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Microsoft Enforces Software Copyright Against Recidivist Copier: Microsoft v. Liu

In Microsoft v Liu, Justice Boswell of the Federal Court determined that Mr. Liu had infringed Microsoft’s copyright in several programs and awarded Microsoft both statutory damages and exemplary and punitive damages.

Liu was the owner of a computer store. Microsoft had previously pursued Liu for copyright infringement. Twice, the parties reached settlements, and Liu was enjoined from further infringement.

Infringement

In 2013, a private investigator hired by Microsoft purchased a computer from Liu. Installed on the computer were unlicensed copies of a Microsoft Windows operating system and four Microsoft Office applications. In 2015, the private investigator purchased a second computer from Liu’s store. At that time, a salesman used a hard drive provided by Liu to load unlicensed copies of Microsoft software on the computer.

Justice Boswell determined that Liu had infringed Microsoft’s copyrights through the 2013 computer sale. Although he concluded that the salesman had infringed Microsoft’s copyrights through the 2015 computer sale, Justice Boswell determined that Liu could not be liable for that infringement simply because he provided the salesman with equipment that the salesman used to infringe Microsoft’s copyright.

Damages

Microsoft elected to receive the statutory damages set out in the Copyright Act. Justice Boswell determined that the statutory damages should be less than the maximum of $20,000 per infringement because only a single instance of Liu’s infringement had been demonstrated and because the maximum amount would have been disproportionate. Justice Boswell also determined that the statutory damages should be more than the minimum of $500 per infringement because of Liu’s conduct in failing to abide by the terms of previous settlements. Justice Boswell concluded that the appropriate level of statutory damages was $10,000 per infringement.

Microsoft also sought $250,000 in punitive and exemplary damages. Justice Boswell found that punitive damages were appropriate:

Mr. Liu continued his infringing activity even after the consent order issued by this Court on July 20, 2012. This disrespect and contempt for this Court and its processes cannot be tolerated or condoned, and on this basis alone an award of punitive and exemplary damages would be appropriate.

However, Justice Boswell concluded that the amount Microsoft sought was unreasonable. Noting that punitive and exemplary damages ought to be substantial enough to get the attention of the defendant, Justice Boswell fixed the amount of the punitive and exemplary damages at $50,000 and fixed the costs payable by Liu at $40,000.

A copy of the decision may be found here.