Microsoft (Quote) today announced a multi-million dollar settlement with French disk replicator MPO Group.
The French company admitted that its Thai subsidiary inadvertently relied on a fake Microsoft licensing agreement, and then replicated thousands of Microsoft server software disks in violation of Microsoft's copyrights and trademarks.
Also as part of the settlement, MPO acknowledged that it had breached the disk replication agreements it had in place with Microsoft. MPO and Microsoft settled the matter without resorting to litigation.
Microsoft attorney David Finn told internetnews.com that it accepts MPO's representation that it was duped by a third party.
However, he said, even though MPO "stepped up and did the right thing" by cooperating with the investigation and acknowledging its responsibility, Microsoft felt it had no choice but to lower the boom and insist on a substantial settlement.
"We were firm but fair," he said.
He explained that MPO's original agreement puts the onus on the replicator to protect Microsoft's intellectual property.
"We can't stand by when counterfeiting and piracy undercuts the work of honest and responsible resellers and partners whose prices are undercut by the introduction of counterfeit software into the market," he said.
The settlement follows an investigation that took place over several years into the production and distribution of counterfeit Microsoft software.
MPO, which is headquartered in Averton, France, has operations in Ireland and Thailand.
According to Microsoft, investigators and attorneys on Microsoft's Worldwide Anti-Piracy team traced the counterfeit back to the MPO Group's Thailand manufacturing facility at MPO Asia, where the company had manufactured 20,000 counterfeit copies of Microsoft Exchange and SQL Server products in July 2003.
In many cases, Microsoft said, it had help from local law enforcement authorities and carried out court-authorized searches.
According to MPO, its local Thai office had manufactured the disks after relying on what turned out to be forged documentation from a third party that purported to have a license from Microsoft to distribute Microsoft software. In fact, no such license existed, and Microsoft said that it does not license its software to be reproduced and distributed in this way.
MPO said it continues to cooperate with Microsoft in a joint and comprehensive worldwide investigation that continues to find counterfeit Microsoft software in the international distribution channel.
Microsoft has been dogged in its pursuit of software piracy, and recently launched the Genuine Software Initiative to educate customers and resellers about the tell-tale signs of piracy.
As the world's largest software vendor, Microsoft has the most to lose from global software piracy, which vendors and analysts note is a significant drain on corporate profits as well as tax revenues and job creation.
Mike Wendy, a spokesman for industry trade group CompTIA told internetnews.com that "software piracy is a $30 billion-plus business across the globe, and Microsoft's popular products -- as well as others -- have been rocked hard by this maelstrom."
MPO generated $342 million in revenues in 2005. More than half of its sales are in France and 10 percent are in Asia. More than half of its business is in storage media and software replication.