In the case of Microsoft Corporation v Ezy Loans Pty Ltd [2004] FCA 1135, Microsoft confronted Ezy Loans accusing them of flagrantly infringing Microsoft’s copyright and trademarks. In this article we examine the fundamental issues concerning intellectual property rights in the modern digital landscape.
Parties Involved
Ezy Loans is a company engaged in the sale and rental of second-hand computers. Over several years, the company, under the direction of its director, duplicated Microsoft software onto these computers without obtaining a license from Microsoft.
Microsoft asserted its right under the Copyright Act 1968 (Cth) and the Trade Marks Act 1995 (Cth), together with its subsidiaries, Microsoft Licensing and Microsoft Pty Ltd (MPL). Not only did Microsoft seek recourse against Ezy Loans but it also sought orders against its director, Earl Davis on grounds that Ezy Loans and Mr Davis sold and rented second-hand computers pre-loaded with unlicensed copies of Microsoft Windows and Office programs. This practice, known as ‘hard loading’, was claimed by Microsoft to amount to unauthorised duplication and distribution of copyright material. Regarding the trade mark claim, Microsoft alleged that there was also an infringement of its trade marks, ‘MICROSOFT’ and ‘WINDOWS’.
The Evidence
Microsoft presented is case with witness testimonies, technical analyses, and internal documentation. Employees, customers, and technical experts corroborated claims of the unlicensed software installations on computers sold by Ezy Loans. Missing original disks, manuals, and license agreements further strengthened Microsoft’s argument.
Ezy Loans and Mr Davis faced challenges and his testimony proved inconsistent and contradictory, ultimately failing to convince the court of their innocence.
The Outcome
Ultimately, the court found in favour of Microsoft, holding Mr Davis and Ezy Loans liable for copyright and trademark infringements. The evidence established that unauthorised reproduction and sale of Microsoft software had occurred, leading to compensatory damages being awarded. Mr Davis’s lack of credibility led to him being held personally responsible for the infringing conduct.
The compensatory damages were ordered pursuant to s 115(2) of the Copyright Act. In accessing compensatory damages, one method involves applying a “going royalty rate,” which was utilised in this instance. The court awarded Microsoft $240,625 against both respondents jointly. Additionally, the court observed that Mr Davis and Ezy Loans displayed a flagrant disregard for Microsoft’s copyright and engaged in a deliberate and deceitful manner to profit from their infringement. As a result, the court further awarded additional damage of $350,000.
Key Takeaways
Compensatory damages can be calculated by having consideration to the licence fee generally payable for receiving authorisation in the form of a licence to use the copyright material.
Additional damages may be awarded where there is flagrancy in providing a form of deterrent.
This was a landmark case in Australian intellectual property law, reinforcing the significance of protecting copyright and trademarks in the digital age. The court’s decision sent a strong message about the consequences of unauthorised use and distribution of copyright material, setting a precedent for future cases involving software piracy and intellectual property infringement in Australia.
If you act in the licencing enforcement and compliance team and require more information, or if you have infringed upon copyright material, please contact our office for a free consultation by visiting https://mclp.com.au/contact-us/, or subscribe to our newsletter by visiting https://mclp.com.au/publications/
About Us
MCLP acts for nearly a dozen software providers to protect their copyright material. Led by Damin Murdock and supported by Ms Jane Choi, Ms Bella Chang and Shiqi Cui, our team operates internationally and can deal with intellectual property matters in English, Mandarin, Cantonese, Japanese and Malay, recovering in excess of $3 million on a past few years for our clients.