The three were found to be selling counterfeit software and of
selling 'loose' certificates of authenticity – i.e. certificates
not attached to computers – in breach of the licence terms of the
software.
Judge Richard Havery of the High Court issued a summary judgment
for Microsoft, which means that he found in the corporation's
favour and that the case will not go to a full trial. Havery wrote
in his judgment that "there is no real prospect of any of the
defendants resisting" the various claims, and that "there is no
other compelling reason why the case should be disposed of at a
trial".
Amongst the evidence produced were transcripts of conversations
which Microsoft claimed took place between a test purchaser,
Kenneth Anderson, and Edward Hill, the principal salesman of the
company involved, Digital Now! Limited.
Hill was quoted as telling Anderson, whom he thought was a
buyer, "I can do you an Office 2003 [Microsoft software] without a
licence for eighty-five quid. The licensed version is one hundred
and eighty-five quid. With the eighty-five quid one we're not
lining Bill Gates's pocket. If he's installing it in a business or
something he might want to do the licence. He might want to do it
properly."
Hill claimed that his remarks were taken out of context and that
the confusion arose because he did not know if Anderson had a
volume licence. "The reference to not lining Bill Gates's pockets
was to emphasise that there was no point in paying twice for the
same right," he said in his witness statement.
Havery ruled that "it is clear on the totality of the evidence
that there is no real prospect of any of the defendants
successfully defending the claim against them that Digital to their
knowledge traded in counterfeit products of Microsoft".
The defendants in the case, two of whom owned the company
between them, argued that in some of the cases they were trading in
licences for which Microsoft had already been paid.
The defence argued that if a large organisation, such as a bank,
bought a large number of computers and never used the bundled
Microsoft software and sold on the licences, that a company such as
Digital could sell those licences, for which Microsoft had already
been paid.
The judge rejected the argument. "The fallacy in the argument is
that if the bank does not accept the EULA [licence] terms [by
operating the software and agreeing the terms], it receives no
licence. Thus it can confer no licence for the use of any Microsoft
software by passing on the COA (certificate of authenticity), nor
can the COA be evidence of, or itself confer, such a licence,"
wrote Havery. "Thus, provided that the licensing system is
enforceable in law, the circumstances exemplified cannot give rise
to a legitimate trade in COAs."
In fact there are circumstances in which disused or unwanted
volume licences for some Microsoft software can be transferred; but
this trade must be compliant with Microsoft’s own transfer terms
and conditions.
Havery gave judgment for Microsoft, including on its claim for
additional damages to be assessed.
