June 23, 2003

Microsoft's dark side: US$ 19 million for piracy?

- by Lionel Berthomier -
On June 17th, 2003, Microsoft appealed the decision of the Nanterre court (France), in which it was fined US$ 425,000 in damages and interest for software piracy in 2001. The ultimate verdict will be made public on October 09th, 2003, with US$ 19 million at stake.(Background: see this NewsForge story from last year.)

Remember. If you're an "insider", you know that on September 27th, 2001, while world news was monopolized by the 9-11 events, Microsoft, the undisputed herald of anti-piracy, was convicted of counterfeit in France.

US$ 425,000 was to be paid to their victims, Raymond Perrin and Isabelle Cuadros, two 3D animation software authors, who have been fighting for their rights for the past six years. The software in question: Softimage Creative Environment, Canadian high tech's finest creation, which Microsoft purchased at ransom price in 1994 and then resold to Avid in 1998 for a fortune.

Microsoft convicted of piracy in 2001. The story should have been groundbreaking. But it stays relatively unperceived, except for a few stories printed in trade publications. Nevertheless, faced with such an affront, the Redmond giant appeals the decision. In the end, Microsoft will have waited until the court's command and the visit of ushers at their French subsidiary's main offices to pay what they owe. Microsoft's executives - and the BSA - which have been known to be more expansive in piracy affairs, shine out by their deafening silence.

June 17th, 2003: the Microsoft piracy case is brought before the 12th Chamber of the Versailles Appeal Court. In the small room, Judge Denis Coupin, his clerk, the plaintiffs, their lawyer, a computer specialist, Microsoft's lawyers, a Softimage engineer, two journalists and a curious passer by: the place is empty! No one could have expected a US$19 million piracy suit would attract so FEW people. However, the audience will proceed in small committee.

2:30 PM: after Judge Coupin's opening statement, word is given to Microsoft's defendant, Ms. Renard, a brilliant Parisian lawyer, who then proceeds through such an academic a plea it is boring. The main argument: "only the code is copyrightable (.) and a software's functionalities cannot be protected by author rights." To prove her point, the young lawyer, silently supported by her colleagues of the Auguste & Debouzy practice, uses the old "elevator trick," which states that all elevator makers around the world have developed the functionality that enables to reach the desired floor by pushing the corresponding button, without having to sue each other for counterfeit... She then explains that her client, when the contract tying him to the plaintiffs was breached, "totally rewrote and copied the functionalities" in question.

On the unfair competition indictment, she uses a judicial subtlety: one cannot use this as "protection vs. counterfeiting." In regards to parasitism, Ms. Renard guarantees her client "did not try and obtain a determining advantage with the 8 asserted functionalities".

She adds: "In 1995, these functionalities were already considered as standard." Then, a Softimage engineer, who came in straight from Quebec, proceeds to present the mentioned functionalities and, in an appraisable effort to communicate with the audience, recalls the great commercial success of his employer, citing Jurassic Park for instance.

Ms. Renard goes on with her pitch, recalling that Microsoft, "the undisputed anti-piracy champion," had seen his image tarnished in this affair "by a press campaign orchestrated".... And she concludes that in the name of "the free course concept" regarding the functionality development, her client's conviction for counterfeit in 2001 should be dismissed.

Judge Coupin then turns to Mr. Alterman, the victims' lawyer. His pitch is based on precise facts like the settlement proposal for the asserted functionalities, made to his clients on the eve of Softimage's acquisition by Microsoft, or the contract requesting that Softimage "drop them in case of contract breach." And Mr. Alderman goes down memory lane. He explains how Raymond Perrin and Isabelle Cuadros were "seduced" by Softimage after the projection of "The Puppet" movie in Montreal in the early 1990's; he mentions how strange it is to him that the functionalities presented today by Microsoft's defense as "not of great interest" be the center of so many attempts at transaction; regarding the author rights, he reminds the audience that the organic descriptions and the detailed analysis of the functionalities developed by his clients were registered at the APP (the French association for software protection); furthermore, he questions the conditions of the expertise which resulted in Microsoft's conviction in 2001, pointing out that the difference found while comparing the two source codes was not 16,000 bits as mentioned in the official report, but exceeded 110,000 bits.

Finally, whereas Ms Renard had put in doubt the method he had used to estimate his clients' prejudice, qualifying it as "unjustified," he reminded the court that three concurring expertises showed that the asserted functionalities corresponded to 6 to 8% of Softimage's software value. Brought down to 5% of the software's value during the period until Softimage's sale to Avid (1998), while applying the usage fee specified in the initial contract (50%), it all adds up to about 2.5% of the turnover generated by the software (a little over US$ 790 million), that is to say US$ 19 million. This is precisely what he requests before the Appeal Court as damage and interest for Raymond Perrin and Isabelle Cuadros, along with the unconditional removal of the pirated functionalities, knowing that should the case go penal, damage and interests would correspond to the full amount of the software's turnover! The session ends. It is 4:30 PM in Versailles on June 17th, 2003. The Appeal Court will pronounce its verdict on October 9th.

This article was sent to a number of publications by its author, Lionel Berthomier. The opinions it contains are strictly his, and may or may not be shared by NewsForge editors and OSDN management.


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