1. Law Assignment
LEGAL ENVIRONMENT OF
BUSINESS
CASE ANALYSIS ON
“A CLEAR CASE OF SOFTWARE PIRACY?”
SUBMITED TO:
PROF. B.V.RAMANA
L.E.B. FACULTY, IBS
SUBMITTED BY:
Abhiraj Rathore (08BSHYD0018)
Tanmayi (08BSHYD0885)
Neeraja (08BSHYD0963)
DATE: Dec. 30, 2008
1
2. Law Assignment
A CLEAR CASE OF SOFTWARE PIRACY?
PLAINTIFF MICROSOFT INDIA PRIVATE LTD. REPRESENTED
THROUGH MR. PRAVEEN ANAND
DEFENDANT DEEPAK RAVAL AND COMPANY REPRESENTED
THROUGH MEMO
RELATED LAWS INTELLECTUAL PROPERTY ACT (COPYRIGHT ACT, 1957)
JUDGE MR. JUSTICE A.K. SIRKI
CASE NO: CS(OS) No. 529/2003
JURISDICTION DELHI HIGH COURT
OVERVIEW OF THE CASE:
The case “A Clear Case of Software Piracy” describes about the violation of the Intellectual
Property Rights of Microsoft India Private Ltd.
Summary of the chronological events in the case are as follows:
a) Microsoft India Private Ltd. was setup in New Delhi, India which is a marketing
subsidiary of the Microsoft Corporation, USA. The company sells the “computer
software” and “computer programs”.
b) The company is the owner of the all the computer program and manual that are
considered as part of literary work under Indian Copyright Act, 1957 and that are
prepared by an employee within the scope of his or her employment according to the
USA Code (17) under the doctrine “work made for hire”.
c) Microsoft India Private Ltd. received information about Deepak Raval and his company
which was carrying the business of selling the intellectual property right of Microsoft
without the authorship. They were selling computers with pre- loaded software of
Microsoft.
d) Microsoft filed a claim in October, 2002 and a suit in a gainst Deepak Raval (first party)
and his company (second party) and argued in the court that on account of piracy
(Internet piracy, reproducing software, and misleading the customer to be genuine) the
company has suffered huge loss to its intellectual property right.
2
3. Law Assignment
e) The company sent Ravinder Pawar, an independent investigator to Deepak Raval to
confirm the infringement. Ravidner bought the computer on 4 th October, 2002 from
Deepak Raval and company. The computer had the loaded unlicensed software. Sunil
John, a technical expert confirmed the existence of the unlicensed software on the
computer.
f) Microsoft sent a letter to Deepak Raval stating that they had infringed on its intellectual
property rights and called them for a meeting on 22 nd November, 2002 to settle the issue.
Neither Deepak Raval nor anybody from the company attended the meeting.
g) Later, Microsoft filed a suit to protect its Intellectual Property Rights. It filed a list of
documents stating that it was the copyright owner of certain programs which was
infringed by the Deepak Raval and company.
h) Microsoft prayed for a permanent injunction against the company and restraining it from
further selling of Microsoft‟s software and program. It sought relief against passing off
and an order for the delivery of all the unlicensed copies, damages, retention of accounts,
profits earned illegally and costs.
i) An ex-parte ad interim was granted by the court in favour of Microsoft as even after
being summoned, Deepak and Company did not appear before the court. Mr. N.
Krishnamurthy, representative Microsoft and few other witnessed were examined. The
company claimed damages of Rs. 12,823,200 in addition to damages on goodwill and
reputation.
j) The documentary evidence in support of the claim such as notarized copy of the attorney
in favour of witness, copyright registration, trademarks registration, affidavits of
Ravinder Pawar, and Sunil Joshi was filed an marked in court.
LEGAL FRAMEWORK:
INTELLECTUAL PROPERTY ACT
Intellectual property rights are a bundle of exclusive rights over creations of the mind, both
artistic and commercial. These could be in the form of Patents; Trademarks; Geographical
Indications; Industrial Designs. The former is covered by copyright laws, which protect creative
works, such as books, movies, music, paintings, photographs, and software, and gives the
copyright holder exclusive right to control reproduction or adaptation of such works for a certain
period of time. IP is the foundation of knowledge-based economy. It pervades all sectors of
economy and is increasingly becoming important for ensuring competitiveness of the enterprises.
3
4. Law Assignment
VARIOUS CATEGORIES OF INTELLECTUAL PROPERTY:
a) PATENTS - A Patent is an exclusive monopoly granted by the Government to an inventor
over his invention for a limited period of time. It provides an enforceable legal right to prevent
others from exploiting an invention. Patents are protected through The Patents Act, 1970
(amended in 1999, 2002 and 2005)
b) COPYRIGHTS - Copyright is a right given by the law to creators of literary, dramatic,
musical and artistic works and producers of cinematograph films and sound recordings.
Copyright is protected through Copyright Act, 1957, as amended in 1999
c) TRADEMARKS - A trademark is a word, phrase, symbol or design, or combination of
words, phrases, symbols or designs is used in the course of trade which identifies and
distinguishes the source of the goods or services of one enterprise from those of others.
d) GEOGRAPHICAL INDICATORS – It refers to the names and symbols which indicate a
certain geographical origin of the product
e) INDUSTRIAL DESGINS -It refers to the creative activity of achieving a formal or
ornamental appearance for mass product items.
OTHER INTELLECTUAL PROPERTY LEGISLATIONS
DISCUSSED IN THE CASE:
COPYRIGHT ACT, 1957
The Copyright Act, 1957 came into effect from January 1958. This Act has been amended five
times since then, i.e., in 1983, 1984, 1992, 1994 and 1999, with the amendment of 1994 being
the most substantial.
For the purposes of this Act, quot;copyrightquot; means the exclusive right (Section 7) subject to the
provisions of this Act, to do or authorize the doing of any of the following acts in respect of a
work or any substantial part thereof, namely :-
In the case of a literary, dramatic or musical work not being a computer programme (Section
14):-
To reproduce the work in any material form including the storing of it in any medium
by electronic means,
To issue copies of the work to the public not being copies already in circulation
To perform the work in public, or communicate it to the public
To make any cinematograph film or sound recording in resp ect of the work
4
5. Law Assignment
To make any translation of the work
To make any adaptation of the work
US CODE 17
Under the US CODE 17 the copyright law defines a category of works called “works made for
hire.” If a work is “made for hire,” the employer, and not the emp loyee, is considered the author.
The employer may be a firm, an organization, or an individual.
Copyright law defines a “work made for hire” as:
A work prepared by an employee within the scope of his or her employment;
A work specially ordered or commissioned for use as a contribution to a collective
work, as a part of a motion picture or other audiovisual work, as a translation, as a
supplementary work, as a compilation, as an instructional text, as a test, as answer
material for a test, or as an atlas, if the parties expressly agree in a written instrument
signed by them that the work shall be considered a work made for hire.
TRADEMARK ACT, 1999
The Indian law of trademarks is enshrined in the Trade Marks Act, 1999. The Act seeks to
provide for the registration of trademarks relating to goods and services in India. The rights
granted under the Act, are operative in the whole of India.
The term of a trademark registration is for a period of ten years. The renewal is possible for
further period of 10 years each. Unlike patents, copyrights or industrial design trademark rights
can last indefinitely if the owner continues to use the mark. However, if a registered trademark is
not renewed, it is liable to be removed from the register.
Two types of remedies are available to the owner of a trademark for unauthorized use of his or
her mark or its imitation by a third party. These remedies are: -
„an action for infringement' in case of a registered trademark and
„an action for passing off*' in the case of an unregistered trademark.
The basic difference between an infringement action and an action for passing off is that the
former is a statutory remedy and the latter is a common law remedy.
Accordingly, in order to establish infringement with regard to a r egistered trademark, it is
necessary only to establish that the infringing mark is identical or deceptively similar to the
registered mark and no further proof is required.
5
6. Law Assignment
In the case of a passing off action, proving that the marks are identical or deceptively similar
alone is not sufficient. The use of the mark should be likely to deceive or cause confusion.
Further, in a passing off action it is necessary to prove that the use of the trademark by the
defendant is likely to cause injury or damage to the plaintiff‟s goodwill, whereas in an
infringement suit, the use of the mark by the defendant need not cause any injury to the plaintiff.
ISSUES
Does the use of the copyrighted work as well as the trade mark without obtaining a license
from the owner amount to counterfeiting and piracy?
Yes, the use of copyrighted work without obtaining a license from the owner amount to piracy. If
there is no license, the copyrighted work can be used for unauthorized reproduction, importing or
distribution either of the whole or of a substantial part of works protected by copyright. In the
copyrighted work, the term quot;counterfeitingquot; is nothing but piracy (Section 51(1)(i) and
Section 51(b)).
The use of trademark without obtaining a license from the owner leads to piracy. This is because
if there is no license, there can be illegal use of signs, names, logos (brands) and business names
that brand manufacturers use to distinguish their products.
Is Microsoft entitled to damages claimed with costs?
Yes, Microsoft is entitled to the damages claimed with costs on accounts of the profits illegally
earned by the defendants by use of the impugned trade mark. The estimated damages are on the
basis of license fee the plaintiff could have earned on the distribution of licensed copies of the
plaintiff's software as the defendants had taken license from the plaintiff to sell the said software.
The party who chooses to not participate in court proceedings and stay away must, thus, suffer
the consequences of damages as stated and set out by the plaintiff.
Further, instead of plaintiff utilizing its energy for expansion of its business and sale of its
products, the resources have to be spread over a number of such litigations to bring to book the
offending traders in the market. In such a case, both compensa tory and punitive damages ought
to be granted apart from the costs incurred by the plaintiff in such litigation.
The company can also claim punitive and exemplary damages of Rs. 5 lacs for the flagrant
infringement of the plaintiff's trade mark and reputation. (CASE: In Hero Honda Motors Ltd. v.
Shree Assuramji Scooters, 2006 (32) PTC 117 (Delhi))
6
