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| IP Newsletter | Spring 2014 |
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TRADEMARK, DESIGN & COPYRIGHT |
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"Free" Software May Be Expensive Infringement of Copyright |
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A recent ruling from the Seoul Central District Court has highlighted the dangers to companies of failing to supervise their employees' installation and use of software for work purposes in violation of the software license terms. The February 21, 2014 ruling held that employees' use of "free for personal use" software at work without paying the requisite license fees rendered the employees' company liable for copyright infringement (Case No. 2013GaHap25649). |
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The software in question was originally offered free for any use, but a newer version of the software changed the program license terms to require licensing fees from corporate users while remaining free for personal use. Users who had previously installed the original version were prompted by the software to upgrade by clicking through one dialog box which installed the newer version, and then clicking through another which asked users to accept the new license terms. Several companies whose employees continued to use the newer version of the software without paying the license fee were warned that they were committing copyright infringement and asked to pay damages, which led to the companies filing for a confirmatory judgment of no infringement at the Seoul Central District Court. |
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As an issue of first impression, the Court held that the temporary storage of a computer program in memory through executing the program constitutes "reproduction" under the Copyright Act (which is defined as "the fixation of works or the reproduction of works in tangible media of expression by means of printing, photographing, photocopying, sound or visual recording or other means, temporarily or in perpetuity"). In this case, because the upgraded software was installed before the new software license was accepted (in other words, under the existing license), the act of installing the software itself (and thus "reproducing" the software) could not be copyright infringement. However, the Court found that when the software was executed, the "fixation" of the executed program (even temporarily) to the "tangible medium" of computer random-access memory (RAM) was sufficient to constitute a separate "reproduction." Therefore, the Court found that any unauthorized use of the software in question after installation (i.e., under the new license terms) would constitute copyright infringement. As a result, the Court awarded the software maker KRW 20,000 (approximately USD 20) per copy made of the program in damages. |
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The Court rejected the companies' argument that such temporary storage in memory was exempt from copyright infringement under Article 35bis of the Copyright Act, which permits certain types of temporary reproduction during use of a computer "for smooth and efficient information processing." The Court held that this article was intended to address acts such as incidental buffering and caching of computer information necessary to view digital content on the internet (e.g., streaming), and not the act of running a program in computer memory in general (which is an act of independent economic value). |
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While the case is currently being appealed, the District Court's ruling highlights the risks that can accrue to a company through employees' unpaid use of "free for personal use" software, which is typically fully usable even without paying any fees, and addresses a number of previously-open questions in Korea regarding the application of copyright law to the use of computers and software. |
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