Introduction
A recent Court of Appeal case, Siemens Industry Software Inc v KB Engineering Coatings Sdn Bhd [2024], affirmed that employers can be held liable for copyright infringement committed by their employees. In this case, an employee tampered with a software licence file, giving unauthorized access to the plaintiff’s software on a work laptop.
At first, the High Court refused to grant summary judgment, saying there were triable issues including whether the employer was responsible for the employee’s actions. On appeal, however, the Court of Appeal ruled otherwise, holding the employer vicariously liable. This decision highlights the need for employers to put in place proper policies and safeguards to avoid such risks.
A similar stand was taken earlier in Singapore in Siemens Industry Software Inc v Inzign Pte Ltd [2023]. Both cases serve as a warning to organisations that copyright infringement by employees can land the company itself in trouble.
Copyright Protection in Malaysia
Copyright law in Malaysia is governed by the Copyright Act 1987. Generally, copyright cannot be formally registered in Malaysia, but ownership can be proven through documents such as a Statutory Declaration or by filing a Voluntary Notification at MyIPO. The Copyright Act under Section 7 recognises copyright in six categories of works: literary works, musical works, artistic works, films, sound recordings and broadcasts.
For literary works, originality is required, meaning that the work must involve effort, skill, or labour. Computer programs/software are expressly classified as literary works under Section 3 of the Act and are therefore protected by copyright law in Malaysia as seen in the Siemens case.
What Counts as Infringement?
Section 36 of the Copyright Act provides that copyright is infringed when a person does, or causes another person to do, any act controlled by copyright without the permission of the owner. Infringement also includes circumventing technological protection measures as set out in Section 36A and the removal or alteration of electronic rights management information under Section 36B.
The tampering of software licensing files, as seen in the Siemens case, is a clear example of such infringement.
Employers’ Liability
The courts in both Malaysia and Singapore have made it clear that organisations can be held vicariously liable for copyright infringements committed by their employees. Copyright holders are entitled to seek remedies against the employer, not just the individual employee. This means that employers cannot simply argue that they had no knowledge of the infringement by the employee. A lack of awareness will not be accepted as a defence.
How Employers Can Prevent Liability
Employers must take proactive measures to prevent copyright infringement in the workplace. These include:
- Educating and training employees on the importance of licensed software and the consequences of infringement.
- Using software asset management tools to track software usage and ensure compliance with licences.
- Conducting regular compliance reviews to detect possible violations early and take corrective action.
- Implementing a strong IT governance framework to regulate software use and ensure adherence to licensing requirements.
- Adopting a comprehensive anti-software piracy policy that is not only written but also actively communicated and enforced through contracts, training, and reminders.
Conclusion
Employers may find it difficult to escape liability for copyright infringement committed by employees, especially with the recent decisions by the Court. Prevention is therefore better than cure. The most effective way forward is for organisations to ensure that they have proper policies, continuous training, and strong governance systems in place.
Pravin is a contributor covering legal insights with a focus on making sense of Malaysia’s evolving legal and regulatory landscape through practical and accessible analysis. More about Pravin.
This article was contributed and sponsored by Kevin Wu & Associates, a full-service law firm based in Kuala Lumpur with practice areas in corporate, dispute resolution, criminal, family office and company secretarial services. KWA offers preliminary consultation and legal advisory to all Temasek Post readers.
Email: office@kevinwuassociates.com
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