Accused software pirate denounces Microsoft

A software dealer whom Microsoft charged with engaging in the sale of pirated software is vowing to fight back. Next week he plans to file a complaint with the European Commission alleging abuse of power and anti-trust violations.

Microsoft Monday filed a legal complaint against Samir Abdalla, an entrepreneur from The Netherlands, claiming that he illegally sold software in the U.S. that was intended for educational markets outside the United States. He is alleged to have made US$3.6 million from the business. The suit was filed in Los Angeles, together with seven complaints against other software dealers from Canada, Egypt and the U.S.

The software maker is asking for damages as well as an injunction that prevents Abdalla from importing software that is intended for students.

Abdalla hasn’t yet received the complaint. He denies the charges that Microsoft put forward in a press release on Monday and claims that the figure of $3.6 million is a gross overstatement. Instead of battling software piracy, he argues that Microsoft is out to stifle the legal export of software to the United States, Abdalla said.

Through a company called H.W. Tradigin, Abdalla buys Office 2003 Professional, Office 2003 Standard and Windows XP Professional packages in Egypt and exports them to the U.S. Microsoft sells its software more cheaply in Egypt through an educational program intended for students, offering Abdalla a profit of about $10 per package, he claimed. The practice of reimporting software is known as parallel import of gray products.

Parallel import is banned in Europe, but not in the U.S. “We don’t do anything wrong. We sell our software as-is to countries where gray trade is allowed. Microsoft shouldn’t come complaining to me,” Abdalla said.

A spokesperson for Microsoft denies that the case revolves around gray trade issues. Instead, the company argues that Abdalla violated the licence agreement which stipulates that the software should only be sold to students.

Abdalla plans to file a legal complaint with European antitrust authorities next week, he said, because Microsoft is abusing its monopoly and engages in unfair competition. He is confident that his complaint will land on fertile grounds with European authorities, because in his opinion Microsoft is stifling free trade.

He furthermore questioned Microsoft’s claim that the software was intended for students. Microsoft shipped half a million software packages under the student program, a figure that outnumbers the student population by a wide margin, according to Abdalla. He therefore alleged that Microsoft was out to flood the Egypt market with cheap software, knowing that it would be sold beyond the student market.

Negotiations between Microsoft and Abdalla broke down in July 2007 after Microsoft demanded a payment of $500,000 to $600,000 to settle that case. Abdalla complains that Microsoft has been strong-arming him from the very beginning, threatening that he would have to face “an army of 600 lawyers” if he didn’t settle.

“That’s just a dirty tactic aimed at ruining my business,” said Abdalla.

— Elizabeth Montalbano from the IDG News Service in New York contributed to this story

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