The Third Circuit Court of Appeals recently upheld a 2006 verdict against USI MidAtlantic, Inc. for $18.9 million plus $4.6 million in prejudgment interest stemming from a copyright infringement suit brought by competitor The Graham Company. The suit alleged Thomas P. Haughey, a former Graham employee who left Graham in 1991 to work for USI MidAtlantic, took with him two binders containing hundreds of pages of information describing different insurance products created by Graham employees which were subject to the firm’s copyrights. The suit further alleged that USI MidAtlantic copied language verbatim from the binders into over 800 client proposals to sell their insurance products. A jury found USI MidAtlantic’s “indirect” infringement went on for over ten years. Pursuant to the Copyright Act, Graham recovered profits attributable to USI MidAtlantic’s infringement, plus prejudgment interest.

TIP:   Copyright infringement can extend beyond direct, “reproduction and sale” infringement to include indirect infringement whereby a company uses a copyrighted work of another to help sell its products. Accordingly, companies should ensure they use original materials when preparing proposals and other information to support their sales.