Employer Beware: Strict Liability in Copyright Infringement – Lessons from Siemens v. KB Engineering [2025] 5 CLJ 856

Introduction

In a landmark ruling, the Court of Appeal of Malaysia recently underscored the strict liability nature of copyright infringement, holding employers accountable for unauthorized software use by employees—even when done without the employer’s knowledge. The case of Siemens Industry Software Inc v. KB Engineering Coatings Sdn Bhd serves as a critical reminder for businesses to vigilantly monitor their IT systems and enforce compliance with software licensing agreements.

Key Facts of the Case

• Infringement Discovery: Siemens discovered that an unlicensed copy of its NX12 software was installed on a computer at KB Engineering’s premises.
• Employee’s Defense: The employee claimed the software was downloaded for personal learning purposes to enhance his skills.
• Employer’s Defense: KB Engineering argued it had no knowledge of the infringement and could not be held liable for the employee’s actions.

Court’s Ruling and Legal Principles

1. Strict Liability: The court reaffirmed that copyright infringement does not require proof of intent. Employers are liable for unauthorized reproductions of software, even if done without their awareness.
2. Vicarious Liability: KB Engineering was held vicariously liable for its employee’s actions, as the software was used on a work laptop during employment.
3. Prima Facie Evidence: Siemens successfully proved ownership and copyright subsistence under Section 42 of the Copyright Act 1987, shifting the burden to KB Engineering to rebut the evidence—which it failed to do.

Practical Takeaways for Employers

• Conduct Regular Audits: Implement periodic software audits to ensure compliance with licensing terms.
• Educate Employees: Train staff on copyright laws and the risks of unauthorized software use.
• Enforce IT Policies: Establish clear policies prohibiting the installation of unlicensed software and monitor compliance.
• Respond Promptly: If infringement is detected, take immediate corrective action to mitigate liability.

Conclusion The Siemens v. KB Engineering case highlights the non-negotiable nature of copyright compliance. Employers must proactively safeguard against infringement risks to avoid costly legal consequences. As technology becomes increasingly integral to business operations, vigilance in software management is not just best practice—it’s a legal imperative.