Software giant suing UK retailer over alleged fake sales

Out-Law News | 05 Jan 2012 | 12:03 pm | 2 min. read

Comet sold fake CDs containing illegally copied software to UK consumers, Microsoft has claimed.

The US software company has initiated legal proceedings against the retailer alleging that it produced and sold "94,000 sets of counterfeit Windows Vista and Windows XP recovery CDs" to UK customers. Comet insists that it has not infringed Microsoft's copyright.

Microsoft alleges that Comet produced backup copies of its operating software in a factory in Hampshire before selling it on to customers via the retailer's outlets.

"As detailed in the complaint filed today, Comet produced and sold thousands of counterfeit Windows CDs to unsuspecting customers in the United Kingdom,” David Finn, associate general counsel, worldwide anti-piracy and anti-counterfeiting at Microsoft, said in a statement.

"Comet’s actions were unfair to customers. We expect better from retailers of Microsoft products – and our customers deserve better, too," he said.

Comet said its creation of backup CDs was legitimate.

"Comet has sought and received legal advice from leading counsel to support its view that the production of recovery discs did not infringe Microsoft’s intellectual property," the retailer said in a statement.

"Comet firmly believes that it acted in the very best interests of its customers.  It believes its customers had been adversely affected by the decision to stop supplying recovery discs with each new Microsoft Operating System based computer. Accordingly Comet is satisfied that it has a good defence to the claim and will defend its position vigorously," it said.

UK copyright law allows a "lawful user" of a computer program to make a backup copy of that program provided "it is necessary for him to have for the purposes of his lawful use".  A lawful user is considered to be a person who "has a right to use the program" regardless of whether they own a licence "to do any acts restricted by the copyright in the program or otherwise". Copyright owners cannot restrict this right even if there is "any term or condition in an agreement which purports to prohibit or restrict the act", the Copyright, Designs and Patents Act states.

It is also permissible for a lawful user of a computer program to "copy or adapt" a computer program provided it is "necessary for his lawful use" although this is subject to the existence of any term or condition of an agreement that regulates the circumstances in which use is considered lawful.

Kim Walker, expert in copyright law at Pinsent Masons, the law firm behind Out-Law.com, said that the case against Comet is a strong one.

"Comet said what it has been doing was in the best interest of customers, but making copies in the interests of customers is not a defence to copyright infringement. Making a backup copy of software is allowed, but only if it’s done by the person entitled to use the software and needing the backup, which is the owner of the PC and not Comet. If the court were to find infringement of copyright then Microsoft would be entitled both to an injunction and damages."

Walker said he expects Comet to try to settle the dispute before the case against it goes to trial.