Recently Microsoft filed lawsuits against four companies in Delhi High Court. The court instead of favoring Microsoft imposed a fine on it and in the process tarnished its reputation. In this brief article, we bring you the latest news analysis on how Microsoft is using India's skewed patent laws for its business interest.

Microsoft had recently filed a lawsuit against software pirates in Delhi High Court but the court instead of hearing the case, imposed a fine of Rs. 800,000 ($16,000) on them. The reason for the fine was Microsoft’s apparent abuse of money power and filing a case in Delhi where the defendants hailed from Mumbai, Bangalore, Hyderabad and Chandigarh.

Microsoft's headline grabbing copyright infringement law suits filed in the Delhi high court against four companies operating in different parts of India have indeed opened a festering can of worms. The four law suits may have invited the wrath of the judiciary for forum shopping—opting for a court of their choice - by companies with deep pockets. But it is equally riveting for telling us the methods used by legal firms to uncover cases of copyright violation on behalf of multinational clients.

What happens to defendants in software piracy cases has so far been spoken of only in hushed tones in legal circles. But Justice Shiv Narayan Dhingra's scathing indictment of companies abusing money power has highlighted the plight of defendants who are slapped with ex-parte injunctions in almost all such cases and face ruinous consequences.

Summarised Details of Case

The fact situation of the present civil suit CS (OS) No.2027 of 2009 with CS (OS) 2132, 2024 & 2026 of 2009, order are as follows:

Microsoft filed four suits of copyright infringement against four different defendants on the ground that the defendants were using illegally copied software of Microsoft at workplace. The main prayer of Microsoft was to move the Hon’ble Court to grant an ex parte interim injunction to restrain the defendants from using the pirated software programmes of the plaintiff in order to safeguard their copyrights. At this juncture, it is also to be noted that none of the four defendants in the suit has an office at New Delhi whereas Microsoft, having an extensive business in India has offices in cities where the defendants are located (which are at Ahmedabad, Mumbai, Pune, Bangalore, Chandigarh and Derabassi). Microsoft filed these suits as per section 62(2) of the Copyright Act, 1957. Microsoft chose New Delhi since it has an office in the national capital.

The Repercussions

The crux of the issue is Section 62 (2) of the Copyright Act under which Microsoft filed its four suits in the Delhi high court. This section aims to protect copyright holders from the harassment of having to initiate proceedings at the place where infringement has taken place.

So, although none of the four accused firms has an office in Delhi, Microsoft chose to file its cases in the national capital through two law firms. Filing intellectual property right violations in high courts, specially the one in Delhi, had become the trend for two reasons, one being the jurisdiction of the upper courts which is Rs. 20 lakhs (Rs 2 million) and above, and the other being the ability to get ex-parte injunctions in such forums.

If injunctions are granted in courts far from where the defendants operate, the law suits are never contested but are usually settled out of court, according to legal experts. That's why Justice Dhingra was incensed enough to observe that a multinational company with offices in the same district where the cause of action had arisen and where the defendants reside could refuse to file the suit in that particular state court and instead choose a distant court "on the strength of its money power". This way it would "become problematic and a harassment for the defendant" to contest the suit.

“When the constitution of India provides equality before law, this equality has to be all pervasive and cannot be allowed to be diluted because of money power or lobbying power,” he said but conceded that he was constrained by the law to entertain the suits and grant interim ex-parte injunction.

However, he did so with an order imposing costs on the plaintiff! Microsoft was asked to deposit Rs. 200,000 in each of the suits as a security for the defendants who would get the money if the case was found to be speculative and the allegations made the software giant turned out to be false.

It is unfortunate that much of the buzz around this landmark judgment has centred on the costs imposed on the plaintiff. Apart from the Rs. 800,000, Microsoft will also have to pay the investigating commissioners Rs. 25,000 per day along with travel and all other costs. What happens to defendants in such cases where ex-parte injunctions are given by courts to stop the use of unlicensed/pirated software is something that has received little attention. Computers are sealed and businesses are severely constrained or halted in many cases.

Not only does the plaintiff who has managed to get the ex-parte injunction start evading arguments on the merits of the case but he also adopts "blackmailing tactics", according to Justice Dhingra. "And the defendants, in order to restart their business and lessen their losses, start succumbing to pressure." Furthermore, the court found that Microsoft had offices in very same cities and accused them to “harass” defendants as they would have to travel to Delhi to fight the case.

Justice SN Dhingra said that “One cannot be given liberty to choose a court of his liking because of his money power. There should be one definite court where the suit can be filed by everybody and one cannot hire the services of the court of his choice.”

Handling of Evidences

Copyright infringement suits are seldom contested. Is the seizure or sealing of suspect computers and CPUs (Central Processing Units) till the case is resolved strictly necessary? According to one view, there is technology that allows one to make a mirror image of the hard disk that would contain all the data in it. These mirror images could be sealed on the spot and produced as evidence in the court of law for the technical experts to examine.

The court's suggestion is that plaintiffs should file an affidavit and pursue the case further only after the mirror images are examined in court. Will such a system work? The software industry needs to respond to this suggestion. Investigative methods used to uncover copyright violations are even less sophisticated. In this case, the law firms hired two people with no knowledge of computers or programming to find out if businesses were using unlicensed software.

And how did the two go about their task? Given the names of certain establishments, the investigators would make calls to employees of the companies to find out how many computers were in use and the kind of software that was being deployed. The number of computers installed at the workplace was then matched with the number of licenses bought by the defendants to arrive a "suspicion of infringement".

Current Details

As Microsoft is cooling its heels on the copyright infringement cases in Delhi High Court, further the matter has been listed next on January 18, 2010. We sincerely hope that the New Year brings in a new ray of hope in the murky waters of forum shopping. This is a classic case of the saying "The Hunter becomes the Hunted!"

—By: R. Manoj. The author is an Assistant Editor at Fanatic Media, Bangalore. He is also an Independent Researcher, specializing in Computer System Security. He has an active interest in designing security algorithms for securing mission critical systems. He can reached at infosecurity@fanaticmedia.com