Copyright Infringement isn’t Ezy

by Scott Smalley

The Federal Court recently awarded a software company almost $600,000 in a case involving the illegal copying of its software, sending a clear message to copyright infringers.

Ezy Loans Pty Ltd is a company that sells and rents second-hand computers. Over several years the company, under the control of its director, copied Microsoft software onto the computers without a licence from Microsoft. The director had also acted in this manner as a sole trader. Microsoft took them both to task in the recent case of Microsoft Corporation and others v Ezy Loans Pty Ltd and Another [2004] FCA 1135.

The court found Ezy Loans and its director guilty of infringing Microsoft’s copyright, of unauthorised use of Microsoft’s trade mark and of misleading and deceptive conduct under the Trade Practices Act.

The court initially issued an injunction to prevent the conduct from continuing. Then, in awarding damages for copyright infringement, the court used the ‘going royalty rate test’, which calculates the figure that Microsoft would have earned had Ezy Loans paid the standard licence fees being charged by Microsoft at the time. This amounted to $240,625 in damages.

Under the Copyright Act, the court also has the discretion to award additional damages if the facts of the case warrant it. In this case, the court noted that Ezy Loans and its director displayed a flagrant disregard for Microsoft’s rights, that they acted in a manner that was deliberate and deceitful and that they profited considerably from their infringement. In a significant move, the court decided to award $350,000 in additional damages—almost one and half times the amount of the original damages award. Furthermore, because the director was so closely involved in the conduct and because he had acted alone at one stage, he was held personally liable for $300,000 of that amount.

This is an interesting example of the kinds of damages available for copyright infringement. It also shows that, in extreme cases, the court is not afraid to come down hard on infringers and hold directors personally liable for their conduct.


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