Imagine a business that hires an employee who brings with him computer programs he wrote for his prior employer, which he offers for use at his new employer. The new employer incorporates and uses those computer programs in the business. As time passes, those computer programs help jump-start the business, save the business money or help increase sales. Then, sometime later the business receives a complaint alleging copyright infringement. It turns out that the employee who brought the works into the business really didn’t own them. The copyrights belonged to the employee’s previous employer. Now, after trial and appeals, the business is facing a judgment of several million dollars for copyright infringement plus several million more dollars for prejudgment interest.

Businesses need to be careful in using copyrighted works and should know where the works come from. Not knowing will impact business valuations and liabilities whether it is in the context of a merger and acquisition, or otherwise.