Channeling a company's single subscription newsletter into in-house computer data bases saves labor, time, money and paper, according to the office manager of a large equipment manufacturer. "Besides," he added, "it's environmentally beneficial." He didn't realize he was setting his company up for a costly lawsuit.

Many people know it is illegal to photocopy newsletters and other trade and business periodicals, thereby saving the cost of multiple subscriptions. However, relatively few individuals know that electronically storing and sharing such materials also violates federal copyright laws.

The correct way to make and circulate copies at will is to buy a license from the publisher, which can cost thousands of dollars.

A West Coast software firm recently paid $100,000 to settle a copyright infringement lawsuit after admitting that it copied and distributed several newsletters published by Phillips Business Information Inc. According to court papers, Phillips alleged that the firm created paper and electronic copies over a two-year period while holding only one corporate subscription to each publication.

Unfortunately for publishers, violating a copyright is easy to do and hard to uncover. "As each firm begins to digitize its information, [electronic distribution] will become a more common practice," said a lawyer who represents publishers in copyright infringement cases.

"Like a lot of people in the U.S., our people didn't know that what they were doing was wrong," said a spokesman for the accused firm, which planned to cancel all newsletter subscriptions.

Subscribers can rely on a growing assertiveness among publishers in safeguarding their copyrights. Publishers reward individuals who provide tips on illegal copying. A promised $1,000 bounty by Phillips opened the door to information that launched its lawsuit.

In 1992, Pasha Publications filed a federal lawsuit in which the court ruled businesses need permission even for in-house distribution of a few photocopies. "Suing customers is distasteful," said Pasha's publisher, "but unless we protect our copyright, we're going to lose it."

Last summer, newsletter publisher Business Publishers Inc. (BPI), Silver Spring, Md., accepted a monetary settlement of a copyright infringement claim against an environmental company. BPI had alleged that the company routinely made cover-to-cover photocopies of BPI's weekly Solid Waste Report newsletter and distributed them to corporate executives in a regular news summary package.

According to BPI President Lawrence Fishbein, BPI offers economical ways to provide multiple copies of its newsletters to executives who need them. "We sell discounted group subscriptions and very liberal photocopy licenses," Fishbein said, "and we participate in the Copyright Clearance Center."

Like other newsletter publishers, BPI reminds readers that violating the copyright laws can lead to damages as high as $100,000 per infringement. In this case, that warning was photocopied along with all of the other items in Solid Waste Report - adding insult to injury, Fishbein said.

"We try to maintain a good relationship with all of our subscribers," Fishbein said. "But we cannot and will not ignore such flagrant abuses of our rights and the good faith of the majority of subscribers who comply with the law."

A federal appeals court in New York is considering a case that probably tests the extremes of copyright protection. Six publishers sued Texaco because one of the company's scientists photocopied a number of journal articles for his own professional use. For its part, Texaco staunchly defends the employee's actions under the "fair use" exception to the copyright laws. The "fair use doctrine" allows photocopying for research and non-commercial purposes. Moreover, according to Texaco, copying the articles allowed its scientist to scribble notes in the margins, to protect the condition of the originals, and to promptly share the journals with other scientists.