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Newsletter awarded $20 million for copyright violations

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Newsletter awarded $20 million for copyright violations

  • A federal jury in Baltimore ordered financial services group Legg Mason to pay $20 million for distributing a copyrighted subscription newsletter among its thousands of employees.

Oct. 9, 2003 — Financial services giant Legg Mason was ordered by a federal jury in Baltimore last week to pay a small publication company $20 million for repeated copyright violations.

Three Legg Mason employees who subscribed to the online financial newsletter Lowry’s Market Trend Analysis regularly faxed the copyrighted material to branch offices and posted it on the company’s internal Web site. In its lawsuit, filed in U.S. District Court in Baltimore nearly two years ago, Lowry’s Reports alleged that Legg Mason illegally distributed its newsletter since 1988, and continued to do so even after learning of the copyright violations in July 2001.

“We were very pleased with the verdict,” said Lowry’s Reports President Paul Desmond. “I think it’s an important ruling for all small publishers who are often precluded from protecting their copyrights because of the huge legal costs associated with this type of litigation.”

Lowry’s promotes its newsletter as “one of Wall Street’s leading financial periodicals reporting on the stock market, reaching a limited but influential market of trading, investing, and corporate finance professionals.” The company earns almost all of its revenue from its annual subscriber fee of $700.

Legg Mason employs 5,300 people in 146 offices nationwide, while Lowry’s has seven employees at its one office, in North Palm Beach, Fla. According to the lawsuit, nearly a quarter of Legg Mason’s employees were accessing the copyrighted material for free.

“If we had 10 firms the size of Legg Mason doing this exact same thing, then our future [as a company] would be very much in question,” said Desmond.

Legg Mason spokeswoman Maura Fox said her company was considering whether to appeal the ruling. “We are shocked at the extent of the damages awarded to Lowry’s by the jury, and believe that those damages are grossly excessive,” she said.

However, University of Baltimore Law School professor William Fryer said the size of the award was appropriate in this case because the violations occurred with regularity over an extended period of time.

“In determining awards, the basic test is to determine the extent [the copyright violations] harmed the commercial value of the product,” he said. “In this case, the violations were systematic and pervasive, and really so aggravated that it was clearly interfering with [Lowry’s] business.

“We have to realize that online copyrighted material is no different than a beautiful painting — it might be easier to copy, but it doesn’t mean you have a right to do it,” he added.

Legg Mason reported $1.5 billion in total net revenue for the fiscal year 2003. The Baltimore-based company provides asset management, securities brokerage, investment banking, and related financial services through its subsidiaries.

(Lowry’s Reports, Inc. v. Legg Mason, Inc. and Legg Mason Wood Walker, Inc.; Council: Thomas W. Kirby, Washington, D.C.) MC

© 2003 The Reporters Committee for Freedom of the Press

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