Printing industry risk managers and their advisers are eyeing the costly threat of unlawful infringements of patents, copyrights and trademarks--attention that is warranted in the onslaught of the Digital Age.
"We have elevated our global security awareness and standards to address not only physical security threats, but also threats to intellectual property, electronic data processing and cybertheft," says Arthur B. Kordus, director of global risk management at Banta Corp., which has nearly 50 operating locations around the world.
What makes managing this new, unpredictable risk especially difficult, points out John Brosnan, director of the media and intellectual property practice for Aon Financial Services' Chicago-based professional risk solutions group, is that corporate protection in this area is a two-way undertaking.
Brosnan says that printers offering what they believe are propriety processes, especially the growing number of supply-side management programs in the market, must be concerned about both enforcing their intellectual property rights against infringers (in order to maximize market share) and avoiding infringement of a third party's rights (or at least shifting the risk through indemnification or insurance where possible).
"Litigation is so expensive, both in terms of legal expenses and potential damages, that a business model can be severely impacted if a company has either not performed due diligence or its due diligence has not revealed that it is exposed to liabilities for infringement," Brosnan says.
Highlighting the bottom-line importance of infringement clashes, big-game hunter R.R. Donnelley, the world's largest full-service printer, has filed a lawsuit against Quark Inc. and Creo Inc. (a subsidiary of Eastman Kodak Co.), charging that products manufactured and sold by the defendants infringe on an "extensive portfolio of R.R. Donnelley patents in the area of digital print processes."
In the action, filed in mid-January, R.R. Donnelley claims that these digital print processes "are central to a significant segment" of its service and product offerings. The complaint seeks monetary and injunctive relief from both of the defendants.
In the copyright infringement corner per se, the hope of all printers--from industry giants to mom-and-pop copying-service shops--is that the absence of knowledge or intent in a case of printing materials that violated copyright law is a valid defense.
But in 1993, a federal court in Chicago ruled that an advertising-brochure printer was liable for copyright infringement by producing certain photos that its contracting client used in the brochures, even though the printer was unaware that the client had not paid a licensing fee for use of the photos.
"Generally, neither actual knowledge nor specific intent is required for one to be liable for copying someone else's work without permission," says Bruce E. Colfin, partner at the New York City-based law firm of Jacobson & Colfin P.C., specialists in entertainment copyrights and trademarks.
"An 'innocent' infringer is still liable for the infringement," adds Colfin, "although the level of innocence is important in determining the dollar amount of damages."
The most frequently cited example of the danger of printers straying too far from the bounds of strict copyright-law interpretation is Basic Books Inc. v. Kinko's Graphics Corp., decided in the federal court for the Southern District of New York in 1991.
In that case, Kinko's was held to be infringing copyrights when it photocopied articles and book chapters for sale to students as so-called "coursepacks" for their university classes.
The court found a direct effect on the market for the materials because Kinko's coursepacks competed directly with the potential sales of the original books, magazines and journals as assigned reading for the students, and because permissions to make the copies were reasonably available from the copyright holders.
At Danvers, Mass.-based Copyright Clearance Center Inc., a not-for-profit organization that provides copyright licensing and compliance services for the text-based works of more than 9,600 publishers and hundreds of thousands of authors and other creators, Vice President and General Counsel Frederic Haber says: "If it can reasonably be inferred by the printer that what's being copied is copyrighted material owned by a third party, the person making those copies is responsible for what he or she is doing.
"Particularly where multiple copies are being made," adds Haber, "the printer should ensure that the necessary permissions have been obtained, either by the printer itself or by the person requesting the copies."
"After the Kinko's case," Haber concludes, "printers were no longer able to say, 'Gee, we didn't know,' and try to use that as a legal defense."
April 1, 2006
Copyright 2006© LRP Publications