Delhi High Court fines a firm for piracy

NEW DELHI, INDIA: In their efforts to create an effective deterrence in companies and organization using pirated or unlicensed software, Delhi High Court has recently fined a company Rs. 10 lakhs as compensatory and punitive damages to the software copyright holders for using pirated software for commercial purposes without adequate genuine licenses. The plaintiffs in this case were Adobe and Microsoft.

While several judgments for damages have been passed against illegal hard-disk loading by the Delhi High Court, this is the first ever judgment on damages against a corporate end-user company.

While granting the order, the Court cited the famous judgment of Time Incorporated V. Lokesh Srivastava, 2005 (30) PTC 3 (Del), which expressed a need for the courts to get tough on the issues of piracy and counterfeiting. In that case the court said: “This Court has no hesitation in saying that the time has come when the Courts dealing with actions for infringement of trademark, copyrights, patents etc., should not only grant compensatory damages but award punitive damages also with a view to discourage and dishearten law breakers who indulge in violations with impunity out of lust for money so that they realize that in case they are caught, they would be liable not only to reimburse the aggrieved party but would be liable to pay punitive damages also, which may spell financial disaster for them."

The judgment reflects the changing mindset and tougher stand of the Indian judiciary in view of the threats and risks posed by piracy and counterfeiting to the India economy and the innovative culture of India.

According to the estimates of Business Software Alliance (BSA), an organization dedicated to promoting a safe and legal digital world, from the approximately 45-50 end-user civil actions initiated jointly by its member companies from January 2008 onwards against companies and organizations using pirated software in India, the approximate value of pirated software found in these companies could be valued at Rs. 85,78,30,000. This figure of loss would be much higher if it had also taken into account cases where member companies had independently pursued civil action against end-user companies, said a BSA press release.

As per 2008 IDC-BSA Global Software Piracy study, the India software piracy rate stood at high 68 per cent and the revenue losses attributed to software piracy in India in that year was estimated at $2.7 billion (Rs 12,665 crores approx).

The piracy rate in India has decreased at a slow pace - by 6 percentage points over a period of 5 years. A whopping 68 per cent of packaged software on PCs were pirated in 2008 in India, amounting to huge revenue and job losses to the domestic software industry, the release added.

According to an economic impact study of software piracy conducted and published by IDC in 2008, in India, reducing software piracy by ten percentage points over a four year period could generate an additional 43,000 new jobs, $3.1 billion in economic growth, and $200 million in Government tax revenues. There was further potential good news for local vendors, where the study also predicted an additional $2.7 billion in revenues to local vendors alone.

Keshav S. Dhakad, Chair, BSA India Committee said that the Business Software Alliance (BSA) welcomed the decision taken by the Delhi High Court. “The Court has sent a strong message through this example that piracy and counterfeiting of software not only harms the copyright owner, it also affects the national economy as a whole and is a deterrent to indigenous product innovation and economic growth, he added.