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[2002] FCA 895
plaintiff. The only formal order was that the applicants bring in short minutes reflecting the reasons; the reasons provide for injunctions, subject to the stated qualification, and for the respondents to pay...
The Court found that the respondents infringed Microsoft's trade marks and copyright by selling and supplying counterfeit software and by installing Windows 98 on a computer sold to an investigator. Selling the Windows 95 disk for $20, against a stated minimum genuine retail price of $175, supported the finding that the respondents knew or should have known it was counterfeit. Publicly displaying that disk for sale was also liable to mislead consumers under Victorian fair trading law. The Court did not decide whether selling the loaded computer was a separate infringement under s 38, and it did not find other Fair Trading Act contraventions. It considered broad injunctions appropriate while recognising the need to avoid catching apparently genuine products where the respondents lacked, and ought not to have had, notice of counterfeiting.
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Microsoft Corporation and its Australian subsidiary, Microsoft Pty Ltd, brought proceedings against Robert Blanch and Wendy Wilson, who traded as Robert Blanch Computer Services. Microsoft Corporation manufactured, marketed and supplied computer programs. Its subsidiary provided Australian marketing and technical support and was an authorised user of Microsoft trade marks ([1]-[3]).
The case arose from two purchases by investigators retained to look into suspected intellectual property infringement. On 7 February 2001, investigator John Ramsden bought a computer for $550. Windows 98 and Office 97 were installed on it. He also received a compact disk after Mr Blanch told him, “This is what I loaded Windows 98 onto. You'll need it too when you connect to the Internet” ([15]-[16]). The respondents' defence admitted the computer sale but said no software was listed on the sale. The judge treated the substance of the transaction, rather than the receipt's limited description, as decisive: in her view, it comprised the computer with the programs installed and the disk handed to the purchaser ([28]).
On 6 May 2001, another investigator, Huong Nguyen, bought a Windows 95 disk for $20 at a market stall displaying the respondents' business name. The disk bore signs substantially identical to Microsoft registered marks. The evidence put the minimum estimated Australian retail price for a genuine version at $175 ([18], [21]).
The respondents did not appear at the hearings or apply to be heard on the final relief motion, despite service of additional affidavits and notice of their opportunity to apply to be heard ([7]-[11]). The judge nevertheless considered their filed defence, which denied many allegations but did not dispute the pleaded copyright ownership claim for Microsoft programs generally ([5]-[6]).
The resulting findings were not a blanket acceptance of every allegation. The Court found trade mark infringement, copyright infringement in Windows 95 and Windows 98, and a Fair Trading Act contravention based on public display of the counterfeit disk. It did not find that all alleged Fair Trading Act conduct had been established, and left open whether selling the computer with Windows 98 installed was a separate infringement under s 38 of the Copyright Act ([30]-[31], [35]-[36]).
For trade marks, s 120(1) of the Trade Marks Act 1995 (Cth) asks whether a person used, as a trade mark, a sign substantially identical with or deceptively similar to a registered mark in relation to goods or services covered by the registration ([13]). The Court accepted that activating the installed programs would display signs substantially identical to Microsoft's registered marks. It also found that the disks bore substantially identical marks and were goods in class 9, a registered class relevant to the case ([16], [18], [22]). Those findings supported the conclusion of trade mark infringement ([23]).
For copyright, the Court found that loading Windows 98 onto the computer hard drive reproduced the program in material form under s 31(1)(a) of the Copyright Act 1968 (Cth). Microsoft Corporation was presumed to own the copyright in the circumstances, and the respondents had no licence to reproduce it, so s 36(1) applied ([25]-[26]). The Court also found that loading Windows 98 onto the disk reproduced the program, and that supplying the disk authorised reproduction ([27]).
The Windows 95 disk raised a separate issue. The Court accepted evidence that it was counterfeit and noted the large difference between its $20 sale price and the minimum estimated retail price of $175 for a genuine disk ([18], [21]). That price evidence supported the conclusion that the respondents knew or ought to have known that making the disk constituted copyright infringement, as relevant to s 38 ([29]). The judgment's reasoning is tied to the evidence about this particular disk and price. It does not set out a general rule that every discounted software product is counterfeit or that low price alone always establishes the required knowledge.
A further copyright theory was left undecided. Microsoft argued that selling the computer with Windows 98 installed constituted an additional infringement under s 38 because loading the program might have formed part of making the computer sold. The judge said she was inclined to think it did, but found the argument insufficiently developed and considered that resolving the point would not materially affect the result. She expressly left it for another case ([30]). It would therefore be inaccurate to describe that proposition as a holding of this judgment.
The Fair Trading Act issue concerned ss 10 and 11 of the Fair Trading Act 1999 (Vic). Section 10 deals with conduct liable to mislead the public about specified matters concerning goods, while s 11 concerns specified matters concerning services ([33]). Although no submissions were made about the meaning of “liable to mislead the public”, the evidence established that the counterfeit Windows 95 disk had been displayed for public sale ([34]). Following Microsoft Corporation v Goodview Electronics Pty Limited, the Court treated the display as liable to mislead the public about the disk's nature, manufacturing process, characteristics and suitability ([35]). It did not find other Fair Trading Act contraventions ([36]).
The judgment applied statutory provisions and earlier authorities; it did not purport to create a new statutory test. On copyright reproduction, Branson J accepted the conclusion reached by Tamberlin J in Microsoft Corp v Business Boost Pty Ltd [2000] FCA 1651, holding that loading Windows 98 onto the computer was reproduction in material form ([25]). The judgment thus treated software installation onto the computer's hard drive as conduct within the statutory concept in the circumstances before it.
For misleading conduct involving counterfeit software, the Court relied on Microsoft Corporation v Goodview Electronics Pty Limited [2000] FCA 1852. It adopted the reasoning that offering counterfeit products could convey that they were made with Microsoft's licence and lawfully supplied, and could obscure risks associated with counterfeit goods ([35]). The supplied judgment quotes Goodview's reasoning, including its reference to Polygram Records Pty Ltd v Monash Records (Australia) Pty Ltd. The operative finding by Branson J was that displaying the disk for public sale was liable to mislead under the Victorian provisions.
On injunctions, the Court considered Microsoft Corporation v Plato Technology Limited [1999] FSR 834. It accepted the general point that injunctive relief protects against a future infringement that the applicant reasonably apprehends. It did not simply adopt Plato's approach without qualification. It examined the actual evidence against these respondents, including the limited range of proven infringements, the breadth of the software schedule and the possibility that an order could catch dealings in apparently genuine products ([38]-[41]).
The judgment does not provide a before-and-after account of later legal developments, nor does the supplied text identify any subsequent judicial treatment. It is therefore possible to explain how Branson J applied the law and earlier cases, but not to assert from this source how later courts have changed or maintained the position.
At [25], Branson J said that loading Windows 98 onto the computer reproduced it “in a material form”. In plain English, the Court treated the act of installing the program on the computer's hard drive as making a protected copy for copyright purposes. The finding was expressly made under s 31(1)(a) of the Copyright Act.
At [27], the judge found that loading Windows 98 onto the supplied disk also reproduced the program, and that supplying the disk authorised reproduction. The significance is that the Court considered not only the copy installed on the computer, but also the unauthorised copy on removable media and the respondents' role in supplying it.
At [28], the judge explained that the transaction was the computer with the programs installed and the disk supplied, rather than simply what the receipt listed. In plain English, the Court assessed what was actually sold and handed over, not just the wording on the paperwork.
At [29], the Court relied on the contrast between the $20 paid for the Windows 95 disk and the $175 minimum estimated retail price of a genuine version. It concluded that the respondents knew or ought to have known that making the disk infringed copyright. The paragraph illustrates how price evidence can contribute to an inference about knowledge, but the judgment does not state that price disparity is conclusive in every case.
At [35], the judge found that public display of the counterfeit disk was liable to mislead as to its nature, manufacturing process, characteristics and suitability. In plain English, the finding was not limited to what the particular investigator was told. The public display itself was conduct within s 10 on the evidence in this case.
At [41], the judge explained why relief needed to account for apparently genuine products. The Court was unwilling to place the respondents at risk of breaching an injunction when they dealt with products that appeared genuine and they were not, and ought not reasonably to have been, aware of counterfeiting. This was a qualification to the applicants' request for broad relief, not a rejection of injunctive protection altogether.
The judgment is most directly relevant to evidence that a computer business installed software on a machine sold to a customer without the copyright owner's licence. The Court found that installation on the hard drive was reproduction in material form ([25]-[26]). It is also relevant where a seller supplies a disk containing an unauthorised software copy, because the Court found that supplying the disk authorised reproduction ([27]).
The Windows 95 finding involved more than a claim that a disk was unofficial. The evidence included an investigator's purchase, a disk bearing substantially identical trade marks, a finding that it was counterfeit, and a marked difference between the sale price and the stated minimum retail price for a genuine product ([18], [21], [29]). The judgment supports considering those facts together when assessing infringement and knowledge under s 38.
For trade mark analysis, the decision addresses both marks displayed when installed software was activated and marks on disks sold as goods in a registered class ([16], [18], [22]). The relevant factual questions include what signs appeared, how they were used, whether they were substantially identical or deceptively similar, and whether the goods fell within the registration.
For the Victorian Fair Trading Act finding, the material fact was public display for sale of the counterfeit disk ([34]-[35]). The Court did not find that every alleged representation or every sale of software necessarily contravened ss 10 or 11. Its conclusion was limited to the conduct and evidence before it ([36]).
For injunctions, the case is pertinent where applicants seek relief broader than the specific infringements proved. The Court considered the scope of the requested software list, whether further infringements were reasonably apprehended and whether an order could create a risk for respondents dealing in apparently genuine goods without notice ([38]-[41]).
The supplied judgment contains no decisions made after 18 July 2002, so it cannot establish how later courts treated Microsoft Corporation v Blanch. It also does not report any later appeal or subsequent judicial consideration of its findings.
It does identify authorities that pre-date the decision. Branson J accepted the software-reproduction conclusion in Microsoft Corp v Business Boost Pty Ltd ([25]). She relied on Microsoft Corporation v Goodview Electronics Pty Limited for the misleading-conduct reasoning concerning counterfeit products ([35]). She considered Microsoft Corporation v Plato Technology Limited on the purpose and potential breadth of injunctions ([39]-[41]). She cited Australasian Performing Right Association Limited v Pashalidis in relation to costs ([42]).
These relationships show the role of the earlier authorities in the reasoning of this judgment. They are not evidence of how subsequent courts interpreted, followed, distinguished or limited Blanch. Any account of later treatment would require legal sources beyond the supplied text.
The clearest expressly unresolved question is whether loading Windows 98 onto the hard drive was part of making the computer sold, such that selling the computer constituted a further infringement under s 38. The judge said she was inclined to think it was, but left the issue for another case ([30]). The judgment therefore does not resolve the legal character of the loaded computer sale under that provision.
The reasons also identify limits in the evidence and pleadings. The applicants did not plead that Microsoft Corporation owned copyright in Office 97, so the Court did not base a copyright finding on that program ([25]). The evidence did not support an alleged sale of a disk containing Office 2000 ([17], [21]). The ultimate copyright findings were for Windows 95 and Windows 98 ([31]).
The Court was not otherwise satisfied that the respondents contravened ss 10 or 11 of the Fair Trading Act ([36]). The judgment does not explain in detail which other alleged conduct failed, beyond identifying the lack of submissions on “liable to mislead the public” and making a specific finding about public display ([34]-[36]). It should not be read as deciding every possible application of those sections to counterfeit software sales.
Finally, the reasons do not reproduce the final injunction wording. The applicants were directed to bring in short minutes of orders reflecting the reasons ([43]). The judgment explains the Court's approach to scope and the concern about apparently genuine products, but the precise final terms cannot be confirmed from the text supplied.
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THE PARTIES 1 The first applicant ("Microsoft Corporation") is a corporation incorporated under the laws of the State of Washington in the United States of America. It carries on the business of manufacturing, marketing, distributing and supplying computer programs ("Microsoft Programs") 2 The second applicant ("Microsoft Pty Ltd") is an Australian company, which is a subsidiary of Microsoft Corporation. Microsoft Pty Ltd provides marketing and technical support in Australia on behalf of the Microsoft Corporation in respect of the Microsoft Programs. It is an authorised user of Microsoft Trade Marks. 3 The respondents trade under the business name "Robert Blanch Computer Services". The business has been registered in Victoria since 18 August 1995.
history of the proceeding 4 The application and statement of claim were filed on 11 September 2001. These documents were served personally on each of the respondents on 2 October 2001. On 9 October 2001 a defence dated 8 October 2001 was filed which bears signatures which are apparently the signatures of the respondents. The respondents did not earlier, nor have they at any time, filed an appearance (see O 9 r 2 of the Federal Court Rules). 5 The defence, except for some minor exceptions, consists mainly of denials of the allegation set out in the applicants' statement of claim and contains brief particulars of the grounds of denials. It does not put in issue the copyright claimed by Microsoft Corporation in the Microsoft Programs. Attached to the defence is a copy invoice which shows the first respondent as the purchaser of various computer related products including Microsoft Windows 95 software. 6 The defence does not address the allegations contained in pars 1‑7 of the statement of claim which are of a formal nature. A fair inference appears to be that these allegations were not regarded as contentious. Although it seems unlikely that the respondents were aware of the effect of O 11 r 13(1) of the Federal Court Rules, its application in the circumstances of this case seems unlikely to result in any unfairness to the respondents. In the circumstances I have considered it appropriate to receive the defence notwithstanding the failure of the respondents to file an appearance. 7 A first direction hearing was held in this matter on 10 October 2001. The respondents did not appear (and indeed have not appeared before the Court on any occasion that this matter has been listed). The applicants by their counsel placed before the Court "Short Minutes of Order" apparently bearing the signatures of the respondents. The Short Minutes of Order provided for the proceeding to continue on pleadings, set a timetable for the preparation of the matter for hearing and asked the Court to "note" certain undertaking described as having been given to the Court by the respondents. As the respondents did not appear, no undertakings could in fact be given by the respondents to the Court. In the circumstances it seemed to me that the purported "undertakings" were of no effect. However, directions were made for the proceeding to continue on pleadings and a timetable set in accordance with the Short Minutes of Order. 8 The next directions hearing was held on 14 February 2002. Again the respondents did not appear. The applicants were granted leave to file and serve a notice of motion seeking judgment against the respondents. On 21 April 2001 each of the respondents was served with a notice of motion dated 18 April 2002 by which the applicants sought final relief pursuant to O 10 r 7, O 20 r 1 and O 18 r 4 of the Federal Court Rules, and five supporting affidavits. 9 On 26 April 2002 the applicants moved the Court for final relief against the respondents pursuant to the notice of motion dated 18 April 2002. As the respondents had failed to comply with the order of the Court, apparently made with their consent, with respect to the filing of evidence (O 10 r 7), and as it seemed plain that they did not intend to defend the proceedings, I considered it appropriate to allow the applicants to move for judgment. 10 During the course of the hearing on 26 April 2002 the applicants by their counsel sought leave to supplement their evidence. Leave was granted for them to do so by the filing and service of further affidavits. All parties were given leave to apply to have the motion relisted provided that such leave was exercised within ten days of the service of the further affidavits. The applicants were required to advise the respondents by letter of the directions made on 26 April 2002. 11 An affidavit of service was filed on 27 May 2002 by which service on each of the respondents of certain additional affidavits and a letter dated 6 May 2002 was proved. By the letter dated 6 May 2002 the solicitor for the applicant advised the respondents of the adjournment of the hearing of the motion for summary judgment, the leave granted to the applicant to file and serve further affidavits and of the respondents' entitlement, within ten days of the service of the further affidavits, to apply to the Court to be heard on the motion. No application to be heard was made by the applicants within that time limit or at all.
INFRINGEMENT OF MICROSOFT TRADE MARKS 12 The applicants by their statement of claim have pleaded that: "The Respondents have from time to time in the course of carrying on business and without the licence of the First Applicant used in relation to computer programs the Microsoft Trade Marks or marks which are substantially identical with or deceptively similar to the Microsoft Trade Marks. PARTICULARS Sale by Respondents of recordable compact disks on which copies of Windows 98 and Office 2000 have been made without the licence of the First Applicant (which compact disk is referred to herein as the "Burnt Disk") on 7 February 2001. Sale by Respondents of a compact disk containing Windows 95 bearing the Microsoft Trade Marks and not being made with the licence of the First Applicant (the "Counterfeit Disk") on 6 May 2001."
The applicants have further pleaded that the Burnt Disk and the Counterfeit Disk are products within class 9 of the Trade Marks Register in respect of which the Microsoft Trade Marks are registered.
13 Section 120(1) of the Trade Marks Act 1995 (Cth) ("the Trade Marks Act") provides: "A person infringes a registered trade mark if the person uses as a trade mark a sign that is substantially identical with, or deceptively similar to, the trade mark in relation to goods or services in respect of which the trade mark is registered." 14 The applicants relied, amongst other affidavits, on the affidavit of John Clifton Ramsden ("Mr Ramsden"), a private inquiry agent apparently employed by Trade Mark Investigation Services ("TMIS"). TMIS is retained by Microsoft Pty Ltd to investigate reports of infringement of the first applicant's copyright in Australia. 15 On 2 February 2001 Mr Ramsden visited shop premises at 58‑62 Woods Street, Laverton, Victoria. He spoke with a man who identified himself as Robert Blanch ("Mr Blanch"). After some conversation Mr Ramsden ordered a computer of nominated specifications which he requested be loaded with Windows 98, Office 97 and Publisher. On 7 February 2001 Mr Ramsden returned to 58‑62 Woods Street. He saw Mr Blanch start the computer which he identified as the one which he had prepared for Mr Ramsden. Mr Ramsden saw that Windows 98 and Office 97 had been installed on the computer. He paid $550 for the computer and received a receipt stamped "Robert Blanch Computer Services" and a business card for "Robert Blanch Computer Services ABN 51 692 965 282". Mr Blanch gave him a compact disk saying: "This is what I loaded Windows 98 onto. You'll need it too when you connect to the Internet." 16 By their defence the respondents acknowledge the sale of the computer on 7 February 2001 but they assert that "no software was listed on the sale". The receipt provided to Mr Ramsden refers to a "CD ROM" but does not otherwise refer to Windows 98 and Office 97. However, for present purposes, the issue is whether the respondents used as a trade mark a sign that is substantially identical to a registered trade mark of Microsoft Corporation. I accept that by selling to Mr Ramsden a computer which had loaded onto its hard drive Windows 98 and Office 97 the respondents used as a trade mark the signs that would be displayed on the computer monitor when those respective programs were activated. I am satisfied that those signs were substantially identical with registered trade marks of Microsoft Corporation. 17 Mr Ramsden has given no evidence of having purchased from the respondents a recordable compact disk on which a copy of Office 2000 had been made. 18 On 6 May 2001, Huong Tuyet Nguyen ("Mr Nguyen"), another employee of TMIS, visited Shepparton Computer Expo Market in Geelong, Victoria. He visited a stall which bore a sign "Robert Blanch Computer Services". Mr Nguyen purchased a Microsoft Windows 95 compact disk for $20.00. The disk bears signs used as trade marks which are substantially identical with registered trade marks of Microsoft Corporation. Mr Nguyen was given, at his request, a business card which bears the name "Robert Blanch Computer Services". The card is not identical to that given to Mr Ramsden. It appears to be an older version of the respondents' business card as it gives an address revealed by the business name search referred to below as having been the previous business address of the business "Robert Blanch Computer Services". 19 A business name search of Robert Blanch Computer Services made on 12 February 2002 reveals that it has been registered as a business name in Victoria since 18 August 1995 and that its current registered address and business address is 58‑62 Woods Street, Laverton, Victoria 3028. The current proprietors, the first and the second respondents, are shown by the business name search to have been the proprietors of the business since 18 August 1995. 20 Rebecca Cope ("Ms Cope"), a Legal Associate for the Microsoft Pty Ltd, is responsible for administering the enforcement of the intellectual property rights of Microsoft Corporation in Australia and detecting unlicensed Microsoft products including counterfeits. Ms Cope's affidavit evidence includes an expression of her opinion, which I accept, that the reproduction of Windows 98 and Office 97 on the hard drive of the computer system purchased by Mr Ramsden on 7 February 2001 was unauthorised. 21 Ms Cope expressed the opinion, which I accept, that the reproduction of Windows 98 on the compact disk provided to Mr Ramsden on 7 February 2001 was not authorised by the first applicant. However, her evidence provides no support for an alleged sale by the respondents of a recordable compact disk onto which a copy of Office 2000 had been made. Ms Cope further expressed the opinion, which I accept, that the Microsoft Windows 95 compact disk purchased by Mr Nguyen on 6 May 2001 was counterfeit. Additionally she deposed to the fact that the minimum estimated retail price in Australia for a genuine version of the disk was $175.00 per unit. 22 I am satisfied that the compact disks provided to Mr Ramsden and Mr Nguyen respectively were products within class 9 of the Trade Marks Register in respect of which the Microsoft Trade Marks are registered. 23 For the above reasons I am satisfied that the respondents have infringed the Microsoft Trade Marks.
infringement of copyright 24 The applicants, by their statement of claim, have pleaded that Microsoft Corporation carries on the business of manufacturing, marketing, distributing and supplying Microsoft Programs. The applicants have further pleaded that: "18. The Respondents without the licence of the First Applicant have in the course of carrying out business from time to time: (a) reproduced in a material form or authorised the reproduction in a material form of the whole or a substantial part of one or more of the Microsoft Programs; and (b) reproduced in a material form or authorised the reproduction in a material form of the whole or a substantial part of one or more of the Microsoft Programs on the hard disk of various computer systems supplied by the Respondents in the course of their business. PARTICULARS Authorisation of the reproduction of Microsoft Programs copied onto the Burnt Disk. Reproduction by the Respondents of Microsoft Programs on the Burnt Disk on or about 7 February 2001. Reproduction by the Respondents of Microsoft Programs on the computer system which was sold on or about 7 February 2001. Authorisation of reproduction of the Microsoft Programs known as Windows 98 and Office 97 on the random access memory of the computer system sold on 7 February 2001. Authorisation of the reproduction of the Microsoft Programs on the Counterfeit Disk sold on 6 May 2001. 19. Further, the Respondents without the licence of the First Applicant have in the course of carrying out business from time to time: (a) sold, or by way of trade, offered or exposed for sale; and (b) distributed or supplied for the purpose of trade copies of one or more of the Microsoft Programs where: (i) the making of these copies constituted an infringement of the First Applicants copyright in the Microsoft Programs or; (ii) in the case of copies imported into Australia, the making of those copies in Australia by the importer would have constituted an infringement of the First Applicant's copyright and the Respondents knew or ought reasonably to have known the matters referred to in (i) and (ii) above. PARTICULARS Sale of the Burnt Disk on 2 February 2001 containing a copy of Windows 98 and Office 97 had been made without the licence of the First Applicant. Sale of computer system on 7 February 2001 onto which copies of Microsoft Programs viz Windows 98 and Office 97 had been made without the licence of the First Applicant. Sale of the Counterfeit Disk on 6 May 2001 containing a copy of Windows 95 which had been made without the licence of the First Applicant." 25 I am satisfied that by loading the program Windows 98 onto the computer sold to Mr Ramsden on 7 February 2001 the respondents reproduced that program in a material form within the meaning of s 31(1)(a) of the Copyright Act 1968 (Cth) ("the Copyright Act"). In this regard I accept the appropriateness of the conclusion of Tamberlin J in Microsoft Corp v Business Boost Pty Ltd [2000] FCA 1651; 49 IPR 573. However, as to the claims that the respondents infringed Microsoft Corporation's copyright in the program "Office 97", I note that the applicants have not pleaded that Microsoft Corporation is the owner of the copyright in any program so identified. 26 I am further satisfied that the respondents were not the owner of the copyright in Windows 98 (Microsoft Corporation is in the circumstances of this case presumed to be the owner - s 126 of the Copyright Act) and that they did not have the licence of the owner to reproduce that program in a material form (s 36(1) of the Copyright Act). 27 I am satisfied that by loading Windows 98 onto the compact disk supplied to Mr Ramsden the respondents reproduced a Microsoft Program in a material form. By supplying the compact disk to Mr Ramsden they authorised the reproduction of that Microsoft Program in a material form (s 36(1) of the Copyright Act). 28 By their defence the respondents acknowledge the sale of a computer to Mr Ramsden on 7 February 2001 but they allege that "no software was listed on the sale". The critical issue, in my view, is not the details contained on the receipt provided to Mr Ramsden but rather what was in truth the subject matter of the sale and purchase of 7 February 2001. The subject matter of the sale was, in my view, the computer with the programs loaded onto its hard drive and the compact disk handed to Mr Ramsden. 29 I am satisfied that by selling the counterfeit Windows 95 compact disk to Mr Nguyen on 6 May 2001 the respondents authorised the reproduction of that Microsoft Program on the counterfeit compact disk. By reason of the contrast between the price paid by Mr Nguyen for the compact disk and the normal retail price of the genuine comparable product I am satisfied that the respondents knew or ought to have known that the making of the compact disk constituted an infringement of the copyright in the program Windows 95 (s 38 of the Copyright Act). 30 The applicants contended that the sale to Mr Ramsden on 7 February 2001 of the computer with Windows 98 and Office 97 loaded onto its hard drive constituted a further infringement of copyright by reason of s 38 of the Copyright Act. To so find I would have to conclude that the making of the computer sold to Mr Ramsden constituted an infringement of copyright. That is, that the loading of Windows 98 (Office 97 may be put to one side) onto the hard drive of the computer was part of the making of the computer sold to Mr Ramsden. Whilst I am inclined to think that it was, I was not assisted by any argument put in opposition to the applicants' argument. As the outcome of this proceeding will not be materially affected by any decision made by me in this regard I take the view that determination of this issue should await another case. 31 For the above reasons, I am satisfied that the respondents have infringed the copyright in the Microsoft Programs "Microsoft Windows 95" and "Microsoft Windows 98".
fair trading act 1999 (VIC) 32 The applicants by their statement of claim have pleaded: "By reason of the matters pleaded above the Respondents, in selling and offering to sell Infringing Copies of the Counterfeit Disk and the Burnt Disk and any other products to which the Microsoft Trade Marks have been applied without the licence of the First Applicant, have expressly or impliedly represented to purchasers of those products contrary to fact, that: (a) such items were made by or with the licence of the First Applicant; (b) the Respondents were lawfully entitled to sell such items; and (c) the purchaser of such items is entitled to use such items. By reason of the matters pleased [sic] in paragraph 28, the Respondents have engaged in conduct in contravention of sections 10 and 11 of the Fair Trading Act (Vic)." 33 Sections 10 and 11 of the Fair Trading Act 1999 (Vic) relevantly provide: "10. A person must not, in trade or commerce, engage in conduct that is liable to mislead the public as to the nature, the manufacturing process, the characteristics, the suitability for their purpose or the quantity of any goods. … 11. A person must not, in trade or commerce, engage in conduct that is liable to mislead the public as to the nature, the characteristics, the suitability for their purpose or the quantity of any services. …" 34 No submissions were addressed to the Court on the question of whether any conduct of the respondents was "liable to mislead the public" within the meaning of ss 10 and 11 of the Fair Trading Act 1999 (Vic). I am satisfied, however, that the evidence of Mr Nguyen establishes that the counterfeit compact disk purchased by him on 6 May 2001 had been displayed for public sale. 35 In Microsoft Corporation v Goodview Electronics Pty Limited [2000] FCA 1852 at [50] said: "I find that by offering for sale counterfeit products, Goodview Electronics and Golden Square were representing that the products were products made with the licence of Microsoft and that Goodview Electronics and Golden Square were lawfully entitled to supply such products. These representations would be likely to induce purchasers of the products to believe that the products would be unlikely to contain viruses and would be covered by guarantees given by Microsoft. The representation would also hide from purchasers the risk that a court could order the delivery up of the products to the copyright owner (Polygram Records Pty Ltd v Monash Records (Australia) Pty Ltd (1985) 10 FCR 332 at 333-334). Such representations were, in the circumstances, misleading and deceptive within the meaning of s 52 of the Trade Practices Act."
On the same basis I find that the conduct of the respondents, by displaying for sale a counterfeit compact disk, engaged in conduct that was liable to mislead the public as to the nature of, the manufacturing process, the characteristics and the suitability for the purpose, of the compact disk.
36 I am not otherwise satisfied that the applicants have established that the respondents engaged in conduct in contravention of ss 10 and 11 of the Fair Trading Act 1999 (Vic).
relief 37 The applicants do not press their claim for damages. They seek an order for costs and the making of the following injunctions: "1. An order that the Respondents, whether by themselves, their servants, agents or otherwise howsoever, be restrained from infringing registered trade marks numbers 371528(9), 377674(16), 576996(9) and 576997(16) ("the Microsoft Trade Marks"). … 2. An order that the Respondents and each of them, whether by themselves, their servants, agents or otherwise, howsoever, be restrained from infringing the First Applicant's copyright in the computer programs described on the Schedule hereto ("Microsoft Programs") by reproducing or authorising the reproduction of Microsoft Programs or a substantial part thereof without the licence of the First Applicant. … 3. An order that the Respondents and each of them, whereby their servants, agents or otherwise, be permanently restrained from representing in trade or commerce to persons to whom the relevant Respondent supplied or offers to supply any Infringing Programs and/or Infringing Products: (i) that the relevant Respondent is lawfully entitled to supply any such product; or (j) in the case of Infringing Programs and Infringing Products, that any such product has been made with the licence of the First Applicant." 38 No evidence has been adduced in the proceeding that the respondents have infringed Microsoft Trade Marks in class 16. Class 16 includes printed instructional and teaching material related to computer and computer software and computer hardware and software manuals. A very wide range of computer programs is described in the schedule referred to in par 2 of the above claims for injunctive relief. The evidence placed before the Court does not suggest that the respondents have infringed the copyright of Microsoft Corporation in more than a small number of the listed programs. 39 In justification of their claim for injunctions broadly formulated, the applicants placed reliance on the decision of Steinfeld QC in Microsoft Corporation v Plato Technology Limited [1999] FSR 834. The learned Deputy Judge noted at 839 that the purpose of an injunction is to protect a person from some future infringement of his rights which he reasonably apprehends. In that case the defendant was accepted to have infringed the copyright of Microsoft Corporation in Windows 95 unwittingly and it was willing to give an undertaking not to deal in any Windows 95 products which it knows or ought upon reasonable inquiry to know to be counterfeit. Steinfeld QC at 845 observed: "Save that in my judgment any injunction or undertaking ought to extend to all Microsoft software products (the evidence does not suggest any reason for singling out Windows 95 as more prone to being counterfeited than any other Microsoft software products) it seems to me that such would constitute the most by way of injunctive relief to which the plaintiff is in this case entitled." 40 I accept that the applicants may reasonably apprehend that a respondent willing to infringe trade marks in class 9 may similarly be willing to infringe trade marks in class 16. It is with far greater hesitation that I conclude that the applicants may reasonably apprehend that the respondents may infringe copyright in the wide range of computer programs in respect of which they have sought an injunction. However, in the end I have been persuaded that a real practical difficulty attends any attempt to reduce the list. 41 I do not accept that in this case the respondents infringed the copyright of Microsoft unwittingly. They do not by their defence assert that they, or either of them, acted unwittingly with respect to the software loaded onto the hard drive of the computer sold to Mr Ramsden. Although by their defence the respondents assert that they did not know that the Windows 95 disk sold to Mr Nguyen was counterfeit, it seems to me that no person active in the computer industry could not be alerted to the likelihood of counterfeiting when the price at which they are able, as it would seem profitably, to sell a Microsoft product is markedly below the normal retail price. Nonetheless, it seems a fair inference from the evidence before the Court that the respondents are operating a modest business of no particular sophistication. In this regard they are in an entirely different category from the respondents in Microsoft Corporation v Goodview Electronics Pty Ltd. I am not persuaded that they should carry the risk of breaching an order of the Court should they in the future deal in apparently genuine products of the applicants in circumstances in which they were not, and ought not reasonably to have been, on notice that the products were not genuine. Subject to this consideration I consider it appropriate for injunctions to be made as sought by the applicants. 42 There will be an order that the respondents pay the applicants' costs up to and including 26 April 2002 but not thereafter. Such costs are not to be reduced under O 62 r 36A(1) of the Federal Court Rules (see Australasian Performing Right Association Limited v Pashalidis [2000] FCA 1815). 43 The applicants are to bring in short minutes of orders which reflect these reasons for judgment. I certify that the preceding forty-three (43) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Branson.
A/Associate: Dated: 18 July 2002 Counsel for the Applicant: Mr R Cobden
Solicitor for the Applicant: Mr G Hansen, Harris & Company
Microsoft Corporation
Blanch
The only formal order was that the applicants bring in short minutes reflecting the reasons; the reasons provide for injunctions, subject to the stated qualification, and for the respondents to pay the applicants’ costs up to and including 26 April 2002, but not thereafter.