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Copyright trolls threaten technology, media, telecom sector

Risk & Analytics|Corporate Risk Tools and Technology|Cyber Risk Management
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By Tina Veale | July 7, 2020

TMT companies are among the most vulnerable targets of copyright trolls because they depend on and frequently use creative content.

The landscape of copyright litigation has been overrun by “copyright trolls,” a disreputable class of entrepreneurs whose business model rests on threats of legal action against companies and individuals whenever copyrights might be claimed.

Technology, media and telecom (TMT) companies are among the most vulnerable targets of copyright trolls because they depend on and frequently use creative content. For example, think of a photo selected by a content provider under the false impression that its use falls within the company’s licensing arrangements. This could prove to be a simple but costly mistake.

This is not to say that copyright infringement isn’t a big problem. The livelihood of writers, photographers and artists depends on the protection of copyright law as much as the profitability of major studios, publications and web platforms.

Trolls, however, have abused copyright law not as a way to protect a copyright but, in effect, to use the threat of litigation to extort money from hundreds or thousands of companies and individuals. Despite legal setbacks, copyright trolls present a growing challenge.

A frequently cited Iowa Law Review article describes a copyright troll as “more focused on the business of litigation than on selling a product or service.” A federal judge has described the trolls’ business model as a numbers game in which a troll targets hundreds or thousands of defendants seeking quick settlements priced just low enough that it is “less expensive for the defendant to pay the troll rather than defend the claim.”

Although porn companies pioneered and mastered the art of copyright trolling, the litigation model has been applied to other, more reputable industries. Trolling surfaces wherever copyrights can be claimed. Examples include the use of music, blog articles, online photographs – even clothing fabric.

Risk mitigation

To avoid copyright infringement and the threat of copyright trolls, proper risk mitigation should combine education, editorial control, legal muscle and effective risk transfer.

As a first line of defense, employees must recognize copyright “myths,” such as the belief that Google images are free for the taking, or that something isn’t copyrighted if it lacks the © copyright symbol, or that attribution and disclaimers insulate the use of copyrighted material. A keen understanding of what constitutes the public domain is essential.

Editorial controls are equally vital. Procedures must be in place for tracing the origin of all published content with responsibility assigned for determining which licenses your company possesses, the terms and conditions, and whether the images either fall within the scope of these licenses or are royalty free. The same analysis is necessary for audio and video clips.

On the legal front, here’s the first rule: Don’t settle. Trolls must know you are not an easy mark. It also is important to apply legal vigilance up front. Contracts with web designers and other third-party content providers and vendors should properly assign risk. Contracts should also include customary representations and warranties, smartly crafted indemnification and dispute resolution provisions.

The role of insurance

Even with all of these mitigation efforts, a holistic approach should include the right insurance. Don’t draw false comfort from a commercial general liability policy with “advertising liability” coverage. Companies that produce content for purposes other than advertising should consider such options as a media liability policy. This form of errors and omissions coverage can cover legal costs and damages arising from claims of copyright infringement, trademark infringement, plagiarism, breach of confidentiality, invasion of privacy and other exposures. Stand-alone intellectual property insurance coverage can help with typical exclusions such as patent infringement and trade-secret misappropriations.

Copyright trolls are unlikely to go away any time soon. Protecting your organization from them requires a combination of insurance and risk mitigation protocols.

Disclaimer

Willis Towers Watson hopes you found the general information provided in this publication informative and helpful. The information contained herein is not intended to constitute legal or other professional advice and should not be relied upon in lieu of consultation with your own legal advisors. In the event you would like more information regarding your insurance coverage, please do not hesitate to reach out to us. In North America, Willis Towers Watson offers insurance products through licensed subsidiaries of Willis North America Inc., including Willis Towers Watson Northeast, Inc. (in the United States) and Willis of Canada, Inc.

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Tech, Media & Telcom Industry Specialist
U.S. Northeast Center of Excellence

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