Microsoft appeals French piracy fine

$19m at stake

Microsoft went to court in France last week to appeal its conviction in 2001 for software piracy, for which it was ordered to pay $425,000 in damages, costs and interest. Today we publish an eyewitness account of the appeal by Lionel Berthomier, who has been covering the case almost single-handedly since 1996.

But first some background. In 1994, Microsoft bought the company Softimage Creative Environment. It sold the company on to Avid in 1998. Softimage’s code illegally included proprietary software from another company. Raymond Perrin and Isabelle Cuadros, 3D animation software developers and authors of the misappropriated software have been fighting the case for six years.

June 17th, 2003 the "Microsoft piracy" case is brought before the 12th Chamber of the Versailles Appeal Court. Here are 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 a small committee room.

2:30 PM: after Judge Coupin's opening statement, the floor is open to Ms. Renard, a brilliant Parisian lawyer acting on behalf of Microsoft. 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 law firm August & Debouzy uses the "elevator trick". 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. She explains that her client, "totally rewrote and copied the functionalities" in question, when the contract tying the company to the plaintiffs was breached.

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 eight 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 functionalities and, in an effort to communicate with the audience, recalls the great commercial success of his employer, citing Jurassic Park, for instance.

Ms. Renard claims that Microsoft, "the undisputed anti-piracy champion", had seen its image tarnished in this affair "by a press campaign". And she concludes that in the name of "the free course concept" regarding the redeveloped functionality, her client's conviction for counterfeiting in 2001 should be dismissed.

Judge Coupin then turns to Mr. Alterman, lawyer for Perrin and Cuatros. Alterman builds his advocacy on concrete facts such as 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".

Alterman 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 1990s. He wonders why the asserted functionalities are qualified today by Microsoft's defense as "not of great interest", but are nevertheless the object of so many attempts at transaction. And regarding author rights, he reminds the hearing 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).

How Much?

Furthermore, Alterman questions the level of 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 bytes as mentioned in the official report, but exceeded 110,000 bytes.

Finally, whereas Ms Renard had called into question the method Alterman had used to estimate his clients' prejudice, qualifying it as "unjustified", he reminded the court that three concurring experts showed that the asserted functionalities corresponded to 6 per cent to 8 per cent of Softimage's software value. This was scaled back to 5 per cent 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 criminal, 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 announce its verdict on October 9. ®

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