (Burke Dep., pp. 24-25). Burke was the person contacted by ASCAP and Burke decided that the contacts would be ignored (Burke Dep., pp. 29-35 and Exhibits 3-5). Accordingly, the Court holds that Burke had the right and ability to control the infringing activities. Thus, the Court finds that the individual Defendant and the corporate Defendant will be jointly and severally liable for the copyright violation.“
Watch Attorney Steve explain CEO, CFO and IT Director liability in regard to software piracy
Can the officer or director just discharge any liability in bankruptcy Court (ex. chapter 7, chapter 11, or chapter 13)?
Liability for “failing to prevent” copyright infringment
“a person is liable for copyright infringement by another if the person has a financial interest and the right and ability to supervise the infringing activity “whether or not the person knew of the infringement.” The court held that “the Bankruptcy Judge clearly erred by inferring from the jury’s finding of willful infringement that Appellants had actually ordered the copying themselves. As principals in the company, Appellants could be held liable for infringement simply for failing to prevent copyright infringement.
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