In an order passed recently on July 15, 2016; Justice Gautam Patel of the Bombay High Court has lambasted Microsoft Corporation for misleading the court into granting an Anton Piller order on the basis of “false suggestions” and “gross suppression” in its pleadings.
As our readers may be aware, Microsoft regularly sues Indian companies for copyright infringement of its software. The usual tactic is for Microsoft or its law firms or its agents like Deloitte to engage investigators to scout for Indian companies committing large scale copyright infringement. On the basis of evidence collected by investigators either through recorded conversations with employees of targeted companies or through other means, Microsoft sues these companies, usually before the Delhi High Court. More often than not the Delhi High Court grants an ex-parte Anton Piller order along with an interim injunction. Court appointed commissioners (usually young lawyers who have little or no experience in the working of the law) are authorised to conduct a search of the premises and computers of the defendant along with Microsoft’s technical experts in order to determine the scale of software piracy.
The wording of these Anton Piller orders by the Delhi High Court have been very controversial – for example in cases where the judge has ordered the hard-drives of the defendants to be sealed and seized, entire companies have come to a grinding halt – payroll, tax payments, business correspondence and any other activity conducted through computers basically stops because of hard disks being sealed. Faced with the possibility of massive losses, the defendants usually settle with Microsoft for extortionate sums, way above the normal license fees that they would have paid if their hard disks weren’t sealed. We’ve covered this issue in previous posts over here. This situation has been tempered to an extent by judges who only authorise Microsoft to mirror, not seize, the defendant’s hard-disks with the intent of preserving evidence – after all Anton Piller orders are all about preserving evidence.
In the present case, Microsoft Corporation (an American company) and its Indian subsidiary chose to file this lawsuit before the Bombay High Court against Girnar Software Pvt. Ltd., a company which appears to have its registered office in Rajasthan but with a branch office in Andheri, Mumbai. On June 24, 2016 Justice Patel granted Microsoft an Anton Piller order – this order is unfortunately not available on the High Court’s website. The order appointed experts from the High Court’s own IT Department to oversee the raids on Girnar’s offices at three locations: Gurgaon, Jaipur and Andheri.
In its pleadings, on the basis of which Microsoft was granted an Anton Piller order, the company had claimed that Girnar had a total of 3,315 computer systems on which there were a total deployment of 1,340 Microsoft Windows programs despite the company having procured only licences for only 545 deployments, further deployment of 1308 Microsoft Office programs despite Girnar having licenses for only 550 deployments and another 60 deployments of Microsoft Visual Studios despite Girnar having procured only 5 licenses. The company had also alleged that Girnar was being uncooperative in Microsoft’s attempt to resolve the matter through negotiations. On the basis of these averments in the pleadings, which are made on oath, Justice Patel issued the Anton Piller order.
The “gross suppression” and “false suggestions”
In his order Justice Patel rules that when the raid was actually conducted, the Deputy Registrar from the Bombay High Court’s IT Department discovered that far from the 3,315 computer systems that Girnar was alleged to have, the company had only 1053 machines, of which only a mere 283 machines ran Microsoft Windows!!!!! The Deputy Registrar informed the Bombay High Court that 75% to 80% of Girnar’s systems ran on Linux or Ubuntu platforms, both of which are FOSS platforms that do not belong to Microsoft.
Further when Girnar put in an appearance before the Bombay High Court, its counsel brought to Justice Patel’s notice that Microsoft had in fact suppressed crucial email exchanges between Microsoft and Girnar. This email correspondence, according to Justice Patel, demonstrated that Girnar was in fact co-operating with Microsoft and was only seeking clarifications regarding safeguards pertaining to the security of its systems.
When Microsoft’s counsel was asked for an explanation for this suppression and falsity in its pleadings, it claimed that there was an “oversight” on its part in not including the emails – as for the discrepancy in the number of computers, Microsoft sought refuge in the vague language of its pleadings which had liberally used phrases such as “estimated”, “some of which”, “approximately”. Microsoft also sought to argue that since the raids at one of the location was delayed, it was possible that Girnar deleted the offending software from its systems.
Justice Patel was not convinced by any of these explanations. In his words:
My disapproval today is of Microsoft’s Plaint presenting speculation as fact. This is not answered by presenting me with still more speculation based on even less fact.
…I do not pretend to understand what Microsoft thought it was doing when it brought a Plaint like this. I find it particularly galling that attempts are now made to explain its pleading by this fuzzyreading approach; by asking me to read into words like ‘approximate’, ‘approximately’, ‘estimated’ and ‘some of which’ a precise qualification of very precisely claimed numbers and figures. When any party approaches a Court, one expects complete candour. We expect this most especially when the party seeks ad-interim relief. The standard gets more stringent when the application is for relief without notice, ex parte. When that application is of the level of an Anton Piller order, the standard is at its most exacting. Microsoft, only because it is Microsoft, is no exception. It gets no latitude only because it is what it is. If this is the attitude to our Courts, that we can be taken for granted, or that because we are Courts in India therefore it is perfectly acceptable to be less than honest with us…
Due to all these various infirmities, Justice Patel vacated his original order of June 24 and has given Microsoft an opportunity to withdraw the lawsuit on the next date of hearing i.e. July 20. He also makes it clear that all future Anton Piller orders will be granted only on the deposit of a security with the court – this is a most basic safeguard for Anton Piller orders – the Delhi High Court has long ago done away with this requirement.
We asked Microsoft for its version of the story. The company’s representative Vinita Lamba in an email, (the entire letter is accessible here) told us of its three fold defence: first that the defendant did in fact admit to a shortfall of 5 numbers and that even this constituted copyright infringement as infringement does not depend on numbers, second that the investigator had estimated a larger shortfall but a time period of 40 days had lapsed between the investigation and the raid, providing a wide enough timeframe for the defendants to change the software on their systems and third Microsoft has claimed that all of the interviews conducted by the undercover investigators with the defendant’s employees were recorded and transcribed and that the shortfall was calculated on the basis of the conversations. It also claims that the investigators have disclosed in their affidavits that it is difficult to “estimate the volume and extent of misuse as it is the fact with[in] the special knowledge of the defendant”. Microsoft further draws on the Delhi High Court’s dicta in Autodesk Inc and Anr. vs A.V.T. Shankardas and Anr. [2008 (37) PTC 581 (Del.)] where the Court held the following
The test of reasonable and credible information regarding the existence of pirated software or incriminating evidence should not be subjected to strict proof or the requirement to demonstrate or produce part of the pirated software/incriminating evidence at the initial stage itself. It has to be tested on the touchstone of pragmatism and the natural and normal course of conduct and practice in trade.
It may not always be possible for a plaintiff to obtain any admission by employing decoy customers and gaining access to the defendant’s premises. Any such attempt also inheres in it the possibility of dis-appearance of the pirated software/incriminating evidence in case the decoy customer is exposed. Accordingly, visit by decoy customer or investigator is not to be insisted upon as pre condition. A report of private investigator need not be dis-regarded or rejected simply because of his engagement by the plaintiff. The information provided by the private investigator should receive objective evaluation.
I was unable to find any defence to the failure of Microsoft to file the complete email correspondence with Girnar which demonstrated that the company was in talks for an audit. The letter does say that there was a paucity of time and hence certain points weren’t covered but just to let our readers know Shamnad spoke to Microsoft’s counsel at around 6:00 PM with a deadline of 9 PM.
Justice Patel needs to examine Microsoft’s witnesses on oath
Justice Patel, like Portia’s alter ego, Balthazaar, in Shakespeare’s Merchant of Venice, appears to believe that “quality of mercy is not strained, it droppeth as the gentle rain from heaven. …It is Enthroned in the hearts of kings…It is an attribute to God Himself…”. I say this because after berating Microsoft, he offers the company an opportunity to withdraw its lawsuit without any further punishment and also goes to extraordinary lengths to shield Mr. Rahul Ajatashatru, Partner at Anand & Anand who was the lawyer who argued for Microsoft in court.
He records in his order “The only reason for this latitude, and, too, for not imposing significant costs today, and which would have not only have been in dollars, but in a very large amount of them, stems from a concern for Mr. Ajatashatru personally……. I do not hold Mr. Ajatashatru personally responsible for this result; nor should his attorneys or clients. Let this be understood, and understood clearly: but for Mr. Ajatashatru, the result today would have been even more final, and infinitely more severe.”
While I’m sure Mr. Ajatashatru is a fine lawyer and I think it’s entirely commendable that a judge has gone to extraordinary lengths to protect this young lawyer, the question thrown up in this case, is one of fixing responsibility for the inaccuracies in the affidavits. It is not my case that either Mr. Ajatashatru or the equity partnership of Anand & Anand are personally liable for the manner in which this case was prosecuted, (I cut my teeth at the firm and I would not want to see any of them in trouble) since these lawsuits are complex efforts involving Microsoft employees, Deloitte and independent investigators. The lawyers bring in only the tail end of the operation and the facts they present before court are usually collected by investigators. If things have gone as wrong as they have in this case today, one expects the court to fix responsibility for the errors. Whether Microsoft misled the court or whether the investigators were misled by the defendant’s during the undercover investigation is a question of fact that needs to be determined by examining, on oath, all the people involved in collecting information and drafting the affidavits, especially the investigators.
The CPC allows the court to examine on oath the deponents of the affidavits filed before court. Judicial propriety requires the court to call the investigators and Microsoft’s representatives to the stand and examine them on oath before making adverse remarks against the company. Only when the court is convinced that there was no conscious attempt to mislead it, can the court let off Microsoft. More importantly, the court itself needs to understand the weak links in Microsoft’s investigation – only then can it fashion safeguards for future Anton Piller orders. The Delhi High Court I’m afraid has done a rather poor job – the Bombay High Court has already done a better job by appointing a neutral technical expert from the Court’s own IT department – the Delhi High Court usually allows Microsoft’s own experts to conduct the technical examination under the auspices of a younger, inexperienced lawyer who is appointed as the court commissioner. If Justice Patel digs into the matter a bit deeper, I’m sure we can get better safeguards which balance the interests of both Microsoft and the defendants.
Justice Patel should also remember that Microsoft doesn’t believe in mercy when it comes to Indian defendants. Lest we forget, I would like to recount the facts of the infamous case involving Pratibha Syntex Ltd. In that case, Microsoft first sued Pratibha Syntex, a textile manufacturer before the Delhi High Court for software piracy. For some reason that case didn’t close as fast as usual Microsoft cases – Pratibha filed a perjury complaint against Microsoft – I don’t have the details of the complaint. What followed however was unbelievable – Microsoft used information seized during the raid authorised by the Delhi High Court, to have the Attorney General of California to sue Pratibha Syntex in California (the company exported to California) under the State’s unfair competition law because apparently by accessing pirated software, Pratibha Syntex was undercutting Californian textile manufacturers! The lawsuit was a dangerous precedent because the cost of defending the lawsuit would have outstripped the cost of procuring Microsoft’s licences. The company finally settled that litigation with the State of California by paying $100,000 dollars without admitting any liability. California’s super-ambitious Attorney General Kamala Harris, of Indian origin, hailed the settlement as the first of its kind judgment against an international company which “gained an unfair competitive advantage over American-based companies by using pirated software in the production of clothing imported and sold in California. The press release along with copies of the judgment can be read here. You have to read the settlement to believe some of the conditions imposed. Pratibha Syntex refuted Harris’s press release with its version. In pertinent part, the company said:
PSL did not engage in any illegal business practices that disadvantaged California garment companies. In addition, PSL maintains that the California Attorney General did not have jurisdiction to apply the California Unfair Competition Law extraterritorially to conduct occurring solely in another sovereign nation, and a motion to dismiss the action was pending at the time of settlement.
The Judgment of the Superior Court of the State of California, which incorporates the parties’ Settlement Agreement, states that PSL entered into the settlement without any admission regarding any issue of fact or law to avoid further expense, inconvenience, and the distraction of burdensome and protracted litigation. The Judgment specifically records that PSL has never admitted any claims made against PSL and has specifically denied any liability from any claims arising from such allegations.
(The Delhi High Court case continues – read here)
If Microsoft wants to play the Indian judicial system in this manner, it would not be completely out of place for the Bombay High Court to play hardball with Microsoft. Of course India need not stoop to the level of Harris’s “trollish” behaviour but it would be a travesty of justice to let Microsoft walk away from this case without so much as a cogent explanation for the many inaccuracies. Like I said earlier, it’s not about the lawyers it’s about an American Corporation taking an Indian court for granted. If an Indian citizen had pulled off a stunt like this before an American court, they too would not have been given any mercy – let’s not forget how an American court fined Bappi Lahiri’s American lawyer for misleading the court in a copyright lawsuit.
The next date of hearing is July 20th.