Digital Watermarks: The Interaction of Digital Watermarking and Copyright Law

The Interaction of Digital Watermarking and Copyright Law

Even prior to the recent introduction of digital watermarks and tracking technologies, webmasters have been found liable for copyright infringement on-line. The new software and services seem likely only to increase the frequency with which copyright owners will pursue Internet infringement. Already, some lessons are emerging from the case law:

1. Proving copyright infringement on-line is not difficult, and digital watermarking may make this task even easier. For example, where a webmaster simply scans photographs from a commercial magazine and includes them on a web site, a court can easily recognize the similarity between the hard copy and digital versions. In one recent case, in Playboy v. Webbworld, a federal court in Texas found the operator of a web site liable for copyright infringement where the web site included photographs that had appeared in Playboy magazine. Apparently without seeing a need for further explanation, the court said simply: "The images retrieved by [Playboy's electronic infringement research assistant] from the [defendant's] website are virtually identical to those images which previously appeared in one of Playboy's copyrighted magazines." In cases where such virtual identity may not be as apparent to the unaided eye, digital watermarks could play an important role. By finding a digital watermark on an image on a defendant's web site, a plaintiff could easily prove that the image was copied from the original.
2. The price for committing copyright infringement on-line can be severe. In the same Webbworld case from Texas, after finding 62 photographs on the infringing web site, the court awarded Playboy damages of $5,000 per infringement, for a total of $310,000. In addition, the court ordered the defendant to pay reasonable attorneys' fees to Playboy. The damages awarded by the court may have been so high in part because Playboy offered evidence that the defendant's conduct constituted "willful infringement," that is, that the defendant knew his actions constituted an infringement. Arguably, with the introduction of digital watermarking, willful infringement may become easier to prove: A court might find willful infringement where a webmaster uses a copyrighted image even after the webmaster discovered a digital watermark on the image.
3. Webmasters may be held personally liable for copyright infringement. Although a webmaster may operate as or for a corporation and thus under the belief that his personal assets are protected against lawsuits such as those involving copyright infringement, a webmaster's actions could subject him to personal liability. In another federal case brought by Playboy, Playboy v. Russ Hardenburgh, Inc. in Ohio, the court found a corporation and its president and sole shareholder liable for 412 infringing GIFs found on the defendant's computer bulletin board system. The president was found personally liable, the court said, because he "has the authority, right and ability to control the content of the BBS and its operations." (Playboy is an obvious target of copyright infringement on the Internet and a reported user of Digimarc's services.)
4. A webmaster may be held responsible even when a person other than the webmaster uploads copyrighted material to a site. In both Webbworld and Hardenburgh, the defendants unsuccessfully argued that the infringing images had been uploaded to the sites by third parties, relieving them of any liability. "If a business cannot be operated within the bounds of the Copyright Act," the court in Webbworld said, "then perhaps the question of its legitimate existence needs to be addressed."

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