Microsoft Corporation v. Liu, 2016 FC 950

Microsoft has been awarded damages and an injunction against the unauthorized copying of several of its programs by the individual defendant. The Court awarded $50,000 in statutory damages, $50,000 as exemplary and punitive damages, $40,000 in costs, plus interest.

Prior to this application Microsoft and Mr. Liu had settled two separate instances of copyright infringement, one in 2010 and the other in 2012. The 2012 settlement included a court ordered injunction on consent. A third alleged instance occurred a month after the Federal Court had issued the injunction, but this does not appear to form part of this application.

The within proceeding related to further alleged infringements occurring in October 2013 and February 2015.  In 2013 a private investigator visited a retail store where he was offered a computer containing Microsoft software that would not come with a DVD or a licence. The private investigator paid cash for the computer and obtained a business card from the proprietor, Mr. Liu.

In February 2015 the private investigator returned to the store and bought a refurbished computer with Microsoft software on the computer without a certificate of authenticity, DVD or licence. This computer was sold by a different employee, who had installed the Microsoft software using a hard drive handed to him by Mr. Liu.

The Court found Microsoft owns the copyright in the Microsoft programs and that Mr. Liu reproduced and copied Microsoft’s computer programs and sold unlicensed copies of them to the private investigator in October 2013. This was found to constitute copyright infringement.

However the Court did not find that Mr. Liu was responsible for the February 2015 infringement. It was Mr. Liu’s co-worker who made the sale and installed the software. While Microsoft asserted Mr. Liu was liable for authorizing the infringement, the nature of the relationship between Mr. Liu and the co-worker was not clear. It was not established that Mr. Liu had sufficient control or direction over Henry’s actions to establish vicarious or joint liability for the infringement on February 3, 2015.

In the Court’s view, someone who merely provides the equipment that could be used to infringe copyright is not liable or responsible for any subsequent violation of copyright that might occur when that equipment is used by someone else to infringe a copyrighted work. This was held to be akin to the self-service photocopiers made available to patrons of the library in CCH Canadian Ltd. v. Law Society of Upper Canada, 2004 SCC 13, [2004] 1 SCR 339 at paras 42 to 46.

After finding at least one instance of copyright infringement, the Court declined to award the maximum statutory damages. The Court noted there was no evidence as to Mr. Liu’s sales of unlicensed software, or the profit generated by the infringing activity, on any date. Mr. Liu’s conduct was not found to be as egregious as the defendant in some other cases and there was only a single instance of copyright infringement found, albeit for five computer programs. An award of full statutory damages, or $100,000 for the five works, was held to be out of proportion of any profit he may have made. However, the Court noted the failure to abide by the previous settlement agreements and thus the Court provided an award to deter future infringement. Thus, $10,000 was awarded for each infringement, totalling $50,000.

Punitive damages totalling $50,000 were awarded in light of the general disregard for the Court’s prior injunction, the need for denunciation and the ongoing nature of the infringements. A $40,000 costs award was also provided based on a draft bill of costs of $71,686.