Delhi High Court issues revolutionary decisions in software piracy cases

In two decisions on software piracy, the Delhi High Court has discussed and adopted principles on punitive damages which are prevalent in other jurisdictions.

Both matters involved the hard-disk loading of pirated or unlicensed versions of Microsoft's software programs onto computers which were then sold to consumers. Microsoft alleged:

• infringement of its copyright; and
  
  
• infringement and dilution of its well-known trademark MICROSOFT.

Microsoft claimed that when consumers use software programs bearing the Microsoft brand, they have a certain level of expectation. If the pirated or unlicensed versions of the software programs failed to work, this would amount to dilution and tarnishment of Microsoft's trademark rights.

In the first decision, Microsoft Corporation v Pawar (CS (OS) 530/2003, April 30 2007), the court granted damages in the amount of Rs2 million to Microsoft. In the second decision, Microsoft Corporation v Mayuri (CS (OS) 1027/2005, July 27 2007), the court granted damages in the amount of Rs1 million to Microsoft.

It is the first time in software piracy matters that the court has discussed and adopted principles on punitive and compensatory damages which are prevalent in other jurisdictions (eg, the United Kingdom, the United States and Australia). The decisions are based on the following principles:

• Punitive damages are a manifestation of equitable relief granted to an aggrieved party.
  
  
• Where the conduct of the erring party is found to be egregiously invidious, the award of punitive damages prevents the party from escaping prosecution or detection.
  
  
• One of the functions of punitive damages is to relieve the strain on the criminal justice system by providing a civil law alternative.
  
  
• Compensatory damages aim to compensate plaintiffs for the loss suffered. In contrast, punitive damages are based on the principle of corrective justice and aim to deter wrongdoers from carrying out unlawful activities.
  
  
• The amount of damages awarded should put the aggrieved party in the same position as it would have been had it not suffered a loss.
  
  
• The practice of granting exemplary damages must be strengthened, particularly in cases of flagrant infringement. There is no need to prove that the defendant has benefited from the infringement or that the plaintiff has suffered a loss.
  
  
• The expression "either damages or an account of profits" in Section 135 of the Trademarks Act 1999 is to be interpreted broadly.

The adoption of these principles by the Delhi High Court is revolutionary. It has brought IP jurisprudence in India - at least in software piracy matters - into line with principles used in leading jurisdictions. Undoubtedly, this augers well for IP rights holders in India.

Munish Mehra, Anand And Anand Advocates, New Dehli