Significant Damages for Software Infringement in Default Judgment
Microsoft Corporation v. PC Village Co. Ltd. 2009 FC 401 (Mandamin, J.)

April 21, 2009

John C. Cotter for the Plaintiff, Microsoft Corporation (“Microsoft”)
No one appearing for the Defendants, PC Village Co. Ltd. et al. (“PC Village”)

This was a case involving damages arising from copyright and trade-mark infringement, by a defendant flouting the court process.

The Plaintiff, Microsoft, is the owner of copyright in various computer software programs and of the MICROSOFT registered trade-mark. An action was launched for copyright and trade-mark infringement against PC Village, and certain individuals associated with the retail business. The evidence established that two (of 7) PC Village locations in Toronto had been selling and distributing unlicensed copies of Microsoft computer software, along with the computer systems.

Although the Defendants had initially taken an aggressive position in correspondence between the parties, they had never filed a Statement of Defence in Federal Court. An agreement in principle to settle had subsequently been arrived at, but never finalized. After Defendants’ counsel brought a motion to be removed as solicitor of record, the Defendants abandoned their defence and took no further part in court proceedings.

The Plaintiffs filed a motion for default judgment on the Statement of Claim pursuant to Rule 210 of the Federal Court Rules.

In its decision the Court restated the requirements for proof for default judgment. According to Federal Court Rules, on a motion for default judgment, where no Statement of Defence has been filed, every allegation in the Statement of Claim must be treated as denied. The Plaintiff must establish that the Defendants were served with a Statement of Claim and that they had not filed a defence within the required deadline. The Plaintiff must lead evidence upon which the Court can find on the balance of probabilities that infringement has occurred within the meaning of the statute being the Copyright Act and the Trade-marks Act.

The Court received and endorsed evidence that the Defendants had been served with the Statement of Claim, and that they had not filed a Statement of Defence with the Court. The evidence submitted by private investigators established that unauthorized copies of Microsoft software had been copied onto hard drives of computers, and sold to the public in association with the Microsoft name. The Court readily found that the Plaintiffs were entitled to default judgment.

In determining the amount of damages, the Court found bad faith on the part of the Defendants, conscious disregard for intellectual property rights, and uncooperative conduct.

In addition to injunctive relief, the court awarded the following damages: (1) a total of $150,000 for 15 copyright violations, (2) $50,000 in punitive or exemplary damages, and (3) a lump sum of $50,000 in respect of solicitor/client costs and disbursements.

By: Ruth M. Corbin, CorbinPartners Inc.