The Delhi High Court has clarified that where any party from whom a written statement is required fails to present the same within the time permitted or fixed by the Court, the Court shall pronounce judgment against him under Order VIII Rule 10 of the CPC, and the averments in the plaint and the evidence are deemed to have been admitted requiring no further corroboration on any material aspect in terms of Rule 4 of the Delhi High Court (Original Side) Rules, 2018.
The Court ruled that the unauthorized use of a copyrighted software program, detected and proved through an inbuilt security mechanism (‘Phone Home’ technology) that logs ‘Infringement Hits’ by cross-checking license keys and capturing MAC addresses, constitutes copyright infringement when the defendant fails to procure genuine licenses and maintains silence to legal notices.
In such cases of infringement, the quantum of loss and damages can be reckoned on the basis of the loss that occurred to the plaintiff, represented by the total market costs or genuine purchase cost of the software programs for the exact number of computer systems on which the pirated/unauthorized software was used, added the Court.
A Single Judge Bench of Justice Tushar Rao Gedela noted how the prosecution witness deposed the manner in which the inbuilt security mechanism developed and integrated into the SOLIDWORKS software program ascertains the infringement by the defendants and the number of computers/other systems of access on account of ‘phone Home’ software. The technology captures and records specific information about the usage of the software programme by the host and the computer on which it is installed and used, which is transmitted to plaintiff’s servers which automatically cross-check the details of the software and the computer system on which it is installed. The transmission of the specific information logs the said information as an incident report of an infringement known as an ‘Infringement Hit’, which refers to the number of times the pirated/unauthorized software is used by an individual.
The Bench observed that the methodology and mechanism explained by the plaintiff appears to be a plausible manner in which it is able to focus and capture infringement of its copyrighted SOLIDWORKS software program. The plaintiff has been able to prove by cogent evidence that the defendants have infringed the copyrighted SOLIDWORKS software program of the plaintiff on 7 computers at infringement database (Exalead Portal). The deathly silence on the part of the defendant to the legal notice dated Dec 09, 2020 and continued acts of unauthorised use would constitute infringement of the copyright of the plaintiff in its SOLIDWORKS software program.
Further, the Bench observed that despite having been served with the summons and having appeared, the defendant chose not to file its reply nor does any evidence impel the Court to construe that the defendants have any plausible defence. The averments in the plaint as also the depositions of the prosecution witnesses and the documents marked as exhibits by such witnesses are deemed to have been admitted requiring no further corroboration on any material aspect, in terms of Rule 4 of the Delhi High Court (Original Side) Rules, 2018. The plaintiff has been able to establish loss of revenue and damages to the extent of Rs. 64.79 lakhs based on the genuine purchase cost of the software for authorized use on seven computer systems, and is held entitled to the same along with costs of Rs. 3.21 lakhs.
Briefly, the Plaintiff no.1 is a corporation organized and existing under the laws of the United States of America, and Plaintiff no.2 is the wholly owned subsidiary of Dassault Systemes, France, set up to carry out business activities and anti-piracy campaigns in India. The respective software programs and all user instruction manuals included with them are covered under the definition of a ‘literary work’ and are entitled to copyright protection under Section 40 of the Copyright Act, 1957 read in conjunction with the International Copyright Order, 1999.
The software industry sustains itself on a viable licensing system where the customer only acquires the right to use the software on the condition that the customer would agree to the terms of an End-User License Agreement (EULA) and/or the Customer License and Online Services Agreement (CLOSA). The plaintiffs invested large sums of money to develop and build security mechanisms into their software, essentially a software program known as ‘Phone Home’ technology, which verifies whether the said software is being used in accordance with the agreements. The infringement data base portal of the plaintiffs named ‘Exalead’ revealed that the defendants were using pirated/unauthorized versions of the plaintiff’s SolidWorks software, on at least seven computer systems.
The plaintiffs established contact with the defendants vide e-mail dated Sep 27, 2020, legal counsel’s e-mail dated Dec 07, 2020, and a legal notice dated Dec 09, 2020, which were not responded to by the defendants. Around 474 number of infringement hits had been recorded and collated in the Exalead database. The defendants were proceeded ex parte vide order dated Sep 15, 2022, since none had appeared on behalf of the defendants and their right to file written statement was closed. Later, the plaintiff filed the suit for a decree of permanent injunction restraining the defendants from infringement of its software programs including SOLIDWORKS, apart from other ancillary reliefs of damages, rendition of accounts, delivery up and costs.
Appearances:
Advocates Shantanu Sahay, Swastik Bisarya and Manvi Panwar, for the Plaintiff
NA, for the Defendant
