Jonathan Carter Shaw is a solicitor in Manches’ IT group and isbased in Oxford. He can be contacted by telephone on 01865 722 106 or by e-mailon jonathan.cartershaw@manches.co.uk
In Microsoft Corporation v Plato Technology Limited [1999]Masons CLR 87, the High Court stated that,where a person had infringedintellectual property rights in software, the relief it would rant to the ownerof those rights would depend on whether the infringer was innocent or dishonest.
The Facts
Plato Technology supplied to enquiry agents of Microsoft fivecounterfeit copies of Microsofts Windows 95 computer operating software. PlatoTechnology had purchased the copies of the Windows 95 software front anothercompany, Agency Sales Limited (which was not part of the action). PlatoTechnology asserted that it had no reason to believe that the copies of theWindows 95 software were anything other than genuine Microsoft products (andthis was accepted by the court as fact).
Plato Technology conceded that, by selling counterfeit copies ofthe Windows 95 software, it had infringed Microsoft’s intellectual propertyrights in the Windows 95 software. The court also reiterated the acceptedposition that whether the infringer had knowledge that its acts were infringinganother party’s trade mark or copyright (save for so called secondaryinfringement) was irrelevant to whether or not the party bad infringed the otherparty’s rights. The only question for the court to decide was what remediesMicrosoft was entitled to receive as a result of that infringement.
Microsoft’s Application
Microsoft applied for
- a wide-ranging, injunction to restraint, any further infringement of Microsoft’s intellectual property rights in any of its software products – the injunction sought was not restricted to Windows 95 software or to products which were purchased from Agency Sales Limited
- an order for the delivery up of all infringing copies of Windows 95 software held by Plato Technology
- damages or, at Microsofts election, an account of profits in respect of all counterfeit Microsoft products with which Plato Technology had ever dealt and
- extensive discovery in relation to the supply, to and sale by it of all Microsoft products with which it had ever dealt.
The High Court’s Decision
Injunction
The court confirmed that it was in its discretion whether or notto grant an injunction and that the sole purpose of an injunction was to protecta person from some future infringement of his rights.
The court distinguished the dishonest infringer from the honestinfringer and rejected the submission that an owner of software, onceinfringement of his rights is established, is entitled as of right to aninjunction to restrain all future infringement.
Wide injunctions (such as Microsoft had requested) were commonlygranted by the court where the infringer of the intellectual property rights insoftware was dishonest and had been extensively dealing with counterfeit copiesin the past and, unless restrained by an injunction, would continue to do so inthe future. The difficulty which the court had in granting Microsoft’swide-ranging injunction against an innocent infringer was that the injunctionwould make Plato Technology in contempt of court if it innocently distributedcounterfeit copies of Microsoft software in the future. The court therefore heldthat Microsofts injunction would not be appropriate for Plato Technology (andwas not necessary to protect Microsofts rights) as there was no evidence thatPlato Technology intended to infringe Microsoft’s rights in the future.
The Court therefore stated that any injunction ought only toextend to not dealing in any Microsoft software products which Plato Technologyknew or ought upon reasonable enquiry to know are counterfeit.
Delivery up
In relation to the second application, the court considered thatto make an innocent infringer deliver up all copies of counterfeit softwarewhich it possessed would be oppressive. As it was not easy to distinguishbetween counterfeit and genuine copies, the effect would be that PlatoTechnology would either have to spend a lot of effort determining which copieswere counterfeit and which were not or to deliver up all the copies of Microsoftsoftware which it possessed.
The court therefore ordered that Plato Technology shouldbe required to deliver up only Microsoft software products in its possessionwhich it ought to know are counterfeit after making reasonable enquiries. PlatoTechnology conceded that this would cover the other 45 copies of Windows 95software which it had purchased from Agency Sales Limited.
Damages and account of profits
In relation to the third application, the court restricteddamages or accounts of profits to the 45 copies of Windows 95 software, whichPlato Technology had purchased from Agency Sales Limited, as there was noevidence that most of the Microsoft products with which Plato Technology hadever dealt were counterfeit.
Discovery
The final application if granted would enable Microsoft to begiven details of all Microsoft products which Plato Technology had sold to anythird party in order to enable Microsoft to make enquiries of all of PlatoTechnology’s customers to see if counterfeit software had been supplied to thosecustomers. The court considered that if this application was granted it couldruin Plato Technology’s otherwise honest business as Plato Technology’scustomers were likely to infer that there was a question mark over PlatoTechnology’s propriety. The court therefore rejected that discovery should bewide-ranging but held that discovery should be restricted to the 45 copies ofthe Windows 95 software which Plato Technology had purchased from Agency SalesLimited.
Comment
The distinction in this case between the innocent and thedishonest infringer will give distributors which purchase their software fromnon-authorised dealers some comfort.
The court had some sympathy with Microsoft’s difficultyin counteracting fraud (as much as 31% of Windows 95 operating software iscounterfeit) and agreed that the purchasing of Microsoft products from anon-authorised distributor was increasing the risk that the software productsmay not be genuine. However, the court was not prepared to grant Microsoft aninjunction which, had it been granted, would have had the effect that the onlyguaranteed way of avoiding, being an innocent infringer would have been topurchase Microsoft’s products from authorised dealers. The court was keen toavoid this.
Leave to appeal was granted to Microsoft so this decision maynot be the final word on this issue.
