Employers often face the dilemma of allowing employees to use their personal tools and software accounts for work purposes. While it may seem efficient and cost-effective, there are significant risks involved. Business attorney Aaron Hall highlights why companies must be cautious about this practice.
Employee-Owned Code
When employees use their own software code, ownership becomes a major concern. If an employee develops software or a tool using their code, the company may face legal challenges once that employee leaves. The primary issue is whether the company has the right to continue using the code. Without proper agreements, the company might lose access, leaving them unable to maintain or update their systems.
Software Licensing
Another critical issue is the licensing of software. Employees may use software tools they have personal licenses for, but these licenses often do not transfer to the company. This becomes problematic when the employee departs, as the company might not legally be able to use the software or any products created with it. For example, creating a video using Adobe products requires a commercial license, and failure to comply can result in legal action.
Loss of Access
When employees leave and take their accounts with them, the company loses access to essential resources. This can disrupt operations, especially if the company needs to modify previous work. For instance, if an employee used Canva to create marketing materials, the company would need access to the account to make updates. Without it, even minor changes become impossible.
Using Licensed Images and Media
Employees might use images or media from various sources, assuming they have the right to use them. However, this can lead to copyright infringement issues if the proper licenses are not obtained. Companies need to ensure they are working with legitimate licensing firms like Shutterstock or Adobe Stock, which offer insurance policies to protect against infringement claims.
Risks of Fraudulent Licenses
There are instances where employees inadvertently purchase licenses from fraudulent sources. Even if the company paid for these licenses, they could still face legal challenges if the seller did not have the right to distribute the content. Ensuring all media and software come from reputable sources is crucial to avoid such pitfalls.
Regular Review of Tools and Resources
Companies should periodically review the tools and resources their employees use. This includes verifying that all software and media are properly licensed and ensuring the company retains access to necessary accounts and tools.
Centralized Control of Accounts
Maintaining control over all accounts and tools used in the company is essential. This involves setting up company-owned accounts for software and media tools, ensuring that all work-related resources remain accessible regardless of employee turnover.
Legal Oversight
Having legal oversight to manage software licenses and intellectual property rights can prevent many issues. This might involve in-house legal teams or consulting with external attorneys to review and manage the company’s use of software and media.
Allowing employees to use their personal tools and software accounts poses significant risks related to intellectual property, licensing, and access. Companies must implement best practices to manage these risks effectively. By centralizing control and ensuring legal compliance, businesses can protect themselves from potential legal challenges and operational disruptions.
Video Transcript
Why Business Owners Should Pay Attention
It is really dangerous to let employees use their own tools, like their own software accounts. Their own software code that they get. It is really important for companies to pay attention to what resources are being used by the employees. I will explain why.
I am Aaron Hall. I am an attorney for business owners and entrepreneurial companies.
Common Practices That Lead to Legal Trouble
Imagine an employee comes on board and that employee you have hired, in order to develop an app or a website or some sort of software, or maybe it is some sort of presentations or a product, whatever it is, often employees want to use the tools they have used in the past. That might be a tool they use for some software.
Maybe it is an online website where they have an account. Maybe it is a free account. Maybe it is a paid account. Maybe they are grabbing code that they used for some other project and they are using that in their software. Why not just let the employee be accountable for the results? Why do you need to meddle and micromanage and get into what the employee is actually using the tools and the resources?
Intellectual Property and Licensing Risks
Here is why. Intellectual property rights and access once the employee is gone. Maybe you didn’t realize this, but often when an employee uses software, either the employee owned that software or the employee might be licensing it from someone. But there is a question. First, if it is the employee’s actual code, then when the employee leaves, there is a question, “Do you have the right to use the code?” You may not.
In other words, the employee may have made use of the code while the employee worked in the company. But then, when the employee leaves, the employee ends the licensing agreement or the permission to use the code. Now what is the company going to do? And by the way, if you have to fire the employee, the employee is even more likely not to allow you to use his or her code.
Software Licensing and Commercial Use
If the employee has used software, there is a question whether the results from that software or whatever was made with that software can be used by your company for commercial purposes. Usually, software is licensed. It is licensed to the employee. And now that license may allow for the employee to create work for a commercial purpose, but there is a question, “Does that license transfer over to your corporation or your company? And what if the employees no longer with you, can you continue to use it?”
What Happens When the Employee Leaves
Here is another problem that comes up. Employees might use software. I’ll give you an example, Canva. Canva is a really cool tool to easily make graphics and images, and now even videos. It is just amazing. And the employee might have a free account. Maybe it is a paid account. Imagine the employee creates all sorts of stuff for the company. And let’s just assume for a moment that it is not even a problem that with Canva that the contents that were created are used by the company.
But here is the problem. The employee leaves, and the company no longer has access to that account. Now let’s say the company wants to make a minor tweak to an image from a year or two ago. Or change some of the text. Or they need the image in a different format. So they need to download it again. If they don’t have access to that Canva account, the company can’t access it.
Questions to Ask Internally
So usually, startups are pretty scrappy. They are using whatever tools and resources they can. But it makes sense to at least review on a periodic basis. Are these tools okay for the company? What happens after the employee who is using the tool leaves? Do you own the resource or the work created by the tool? Can you get back in there and tweak things? Do you have access to the tool?
And then, from a copyright standpoint, do you have a lawful license to be able to use this tool, or can the employee send you a cease and desist letter saying, “You must stop using that code because I own it and you fired me.” And now the employer can’t use it any longer? Or you might find another company says, “Hey, look, we see that you used Adobe products to create this video. You never were licensed to create that video. Take that video down or pay us $10,000 to acquire a license after the fact for all those videos that were created.”
Avoiding Trouble with Derivative Works
So what is the takeaway here? When you are running a company, you want to make sure that the company has access to all the accounts, the tools that are being used by the employees and that somebody is paying attention, whether it is a lawyer or somebody else in the company, who knows, to the legal rights to use what has been created by those tools because if you use Adobe products to create tools, then this work that is created by the software legally is called a derivative work.
In other words, it is derived from an Adobe software. So if you don’t have a license or you don’t have permission to use it for a commercial purpose in the company, Adobe can say, “Shut it down.”
When Employees Use Online Images
One other example of problems I have seen is where employees will get an image online. They might even pay for the image, and they think they are getting the rights to it to use in the company.
And let’s say, years go by, the image has been used. Let’s say it is an image up on the company website. The employee is long gone. And then the company gets a letter from the attorney representing the image copyright holder. And the letter says, “You will immediately cease and desist from using this image. You are violating the copyright of the image owner.” And you say, “Well, wait a second. I don’t remember ever taking somebody else’s image.” And then you go, “Oh yeah, I bet this was this one employee who did this.”
Well, did they keep any record of paying for it? And by the way, even if you pay for an image, it doesn’t mean you necessarily own the rights to that image. You might be paying a con artist who says they have the rights and they are giving you permission, but they don’t have the rights. So with images, it is really important to work with legitimate image licensing companies. One of the big players that way, you know, you are covered. And often, a way to ensure you are protected is to check and see if that company has some sort of insurance policy in place.
Working with Reputable Licensing Sources
So if you later get a cease and desist letter from the owner of the image and they claim that you are infringing the copyright, you can say, “Wait a second, no, we purchased that image from Shutterstock, iStock Photos, or Adobe Photos, whoever it may be. Here is the license we have, and let’s reach out to the company because they have an insurance policy to defend us in that case.”
I have seen where there are accidents and there wasn’t clear communication between the copyright owner and the licensing company. And so the cease and desist letter was sent out in error. I have also seen where companies purchased from a fraudster, from a scam. They paid to use an image, but the company they paid didn’t have the right to license it to you.
So merely paying for a license is not enough. So as you can see here, whatever images software, tools, videos stock photos, stock videos, sounds, all of that, they are important copyright features. And it is important for a company who wants to avoid intellectual property lawsuits to be attentive to working with legitimate sites, controlling the accounts, and paying for the tools they use. And that way, they have this strong defense if there ever is an allegation later for copyright infringement or some other type of intellectual property infringement.
Stay Informed and Protected
I am Aaron Hall. I am an attorney for business owners and entrepreneurial companies. If you would like more tips about how to avoid problems in your company, you are welcome to subscribe.
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