Microsoft Wins Against Computer Reseller

Microsoft Corp. v. Suncrest Enterprise (N.D.Cal. May 16, 2006)

(Note: This summary only addresses issues of copyright law present in this case. Other areas of law were discussed by the court's opinion, but those aspects of the case are not discussed in the summary below.)

"Microsoft sometimes sends undercover investigators to purchase products from wholesalers who carry Microsoft products." Between 2001 and 2003, Microsoft investigators made several test purchases from Suncrest Enterprise, which is a company that bought and resold computer goods. The four copies of Windows 98 in the first test puchase turned out to be counterfeit. Shortly therafter, one of Microsoft's attorneys, accompanied by law enforcement officers, inspected the Suncrest Enterprise's warehouse and found that all the Microsoft Products were genuine.

Suncrest Enterprise soon passed another test purchase in October 2002, but in October 2003 they failed a third test purchase by Microsoft. This time the products were genuine, but a Certificate of Authenticity ("COA") accompanying one of the Windows products was counterfeit. "A Microsoft COA is a document or sticker label that Microsoft includes in or with its software packages to assure end users that they have received genuine Microsoft products." As a result of this counterfeit COA, Microsoft brought suit against Sunrise Enterprise for various claims, including one of copyright infringement based on the first test purchase.

On a motion for summary judgment, the district court agreed that the evidence was sufficient to establish copyright infringement by Suncrest Enterprise. Further, it found that Yi-Ling Chen, Suncrest's CEO and sole shareholder, was vicariously liable for Suncrest Enterprise's infringement. In terms of damages, the district court awarded $5000 in statutory damages and attorney costs, not exceeding $30,000, to Microsoft.

Holding: Suncrest Enterprise committed copyright infringement against Microsoft.