Legal Risk - Environment - Example of Microsoft

1. Microsoft Corporation v/s Beijing
eFuture Technology Co. Ltd.
Presented By –
Isha Joshi
(BBA-FT IV sem)

2. CASE
 In November 2010, Microsoft investigated and found that
eFuture had duplicated, installed and commercially used
copyrighted Microsoft software products without its
authorization or license.
 In the ensuing 10 months, Microsoft tried to negotiate with
eFuture to resolve this dispute, but eFuture was not
cooperative.
 In October 2011, Microsoft filed four complaints against
eFuture before the Court respectively asserting that eFuture
infringed upon its copyrights of Microsoft Windows,
Microsoft Office, Visual Studio and Microsoft Server.

3.  In the complaints, Microsoft asked eFuture to stop
infringing upon its copyrights, compensate its
losses of about RMB 5.26 million, and afford all
judicial fees before the Court.
 In the meanwhile, Microsoft raised
correspondent evidence preservation requests in
the Court.
 The Court accepted the four complaints and
made a spot check on computers in the offices of
eFuture to preserve infringement evidence upon
Microsoft’s requests.

4.  After a nearly 6 month trial, the Court adjudicated the
four lawsuits in public on December 10, 2012, finding
that eFuture illegally used the software series of Microsoft
Windows, Microsoft Office, Microsoft Visual Studio,
Microsoft Windows Server and Microsoft SQL Server.
 eFuture was ordered to compensate Microsoft RMB
3,879,573 in total for the latter’s economic losses and
reasonable expenses to stop its infringement activities
 And was ordered to afford all judicial fees. Neither
eFuture nor Microsoft appealed the trial decisions, and
then they reached a settlement on carrying out the
decisions.

5. COMMENTS
“An employer is held liable for
instalment and use of pirated software
on personal computers of its
employees.”

6.  In precedent cases involving software copyright
infringement issues, it was common that
defendant companies owned computers
installing with software in question.
 In this case, computers installing with illegal
duplication of Microsoft software belong to
eFuture’s employees.
 Therefore, among other arguments, both
defendant and plaintiff focused on whether
eFuture should be liable for the illegal
duplication installed in the employees’ personal
computers.

7.  To save its operation costs, eFuture did not
provide computers to its employees, but to
subsidize the computers purchased and owned
by them.
 In view of the different ownership of computers,
eFuture refused to take liabilities and argued
that computers spot-checked by the Court in the
course of evidence preservation belonged to the
employees rather than itself, though they were
placed in its offices, and that it was the
employees’ personal acts to install the illegal
software copies.

8. Apparently, eFuture’s arguments could
not set up.

9. Statutory Damages
Calculation in China
 Copyright Law of China
Article 49.1. if a copyright or copyright-related right is
infringed, the infringer shall compensate the right holder
for the actual losses caused by the infringement; if the
actual losses are difficult to calculate, compensation may
be made according to the illegal gains of the infringer.
The monetary compensation shall also include the
reasonable expenses of the right holder for stopping the
acts of infringement.

10. RESULT
 In this case, eFuture admitted that one employee used one
computer, so the Court knew the actual number of
computers eFuture had and then calculated the
proportion of spot-checked computers to all eFuture
computers.
 The Court counted the number of pirated software copies
installed in the spot-checked computers, and estimated
the total pirated software copies used by eFuture on the
basis of the proportion.

11.  The Court reached the amount of economic losses of
Microsoft had suffered.
 The calculation methodology of damages herein can serve
as a good reference for future similar cases.
 As to the reasonable expenses Microsoft spent to stop
eFuture’s infringement, the attorney fees and notarization
fees to fix eFuture’s infringement activities shall be
counted in.
 Under the above-mentioned judicial interpretation, the
Court ordered eFuture to afford the expenses as well as
the judicial fees accordingly

12. THANK YOU