Think it's harmless to copy those newsletter articles for your files? Think again.

Suppose a certain industry newsletter is indispensable to your business. Many of your employees need ready access to it, but subscriptions cost $400 each. How about buying one subscription and encouraging employees to check for articles they think they might need and then make copies for their files?

That's what Texaco Inc. did with various scientific journals that its huge research and development staff needed--until the publisher of one of the journals found out and took Texaco to court. The U.S. Court of Appeals for the Second Circuit ruled that Texaco's practice was not "fair use" of the journals. After much negotiation, Texaco agreed to settle the case with a seven-figure retroactive licensing fee.

Stephen Gillen, an attorney who specializes in copyright, trademark and publishing issues with Cincinnati law firm Frost & Jacobs LLP, draws a parallel to computer software. "Most executives are well aware that buying one copy of a software program does not entitle their company to make multiple copies for internal use," Gillen says. "Many, though, would be surprised to learn that subscribing to a scientific or business periodical does not entitle the company to photocopy its articles, even for strictly internal use by its staff."

While most small businesses aren't likely to use scientific journals, many depend on industry newsletters. Because they're targeted specifically to a given industry and provide the latest news and analysis, these newsletters charge a price far greater than their size would seem to warrant. A single annual subscription might cost hundreds of dollars because newsletter publishers rely on subscription and licensing fees rather than advertising. "They can't afford to sell one copy and have it copied many times," Gillen says. Accordingly, newsletter publishers are even more aggressive than research and development publishers about going after people making unauthorized photocopies.

Steven C. Bahls, dean of Capital University Law School in Columbus, Ohio, teaches entrepreneurship law. Freelance writer Jane Easter Bahls specializes in business and legal topics.

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This article was originally published in the January 1998 print edition of Entrepreneur with the headline: Copycats.

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