Company held liable for copyright infringement after employee installs unlicensed software

The High Court ordered manufacturer Inzign to pay $30,574 in damages to Siemens Industry Software. ST PHOTO: KUA CHEE SIONG

SINGAPORE - A Singapore company was sued for more than $400,000 by an American software company, after its employee installed an unauthorised version of the latter’s software on an unused laptop he found at the workplace.

In its suit, Siemens Industry Software contended that the defendant, medical device manufacturer Inzign, was both directly and vicariously liable for copyright infringement arising from the actions of its employee.

On Wednesday, the High Court found Inzign only vicariously liable for the acts of its employee Paing Win, and ordered the company to pay $30,574 in damages to Siemens.

Siemens had claimed $259,511 in damages, comprising notional licence fees for the modules allegedly used by Mr Win, as well as additional damages of $200,000 to punish Inzign for its “reckless and flagrant” conduct.

But Justice Dedar Singh Gill said that the $259,511 sum was excessive and that Inzign’s conduct did not warrant additional damages.

The case involves Siemens’ NX software, which can create computerised models of a product, develop physical products from these models, and put them to use with little or no physical testing.

Users typically purchase licences only for the modules specifically applicable to their businesses.

Inzign owns licences for three modules, each of which can be used only by a single user at any one time.

Mr Win, who joined the company in 2011 as a machinist, was required to use the software after his role was expanded to include programming responsibilities.

He said that when work slowed down during the pandemic in 2020, he watched tutorials on YouTube to familiarise himself with the software, and came across instructions to download the full version.

He tried unsuccessfully to install the software on his personal computer, which could not support the program, and was also unable to bypass the administrative controls of the company’s computers.

He then took a laptop that his toolroom manager, Mr Wong Quee Seng, had left in one of the drawers of the toolroom.

On discovering that there were no administrative controls, he downloaded and installed the software on it. He used the software on at least 15 different occasions between December 2020 and April 2021.

In March 2021, Mr Nicholas Low, an employee of the Siemens unit that distributes and sub-licenses the software in Singapore, discovered the unauthorised use through an automatic reporting function built into the software.

He traced the infringement to Inzign and visited the company’s premises in April. Following internal investigations, the software was uninstalled from the laptop.

Mr Low suggested that Inzign could “legalise” the infringement and attached a quotation for a licence to use one module for the price of $79,587.

Inzign did not take up the offer and Siemens filed the lawsuit.

In his judgment, Justice Gill found that Inzign was careless in its management of the laptop, which was left unsecured as a result of Mr Wong’s negligence.

Moreover, Mr Win was not given adequate supervision in the course of his work; his supervisor entered the toolroom only when specific issues pertaining to a machine arose, said the judge.

The judge also noted that the anti-software piracy policy was last brought to Mr Win’s attention in 2015.

Justice Gill found that Inzign was not primarily liable for copyright infringement, as it did not know that the infringing acts had occurred and had little practical control over Mr Win’s actions on the laptop.

However, the judge held that Inzign was vicariously liable for Mr Win’s acts, as there was a sufficient connection between their employment relationship and the infringing acts.

He concluded that Inzign’s lax supervision of Mr Win afforded him the latitude and opportunity to commit the infringing acts.

The mismanagement of the laptop also facilitated the acts of copyright infringement, he said.

Mr Wong admitted in court that he had failed to follow proper procedure when he sent the laptop for repairs without obtaining approval, and later placed the repaired device in the drawer without informing the company of it.

Justice Gill also found that the infringing acts were committed in the context of Mr Win’s employment for Inzign’s benefit.

Even though the infringing software was not used in relation to Inzign’s official projects or jobs, Mr Win did not install the software to further his personal interests, but because he wanted to become more skilful in using it, said the judge.

As for the quantum of damages, the judge determined the sum based on the licence fees that Inzign would have paid Siemens if a hypothetical bargain had been struck between them.

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