Microsoft not so “soft” on copyright infringement

MICROSOFTNOTSO“SOFT”ONCOPYRIGHTINFRINGEMENT
ALEXANDRASTEELE*
LEGERROBICRICHARD,L.L.P.

L
AWYERS,PATENTANDTRADE-MARKAGENTS

InacaseopposingMicrosoftCorporationandseveralcorporateandindividual
Defendants,theFederalCourtofCanadafoundinfavourofMicrosoftCorporationin
somefifteeninstancescopyrightinfringementandthereforegrantedapermanent
injunction,togetherwithstatutoryandpunitivedamages,aswellassolicitor/client
costs.[MicrosoftCorporationv.1445687OntarioLimitedetal.,2009FC401,April
22,2009,MandaminJ.]
TheFacts

Betweentheyears2000and2006,thePlaintiffMicrosoftCorporation(“Micorsoft”),
investigatedandattemptedtocurbtheunauthorizedsalebyseveralcorporateand
individualDefendants,operatingunderthename“PCVillage”,ofcopyrighted
softwarebearingtheMICROSOFTtrade-marks.Notwithstandingdemandletters,
Courtproceedingsandnegotiations,theDefendantscontinuedtosellandinstall
unauthorizedcopiesoftheMicorsoft’scopyrightedsoftware.TheDefendantswere
representedbycounselearlyinthecase,butcounselremoveditselffromtherecord
aftertheDefendantsfailedtofollowthroughonanagreementinprinciplethathad
beenreachedbetweentheparties.Thereafter,theDefendantsdidnotfileadefence,
andsoMicrosoftmovedfordefaultjudgment.
TheFederalCourtJudgment

TheCourtbeganbyreiteratingthewellknownrequirementsforobtainingdefault
judgement.Therequirementsarethefollowing:
a)WherenoStatementofDefencehasbeenfiled,everyallegationintheStatement
ofClaimmustbetreatedasdenied.

©CIPS,2009.
*Lawyer,AlexandraSteeleisamemberofLEGERROBICRICHARD,L.L.P.,amultidisciplinaryfirmof
lawyers,andpatentandtrademarkagents..PublisjedintheJuneissueoftheWorldIntellectualProperty
Report.Publication142.224

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b)TheplaintiffmustalsoprovethatthedefendantswereservedwiththeStatement
ofClaim.
c)Theplaintiffmustdemonstratethatthedefendantshavenotfiledadefencewithin
thetimespecifiedintheFederalCourtsRules.
d)TheplaintiffmustadduceevidencethatwillenabletheCourttoconclude,ona
balanceofprobabilities,thatthereisinfringement.

Afterreviewingtheevidence,JusticeMandaminwassatisfiedthattheStatementof
ClaimhaddulybeenserveduponeachoftheDefendantsandthateachDefendant
hadfailedtofileaStatementofDefencewithinthetimeprovidedforintheFederal
CourtsRules.

Turningtotheissueofcopyrightinfringement,theCourtnotedthattheevidence
showedthatinvestigatorshadattendedatthepremisesoftheDefendantsonthirteen
differentoccasionsbetweentheyears2000and2006.Thecircumstancesofthe
computerpurchasesmadebytheseinvestigatorsattheDefendants’premises,
includingthefactoftheabsenceofanofficialCD-ROMandcertificateofauthenticity
labelofthesoftwareinstalledonthecomputers,theconversationsthatthe
investigatorshadwiththeindividualDefendants,asallofthesefactsestablishedthat
thecomputersoftwaresoldbytheDefendantswasunauthorizedbyMicrosoft.The
Courtwassatisfiedthatfifteenclearcasesofcopyrightinfringementofhadoccurred.

HavingfoundtheDefendantsliableforcopyrightinfringement,theCourtthenturned
tosection38.1oftheCanadianCopyrightActwhichpermitsaplaintifftoelectan
awardofstatutorydamages,nolessthan$500andnomorethan$20,000CADas
theCourtconsidersjust,perinfringedwork.Section38.1(5)oftheCopyrightAct
alsoprovidesthelistofrelevantfactorsfortheCourttoconsiderinexercisingits
discretiontograntanawardofstatutorydamages,namely:

a)thegoodorbadfaithoftheDefendants;
b)theconductofthepartiesbeforeandduringtheproceedings;and
c)theneedtodeterfurtherinfringementofthecopyrightedworks.

JusticeMandaminfoundthattheDefendantshadknowinglyinfringedMicrosoft’s
rightsasthefactsrevealedthattheDefendantshadbeenputonnoticetoceasetheir
activitiesonseveraloccasions:theyhadreceivedseveral“ceaseanddesist”letters,
hadconsentedtojudgmentinanothermatterandhadvoluntarilyenteredinto
settlementdiscussionswithMicrosoft.Underthesecircumstances,theCourt
concludedthattheDefendantswerewellawarethattheirconductwasillegal.In
addition,theCourtfoundthatdespiteenteringintoanagreementinprincipal,they
abandonedthesettlementagreementanddissolvedsomeofthecorporationsthat
hadcarriedoutinfringingactivities.TheCourtconcludedthattheDefendantsshowed
atotaldisregardforMicrosoft’srightsandfortheCourtprocess.TheCourtstated
thattheamountofstatutorydamagesmustcompensateMicrosoftnotonlyforthe
badfaithoftheDefendantsandtheirdisregardforMicrosoft’srights,butalsotodeter

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theDefendantsfromcontinuingtheirinfringingactivities.Tomeettheseobjectives,
theCourtgrantedstatutorydamagesintheamountof$10,000percopyrightedwork,
foratotalof$150,000CAD,asrequestbyMicrosoft.

Regardingpunitiveandexemplarydamages,theCourtreiteratedthatthe
Defendantswerewellawareoftheillegalityoftheiractions,butnonethelessactively
promotedtheiractivitiesbyprovidingunauthorizedcopiesofthesoftwareatalittleor
nocost,aspartofthecomputersystemtheywereselling.TheCourtagreedwith
Microsoftthatsignificantpunitivedamagesshouldbegrantedandthattherequested
amountof$50,000wasappropriateunderthecircumstances.

Finally,theCourtissuedapermanentinjunctionagainstalloftheDefendantsand
orderedthepaymentofalumpsumof$50,000representingsolicitor/clientcostsand
disbursements.
Conclusion

AlthoughsomemayperceiveCanadianlawasbeingsoftonpunishingviolationsof
copyrightsandtrade-markrights,thepresentcaseshowsthattheCourtswillnot
hesitatetoorderthefullextentoftheremediesavailablebylawtocompensate,
punishanddeter.
OneofthemajorhurdlesinenforcingintellectualpropertyrightsinCanadaand
abroadisthatmanydefendantshavelittleornorespectforintellectualproperty
rightsorfortheCourtprocess.Ultimately,theproblemliesnotsomuchonterritorial
lawsbeinglax,ortheCourtsbeingoverlytolerant,butratherwiththefactthatthe
saleofinfringingorcounterfeitproductsissolucrativethatindividualsand
corporationswillnothesitatetopursuetheseillegalactivitiesdespitebeingordered
tostop.Untiltheconsumerdemandforcheapcopiesiscurbed,intellectualproperty
rightsownerwillhavetocontinuetobevigilantandpersistentinprotectingtheir
valuableassets.

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