The Federal Court of Canada has recently awarded Microsoft Canada Co. the highest statutory damages in an intellectual property case in the country.
The court’s decision directing Inter-Plus Inc., a Montreal-based software reseller, to pay Microsoft a total of $500,000 in statutory damages and $200,000 in punitive damages was called “ground breaking” by software industry insiders.
“This is the only case in Canada where the maximum amount of statutory dollars was awarded in an intellectual property case,” said Marek Nitoslawski, national chair, technology and intellectual property practice group, and a partner at Fasken Martineau DeMoulin LLP, in Montreal.
“In the past,” Nitoslawski said, “Canadian courts were criticized for being soft on piracy. In this case the court really came down hard on Inter-Plus.”
“This sends a positive message to the software vendor community that our (intellectual property) laws are being upheld,” said John Payes, partner, Nakisa Inc, a Montreal-based maker of human resources management software.
“We are happy to see the court award the highest possible amount,” added Payes who is also president of the International Association of Microsoft Certified Partners (IAMCP).
The decision stems from a lawsuit filed by Microsoft against Inter-Plus in August of 2000. Microsoft accused the Montreal-based firm of possessing and selling counterfeit CD-ROMs of Microsoft products.
The matter went to trial in Montreal on October 31, 2006. On January 16, a judgment by Federal Court Justice Sean Harrington found Inter-Plus and its principal, Carmelo Carrelli, liable for the maximum amount of statutory damages under the Canadian Copyright Act. “I am satisfied that the defendants’ conduct was outrageous,” Justice Harrington wrote in his judgment. “Carmelo Cerrelli is the kingpin, and Inter-Plus is the name of the game.”
Aside from the $200,000 in punitive damages, Inter-Plus was ordered to pay Microsoft the maximum amount of $20,000 per work infringed, totaling $500,000 for the 25 copyrights in question.
The minimum is $30 per work infringed on.
The alleged counterfeited products included products such as Microsoft Windows 98, Microsoft Windows NT and Microsoft Office.
“This sets out a new range of damages a company can receive for infringement of its copyright,” said Michael Hilliard, corporate counsel, Microsoft Canada.
He said this was also the first time in Canada that a finding of personal liability was handed down in an intellectual property case. “The decision means that Carmelo Correlli will be personally liable to pay part of the damages.”
A Microsoft press release said Royal Canadian Mounted Police operatives seized counterfeit Microsoft products from Inter-Plus’s office in November 1999. The Montreal Urban Community Police seized similar products from the premises in March 2000.
The products seized on the second raid were later returned to Inter-Plus and, according to the Federal Court, “disposed of by Inter-Plus under extremely suspicious circumstances.”
Nitoslawski says it’s rare for the courts to find directors of a company personally liable in such cases. “But apparently the defendant was found guilty of blatant and repeated infringement and the court came down hard on him.”
The maximum award in Canada may appear small compared to the US$200,000 per work in the United States “but his is still quite a victory for Microsoft and copyright enforcement,” said Nitoslawski.
The defendants are appealing the award of statutory damages, punitive damages and the finding of personal liability but are not appealing the court’s determination that they are dealing in counterfeit products, said Hilliard.