Microsoft takes action against Bai Nao Hui

Microsoft recently sued three companies in the Beijing No 2 Intermediate People’s Court:

• Beijing Hongguan Shiji Trade Company.
• Beijing Chaowai Yuexiu PC Market Company.
• Beijing Kaiye Electronics Technology Co Ltd.

The latter two companies are the operator and owner, respectively, of Bai Nao Hui, a well-known Chinese computer store with branches in Beijing and Shanghai. Bai Nao Hui was found to be selling computers pre-loaded with pirated Microsoft software. Although Microsoft sent demand letters, personal computers loaded with unauthorised copies of the software could still be purchased at Bai Nao Hui. Microsoft commenced proceedings for infringement.

The court found that the second and third defendants had, in the daily operation of Bai Nao Hui, made efforts to publicise anti-piracy measures and carry out their management duties. After receipt of the demand letters, they had stepped up measures to manage, discover and punish piracy, and had worked with Microsoft to combat piracy.

The second and third defendants were found to have complied with their management obligations. Since the upload of pirated Microsoft software on computers was not obvious, it was difficult for the operator of Bai Nao Hui to know that the computers sold in its shops were loaded with piracy software. Accordingly, the second and third defendants were held not liable for infringing Microsoft's copyright. However, the first defendant was ordered to stop the infringing act of loading pirated software on computers and to pay damages of Rmb100,000 and costs of Rmb15,000.