Employer’s Liability for Independent Contractor’s Copyright Infringement

From Lexology, John Ahn discusses the liability of businesses that hire independent contractor’s for copyright infringement by the independent contractor. John writes:

Copyright Infringement of Independent Contractors
We know that your direct actions can constitute infringement, but what happens when the infringement occurs due to a third party’s actions? For example, what if the third party is the independent contractor you hired to create your website?
In these instances, courts have held that anyone who has the “right and ability to supervise the infringing activity” of an independent contractor will be held vicariously liable for copyright infringement if he/she enjoys a “direct financial benefit from said infringing activity.” (See Rosen v. Martin. Cal. Apr. 19, 2013, No. CV 12-0657 ABC (Ex)) 2013 U.S.Dist.LEXIS 201985, at *12.)
In Rosen v. Martin, the court found the defendant had the ability to supervise the work of his independent contractors when they downloaded and uploaded copyrighted works without the Plaintiff’s permission. (Id.) Even though the defendant directed the independent contractors to not list these works again after the fact, the court still held the defendant vicariously liable for the independent contractors’ infringement. (Id.) In other words, even if your web designer is the one who actually infringed on an existing copyright, you could still be held accountable for the actions of your independent contractor.
The “What Ifs”
What if you completely unaware of the infringement? Could you try to make the argument that as the employer, you did not know your independent contractor would or could be infringing on intellectual property? The court in Hitek Software LLC echoed the ruling in Rosen but added that an employer who had the right to supervise the infringing activity would still be vicariously liable “even if the defendant initially lacks knowledge of the infringement.” (See Hitek Software LLC v. Timios, Inc., (C.D.Cal. June 18, 2012, No. CV 12-709 CAS (AJWx)) 2012 U.S.Dist.LEXIS 86560, at *11.) In Hitek Software LLC, the alleged infringement occurred when Timios, Inc. (the “Defendant”) employed an independent contractor computer specialist who installed software for the Defendant using an illegally generated product key and spoofing the software activation process. (Id. at 3.) However, the court determined that the Defendants had the right and ability to “oversee, govern, control, and direct” the independent contractor at all relevant times and was therefore liable for the independent contractor’s actions. (Id. at 13.) The idea here is that if you had the right and ability to supervise your independent contractor during employment, you should have known better and are not excused by your ignorance.
What if the independent contractor was simply negligent? Would employers be absolved of liability? As a general rule, employers will not be held vicariously liable for the negligent acts of their independent contractors. (See Secci v. United Independant Taxi Drivers, Inc. (2017) 8 Cal.App.5th 846, 859 [214 Cal.Rptr.3d 379].) This rule has a few caveats and exceptions like the peculiar risk doctrine, which states an employer can be held liable for an independent contractor’s negligence if the contractor was hired to perform work that is inherently dangerous, and the contractor’s negligence causes injury to others. (Privette v. Superior Court (1993) 5 Cal.4th 689, 691 [21 Cal.Rptr.2d 72, 854 P.2d 721].) However, assuming you haven’t hired an independent contractor for work that is inherently dangerous (and without getting into whether the court’s current view will continue to prevail) courts still generally view copyright infringement as a strict liability tort. (See Educational Testing Serv. v. Simon (C.D.Cal. 1999) 95 F.Supp.2d 1081, 1087.) Plaintiffs can merely show the defendant used their authored work without permission (e.g., copied, distributed, or performed) in order to prove a prima facie case of copyright infringement. This essentially means that you will likely be unable to use your independent contractor’s negligence as a defense to vicarious liability for your independent contractor’s infringement.
The takeaway here is simple: ask for permission. When you are dealing with situations where you encounter authored work that catches your eye, and you plan on using the copyrighted material in some shape or form, make sure to ask for the owner’s permission. Not all owners or originators of copyrights will ask for money. In fact, many just want credit and recognition for their hard work. If you don’t have the budget (or maybe you just don’t like talking to people), find something that is public domain including free stock images and try to make it work (because you don’t really have that many other legal options). As an employer, make sure your independent contractor is taking the same precautions to avoid letters from firms like Koppi & Wright, PC to save yourself the headache.