Delhi High Court
Microsoft Corporation vs Mr. I. Sadiq Batcha & Ors. on 1 July, 2009
Author: Manmohan Singh
* HIGH COURT OF DELHI: NEW DELHI
+ CS (OS) No.702/2004
% Judgment reserved on: 28th April 2009
Judgment pronounced on: 1st July, 2009
Microsoft Corporation ..... Plaintiff
Through: Praveen Anand, Adv
Versus
Mr. I. Sadiq Batcha & Ors. ..... Defendants
Through: Ex-parte
Coram:
HON'BLE MR. JUSTICE MANMOHAN SINGH
1. Whether the Reporters of local papers may
be allowed to see the judgment? Yes
2. To be referred to Reporter or not? Yes
3. Whether the judgment should be reported Yes
in the Digest?
MANMOHAN SINGH, J.
1. The defendants are ex-parte. The plaintiff has filed a suit for
permanent injunction restraining the infringement of Copyrights,
Registered Trademarks, Passing off, Rendition of Accounts of Profits,
delivery up etc. The Plaintiff, Microsoft Corporation is the Company
organized and existing under the laws of the State of Washington, USA.
2. As per plaint, the Plaintiff has been carrying on business in
the field of development of computer programs (software) and the
manufacture and sale of software, pre-recorded onto tapes, disks,
diskettes, cartridges, cassettes with read-only memories such as
compact discs, related user manuals and instructional guides. The
Plaintiff, in addition to the above, is also involved in the development,
manufacture and sale of computer hardware, principally the Mouse,
Keyboard and Joystick, among other hardware accessories.
Documentation, namely reference user, instructional and general utilities
manuals and data sheets for computer hardware and software
manufactures, producers and users, are also developed, manufactured
and sold by the Plaintiff.
3. The Plaintiff has a subsidiary in India, Microsoft Corporation
India Private Limited, having its office at The Great Eastern Centre,
Nehru Place, New Delhi - 110 019, which was set up in the year 1989.
4. The Plaintiff averred in the plaint that the products of the
Plaintiff, namely software and hardware, are sold either as retail or OEM
(Original Equipment Manufacturer) products. An OEM dealer is one
who has an agreement with the Plaintiff to sell its products only when it
is accompanied by the sale of a personal computer or are accompanied
by components that go towards upgrade of a computer.
5. Apart from computer software, the Plaintiff also
manufactures a large range of computer peripherals (hardware). The
Plaintiff has established its reputation for technological expertise in
hardware by developing and launching a series of successful devices
including the ergonomically designed Mouse and Keyboard for the last
more than two decades.
6. The software of the Plaintiff is sold either as retail, or as
OEM. Besides the difference mentioned therein, there are key features
which characterise retail and OEM software. OEM software consists of
CD (s) containing the software, a Registration Card, a User Manual
containing a licence Agreement a Certificate of Authenticity (CoA) and
significantly, a statement on the CD and the accompanying manual
which reads "For distribution only with a new PC" manufactured in
specified countries.. The aforesaid listed contents are packaged in
"shrink-wrap" plastic that is designed to fit snugly around the contents.
The trademark MICROSOFT is mentioned clearly and conspicuously on
all the contents. Retail software is sold in a glossy box which bears with
the Plaintiff's trademark MICROSOFT. The box contains a User
Manual, a CoA, and End User License Agreement (EULA), a
Registration Card, and a Compact Disc (CD) containing the software.
7. The programs are available in different versions and for use
on different hardware and software platforms. The core of the Plaintiff's
activities relate to development of new software and operating systems
with a view to simplify the use of computers in the modern world, in
conformity with its motto "software for people, not computers". To this
end, the Plaintiff has developed infer alia the following computer
programs that are applied and used in various fields:
- Microsoft Office
- Microsoft Windows
- Microsoft Windows NT
- Microsoft Database and Development Tools
- Microsoft Home
- Microsoft Word and Microsoft Word for
Windows
- Microsoft Excel (Spreadsheet program)
A few other popular programs of the Plaintiff are :
Microsoft MS-DOS (Disk Operating System)
Microsoft Project (of business project planning system)
Microsoft Power Point (Presentation Program)
Microsoft Mail (Electronic mail program)
Microsoft Multiplan (spreadsheet program)
Microsoft works (integrated program including a word processor,
spreadsheet, databases and communications package.)
Microsoft Publisher
Microsoft Desk Top Publishing
Microsoft Outlook
8. It is stated in the Plaint that the Plaintiff's computer programs
are "works" that have been first published in the USA. These programs
have been created by employees or the Plaintiff, for the Plaintiff. Under
the US Copyright Law US Code Title 17, Section 20(1)(b), the
copyright in a work created by an employee belongs to the employer
under the 'Workfor Hire' doctrine. The computer programs along with
the User Instruction Manuals constitute 'computer software' and are
'original literary' works as contemplated under Section 2 (o) and Section
13 (1) (a) of the Copyright Act, 1957. The Plaintiff is the owner of the
copyright in aforesaid works.
9. As India and the USA are signatories to both the Universal
Copyright Convention as well as the Berne Convention, protection is
afforded to the Plaintiffs works since they are created by authors or
member countries and originate from and are first published in the said
member countries. This is by virtue of section 40 of the Copyright Act,
1957 read along with the International Copyright Order, 1991.
10. The Plaintiff being the owner of the copyright in the
aforesaid literary works within the meaning of the proviso to Section 17
of the Copyright Act, 1957. it is entitled to all the exclusive rights
flowing from such ownership as set out in Section 14 of the said Act.
11. The copyright owned by the Plaintiff in its software can be
broadly divided under two heads:
Copyright in the Computer Programs existing mainly in the
Object Code and Source Code versions.
12. The reproduction in any material form, including publication,
performance, dissemination, translation, adaptation, the use,
distribution, sale, offer for sale of any of the above material without the
Plaintiff's consent, would amount to infringement of the Plaintiff's
copyright as contemplated under Section 51 of the Act. These acts of
infringement are further divided into two categories namely:
a "primary act' of infringement committed by a person who
reproduced the computer programs in a material form or
publishes, translates or adapts the said computer program; and
a secondary act of infringement which is committed by a person
who makes for sale or hire or lets for hire or by way of trade,
displays or offers for sale or hire or distributes for the purposes of
trade, infringing copies of the computer program.
13. As stated earlier, the Plaintiff is the largest computer
Software company in the world with rapidly growing sales. The
statement in this regard has already produced.
14. The Plaintiff invests huge sums of money in developing its
products. A statement of expenses incurred on the same has also been
produced.
15. In the year 1970, the Plaintiff adopted the trademark
MICROSOFT in respect of the goods manufactured and sold by it. The
word MICROSOFT has also been used by the Plaintiff not only as a
trademark but also as a prominent key, and leading portion of its corporate
name.
16. The trademark MICROSOFT has been continuously and
extensively used during the course of trade by the Plaintiff since the day of
its adoption, so much so, that the said trade mark has come about to be
exclusively identified and recognised by the purchasing public as
exclusively relating to the goods of the Plaintiff.
17. The Plaintiff submits that the Plaintiff has acquired statutory
rights to the exclusive use of the trade marks MICROSOFT &
MICROSOFT GW-BASIC by virtue of registrations granted under the
provisions of the Trade and Merchandise Marks Act, 1958, the details of
which are as under:-
Trade Mark T.M.No. Class Date Goods
Microsoft 430449B 9 30.11.84 Computer programs pre-
recorded o tapes, disks,
n
diskettes, cartridges etc.,
Microsoft 430450 16 30.11.84 Computer hardware and
software manuals, computer
documentation etc.,
Microsoft 437500 9 9.5.85 Computer programs pre-
GW Basic recorded o tapes, disks,
n
diskettes, cartridges etc.,
Microsoft 437501 [6 9.5.85 Computer hardware and
GW Basic software manuals, computer
documentation etc.,
18. The abovesaid trade marks are valid and subsisting. Being
Part A registrations, and being more than seven years old, they are
conclusively valid under the provisions of Trade Marks Act, 1999.
19. The Plaintiff is the exclusive right to use the same, upon or in
relation to the registered goods, and consequently the use of the word
MICROSOFT by any trader upon or in relation to any computer
software, without the consent of the Plaintiff, would amount to
infringement of the aforesaid trade marks. The use of the word
MICROSOFT on inter alia, diskettes, compact disc, labels, cartons etc.,
would therefore amount to infringement of the Plaintiff's registered
trade marks.
20. The plaintiff submits that the Plaintiff has acquired a
substantial reputation and goodwill. The great demand of the Plaintiff's
products, i.e., Software and Hardware, have has in fact resulted in large-
scale piracy and counterfeiting of the same in several countries
including India.. Such counterfeit products are available at substantially
lower prices than the original products. Computer software is capable of
being copied easily. Pirates hardly need to invest any money on either
the creation or development of these programs, or on the marketing of
the same. The reduced prices lure the customers to purchase these
pirated products.
21. The Plaintiff has been constantly protecting its copyrights
and trademarks, and has, from time to time, prosecuted several
infringing parties in India. Investigations have been conducted on behalf
of the Plaintiff.
22. As per plaint, Defendant No.3, M/s SSS Systems Pvt. Ltd.,
located at #164, Peters Road, Opp. New College, Royalpettah, Chennai -
600 014 is a company engaged in computer assembling and retailing.
Mr. I. Sadiq Batcha, Defendant No.1 and Mr. Thasthageer, Defendant
No.2 are the Managing Director and the Joint Managing Directors
respectively of Defendant No.3.
23. It is mentioned in the plaint that in July 2001, the Plaintiff
received information that the Defendants are infringing the plaintiff's
copyrights, trademarks and other intellectual property rights by carrying
on the business of Hard Disk Loading, i.e., were pre-loading various
software of the Plaintiff Company on to the computers that were being
assembled and sold by them. The said software, was not accompanied
by the original Media, being the Compact Disc (s)1 Floppy Disks,
Certificate of Authenticity (COA), End User License Agreements
(EULAs), User Instruction Manuals, Registration Cards.
24. In order to ascertain if the Defendants were indeed involved
in such infringing activity, a representative of the Plaintiff was sent to
the outlet of the Defendants to place an order for a computer with the
Defendant No. 3. Accordingly Mr. Ravi Pawar, the said representative
visited the premises of Defendant No.3, M/s. SSS Systems, No. 164,
Peters Road, Opp. New College Royapettah, Chennai-600002 on 11th
July 2001.
25. He met Mr. Madan Mohan, Sales person, of Defendant No.3,
and inquired about a Pentium computer. Mr. Ravi was informed that an
Intel Pentium III computer system of the required configuration would
cost Rs.32,500/-. Mr. Ravi was issued a quotation having reference No.
RY/OI-02/SH/I69 for the said computer. On various visit and enquiry
Mr. Ravi observed that many software were installed by the Defendants,
which are unlicensed and/or pirated versions of the Plaintiff softwares.
Details are given in Para 26-32 of the Plaint.
26. It is averred in the plaint that on 13th August 2001, the
Plaintiff addressed a letter to the defendants informing them that by their
actions they have infringed the intellectual property rights that vest in
the Plaintiff. The defendants through the said letter were called upon for
a settlement meeting on 1st August 2001, and were also informed that a
failure on their part to attend the said meeting would leave the Plaintiff
no choice but to resort to suitable legal action to protect its rights. But,
the Defendants chose to ignore the said legal meeting and did not come
for the said settlement meeting.
27. It is stated by the plaintiff that on a comparison of the
software being sold by the defendants, and software originating from the
Plaintiff, it was found that the software supplied by the defendants was
pirated versions of original Plaintiff's computer programs. The
following were the distinguishing features found:
The software supplied by the defendants does not have the
accompanying User's Manual and was not shrink wrapped;
The software supplied by the defendants does not have
Software License Agreements as in the case of the
Plaintiff's software; and
The software supplied by the defendants does not have the
order number, which is always present on the software of
the plaintiff;
28. As per plaintiff, the above features mentioned led to the
conclusion that the software supplied by the defendants are pirated
versions and therefore, the defendants have violated the copyright in
computer programs of the Plaintiff. Hence, the present suit has been
filed by the plaintiff.
29. The suit as well as the interim application for injunction was
listed before court on 26th November, 2001 when summons were issued
to the defendants in the suit and notices were issued in the application
and an ex parte ad interim injunction was passed in favour of the
plaintiff and against the defendants restraining them from
manufacturing, selling, offering for sale unauthorized copies of software
and hardware of the plaintiff and the defendants were further restrained
from distributing to the public the counterfeit/unlicensed version of the
plaintiff's software pre-loaded into the hard disc of the computers in any
manner. In terms of Section 5(2) of the Delhi High Court Act as
amended by the Delhi High Court(Amendment) Act and interims of
office order dated 28th August, 2003 the suit was transferred to the
District Court as its valuation was below Rs.20 lacs. Prior to the
transfer, the defendants filed the written statement and denied all the
allegations made by the plaintiff against the defendants.
30. By order dated 7th April, 2004 passed by the Additional
District Judge, Delhi, the amendment sought by the plaintiff to revalue
the pecuniary jurisdiction from Rs.5,00,100/- to Rs.20,00,100/- was
allowed. Subsequently the suit was transferred to this court and re-
numbered being CS(OS) No.702/2004. The defendants were given time
to file the amended written statement but no amended written statement
was filed, despite the matter was adjourned many times in this regard.
31. The issues were framed on 16th May, 2006 and the plaintiff
was given 8 weeks time to produce the evidence by way of affidavits.
As no one appeared before the Court on 25.9.2006, the defendants were
proceeded ex parte. The ex parte evidence by way of affidavits has been
filed by the plaintiff by way of affidavits of Mr.Anand Banerjee
alongwith certified copies of the various documents, copy of affidavit of
Mr.Ravi Pawar, an employee of EIPR India Ltd who had made the
investigation and affidavit of Mr. Sunil John.
32. The plaintiff has also filed the affidavit of Mr. Sanjiv
Sharma, Chartered Accountant who has given the approximate average
market price of the Microsoft products of which pirated/unlicensed
copies were distributed illegally by the defendants. In the evidence, the
plaintiff has in fact proved the facts stated in the plaint and has also
exhibited the following documents in support of his case.
33. The evidence filed by the plaintiff has gone unrebutted as no
cross-examination of the plaintiffs witnesses were carried out,
therefore, the statements made by the plaintiff are accepted as correct
deposition. Under these facts and circumstances, the plaintiff is entitled
for a decree for permanent injunction in terms of Para 46(a) to (d) of the
plaint.
34. As regards the relief claimed in Para 46(e) is concerned, the
plaintiff has prayed damages to the tune of Rs.20 lacs to be paid by the
defendants on account of passing off their pirated software as that of
the plaintiff and conversion damages for copying the plaintiff's program
on the hard disk of the computer.
35. On the question of damages, the learned counsel for the
plaintiff has referred various judgments in support of his submission
pertaining to the aspect of damages. Some of the decisions which have
been referred are as under:-
(i) In General Tire Vs. Firestone, (1975) 1 WLR 819, it was
observed that the general rule is that the measure of the damages is, as
far as possible, that sum of money, which will put the injured party in
the same position, as he would have been if he had not suffered the
wrong. Extent of loss suffered or, the advantage gained by the defendant
by his wrongful act at the cost of the plaintiffs
(ii) In Meters Ltd. v. Metropolitan Gas Meters Ltd., (1911) 28
RPC 157 (UK), it was held that in the case of an infringement of patent,
damages were computed as follows :
"(no. of infringing articles) x (the sum that would have had to be
paid in order to make the manufacture of that article lawful) -
Where the defendants were acutely aware of the implications of
their act and committed them willfully and intentionally in
flagrant violation of the plaintiff‟ s copyright and trademark,
substantial additional damages are awarded."
(iii) In Microsoft Corporation Vs. Kamal Vahi & Ors., CS
(OS) No.817 of 2004 it was observed that compensatory damages are
awarded based on a calculation of a percentage of revenue that would
have been earned if the defendants had not indulged in the infringing
activity.
(iv) In Microsoft Corporation Vs. Deepak Raval,
MIPR2007(1)72 in CS (OS) No.529 of 2003, it was observed that
where the defendants fails to respond and are recklessly indifferent as to
whether or not the goods they are selling counterfeit, dishonest intention
may be inferred and the defendants can be said not to be "honest
traders"
(v) In Amarnath Sehgal Vs. Union of India, 2005 (30) PTC
253 (Del) it was observed that compensatory damages may be paid
where the acts and commissions of the defendants violate the
established rights of the plaintiffs.
(vi) In Microsoft Corporation Vs. Goodview Electronics Pty
Ltd., [2001] FCS 1852 factors to be taken into account in awarding
additional damages were laid down :
- Flagrancy of the infringement.
- Any benefit shown to have accrued to the defendant by
using of the infringement.
Similar view has been laid down in the case of Microsoft
Corporation v. Glostar Pty Ltd, [2003] FSR 210.
(vii) In Microsoft Corporation v. Kiran, 2007 (35) PTC 748
(Del) it has been held that wilfully, intentionally and flagrantly violating
the copyrights and trademark is deliberate and calculated infringement.
36. The plaintiff has also relied upon the decision rendered by
this court in CS(OS) No.2065/03. The claim of the plaintiff is that the
plaintiff is entitled for a sum of Rs.29,19,600/- as per the affidavit of
Mr. Sanjiv Sharma filed by the plaintiff who has given the
estimate/approximate average market price of the licensed Microsoft
product of which pirated/unlicensed copies were distributed illegally by
the defendants by way of hard disk loading on continuous and repeated
basis. The said figures of calculation given by the plaintiff is
approximate.
37. Keeping in view the infringement committed by the
defendant which has gone unrebutted and since the claim is based upon
assessment of the plaintiff, I am of the opinion that a sum of Rs.5 lacs
can be reasonably awarded to the plaintiff as compensatory damages and
a sum of Rs. 5 lacs as punitive/exemplary damages as well as damages
on account of loss of reputation and goodwill of the plaintiff. This
prayer made in Para 46(e) is granted to the above extent. The plaintiff is
also awarded Rs.50,000/- as costs of the suit.
38. The decree be drawn accordingly. The suit as well as the
pending applications are disposed of accordingly.
MANMOHAN SINGH, J
JULY 01, 2009
SD
