13 March 2023

In the recent decision of Siemens Industry Software Inc (formerly known as Siemens Product Lifecycle Management Software Inc) v Inzign Pte Ltd [2023] SGHC 50, the General Division of the High Court held that an employer was vicariously liable for copyright infringement committed by its employee, notwithstanding that the employer was not aware that its employee had committed the acts complained of and had not authorised the employee to commit the said acts. Prior to this decision, the question whether the doctrine of vicarious liability applies to copyright infringement had not been settled under Singapore law.

Background

The plaintiff was the copyright owner of the NX Software, which was used to create, develop and test models of products. The defendant was a Singapore company which already licensed certain modules of the NX Software. The defendant had employed a machinist (“Employee”) whose role required him to use the NX Software.

In 2020, the Employee installed an unauthorised version of the NX Software on an unused laptop belonging to the defendant which the Employee found in a toolroom at the defendant’s premises. The Employee had done so to practise using the NX Software.

The use of the unauthorised version of the NX Software was subsequently discovered by the plaintiff through an automatic reporting function built into the NX Software. After the plaintiff informed the defendant of the existence of this unauthorised version of the NX Software, the defendant conducted internal investigations and eventually uninstalled the unauthorised version from the laptop.

Subsequently, the plaintiff commenced proceedings against the defendant for copyright infringement, arguing that the defendant was both primarily and vicariously liable for the actions of the defendant’s Employee.

High Court’s decision

As the parties did not dispute that the defendant’s Employee had infringed the plaintiff’s copyright in the NX Software, the High Court’s decision focused on whether the defendant was primarily and/or vicariously liable for the Employee’s copyright infringement.

With respect to primary liability, the High Court held that the starting point of the analysis was section 31(1) of the Copyright Act 1987 (2006 Rev Ed) (“Copyright Act”), which stated that the defendant would be liable for copyright infringement if the defendant was found to have either (a) carried out the infringing acts or (b) authorised the infringing acts. The Copyright Act was repealed when the current Copyright Act 2021 came into force on 21 November 2021. Section 146(1) of the Copyright Act 2021 is the equivalent of section 31(1) of the Copyright Act.

The High Court decided that the defendant cannot be said to have carried out the infringing acts, as there was no evidence that the Employee’s infringing acts were in the course of the Employee’s duties as an agent of the defendant, nor in the exercise of any powers granted to the Employee from the defendant’s constitution or in general company law. Further, the Employee had signed the defendant’s anti-software piracy policy in 2015, which stated that employees were not allowed to install, download or use any unauthorised software onto the defendant’s computers.

Furthermore, the High Court found that the defendant did not authorise the Employee’s infringing acts. While the defendant may have facilitated the copyright infringement by failing to account for the unused laptop and to install administrative controls onto it, the defendant had no control over what the Employee did with the laptop and the Employee’s infringing acts were carried out without the defendant’s knowledge. Further, the existence of the anti-software piracy policy supported the conclusion that the defendant would not have granted the Employee the right to commit the infringing acts.

However, the High Court proceeded to review decisions from the United Kingdom and Australia and held that in the absence of express restrictions in the Copyright Act, the doctrine of vicarious liability may be extended to copyright infringement.

The High Court went on to decide that the defendant should be made vicariously liable for the Employee’s infringing acts, as the circumstances in which the Employee was allowed to work provided the Employee with the opportunity to commit the infringing acts. The defendant had failed to take reasonable steps in preventing the Employee’s infringing acts due to its lax supervision of the Employee and the insufficient implementation of its anti-software piracy policy.

In support of those findings, the High Court pointed out that the unused laptop on which the infringing acts were carried out was mismanaged by the defendant, as the toolroom manager did not bring the existence of the unused laptop to the defendant’s attention and neither was the laptop properly secured in the toolroom. This mismanagement created the circumstances which facilitated the Employee to commit the infringing acts.

It must be noted that the High Court also found that the infringing acts were committed in the context of the Employee’s employment for the defendant’s benefit, as the Employee had committed the infringing acts to practise using the NX Software for the purpose of improving the Employee’s performance in relation to the tasks assigned by the defendant.

In finding the defendant liable, the High Court also considered the fact that imposing vicarious liability on the defendant would ensure effective compensation of the plaintiff, as the Employee was unlikely to possess sufficient financial resources to compensate the plaintiff. The High Court also concurred with the plaintiff’s arguments that this case would incentivise employers to take further steps in reducing the incidence of copyright infringement by their employees.

Key takeaways

The High Court’s decision establishes that the doctrine of vicarious liability can be applied to copyright infringement under Singapore law and in particular, that employers can be made vicariously liable for acts of copyright infringements by their employees.

The factors that would lead a court to find employers vicariously liable are linked to the opportunities employers afford their employees to commit infringing acts and the extent to which the infringing acts may further the employers’ aims.

In this regard, it is notable that while an employer’s imposition of an anti-software piracy policy on its employees may assist in avoiding primary liability, it may not be sufficient to avoid vicarious liability. Failure to ensure compliance with an anti-software piracy policy would render the existence of such a policy pointless in the face of a claim for vicarious liability.

Employers should therefore take greater care and exercise effective control over all electronic devices within their office premises that can be used to commit infringing acts and steps should be taken to ensure that all electronic devices are secured both physically and electronically from unauthorised use. Employers should also be proactive in the enforcement of their anti-piracy policies and ensure that these are regularly updated and brought to the repeated attention of their employees on a regular basis.

Reference materials

The judgment is available on the Singapore Courts website www.judiciary.gov.sg.

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