Microsoft sends AU$1.86 million message to counterfeiters

The court found that TYN and its sole director, Ngat Doan,engaged in misleading and deceptive conduct by reproducing high quality counterfeit versions of Microsoft software -- Windows Millennium Edition, Works and Money -- for pre-installation on the company's wholesale computers.

Senior legal counsel for the applicants, Vanessa Hutley, said this was not the first time Microsoft had been to court with Doan.

"Charges were filed against Doan in 1997 for his other company called Beam. He was then ordered not to infringe Microsoft copyright again," she said.

However, Hutley said, following a tip-off from the company's consumer hotline and a subsequent investigation, they found at least 300 cases of pirated Microsoft software and evidence that the infringement was a "systematic process".

"We never had a final number of how many pirated versions were sold as companies like this don't keep records, for obvious reasons," she said. "But the court was satisfied that this was a systematic process."

TYN -- which began the case as APD International but changed it shortly after the case went to trial -- and director Doan were charged AU$386,000 in additional damages, based on the estimated loss from each piece of counterfeit software that was known to be sold.

Hutley said "we think it was a very strong judgement and sends a good message that the court takes this kind of piracy very seriously." She adds that "high quality counterfeits like these are very damaging to authorised partners."

"High quality counterfeits are designed to dupe honest people," she said. "They are priced similar to the real versions so people think they're getting a bargain and its only when something goes wrong with it that they realise they've been duped."

According to Hutley, this case was unique in that the counterfeits were actually produced in Australia.

"Most counterfeits are produced in other countries," she said, explaining that TYN employed an outside domestic manufacturer to produce the counterfeits.

"People assume this is a victimless crime but when you put it in terms of losses for the industry and for its people in terms of jobs it shows," she said.

According to a study released by the Australian Toy Association, the Business Software Association and the Interactive Entertainment Association of Australia in November last year the costs of counterfeiting is "directly borne" by legitimate vendors.

The study revealed that the total loss of profits for the toy, software and video games industry was AU$677 million, equating to AU$200 million in profits.

It also stated that a one third reduction in counterfeiting in Australia - bringing it on par with New Zealand and the US - would increase the nation's real GPD by AU$41 million.

According to the study, AU$466 million was lost in sales in 2002 for the software industry due to business software counterfeiting, AU$142.5 million was lost for software suppliers and AU$11.9 million was lost for software retailers.

Hutley said Microsoft continues to get calls from consumers and retailers to the hotline regarding pirated goods, which will provoke new investigations.

"Some people make mistakes and we recognise that but with systematic cases of infringement like TYN then we have to take a stand," she said.