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By | OUT-LAW.COM 28th January 2009 12:02

Parallel importer jailed for up to nine months in Microsoft case

A very grey day indeed

A software distributor faces nine months in jail for selling 'grey' imported copies of Microsoft software. Sales firm ITAC's founder Barry Omesuh must pay £2.5 million in damages to the software giant.

Omesuh was found guilty by the High Court of disobeying earlier Court orders about his behaviour and concealing his assets from the Court.

Microsoft said that it had obtained a judgment against Omesuh because he infringed its rights by engaging in parallel importing. This is the importing and selling in one region software intended for another region.

Software makers and other businesses based on licensing, such as music labels, issue licences for their products' sale only in certain territories. Products are often priced more cheaply in some parts of the world than others.

Anyone who knowingly imports and sells goods in contravention of those licences is breaking the licence terms, and that can amount to copyright infringement and trade mark infringement.

Microsoft said that it first took action against ITAC in 2004, and that that case concluded in 2006 with the court ordering it to pay Microsoft £1 million and stop its grey import activity. It said that Omesuh was found liable for infringing its intellectual property again in 2008.

It was given court orders freezing Omesuh's assets and ordering him to tell the company where his assets were but he broke those orders, the company said.

Last year Microsoft hired a private detective to keep Omesuh under surveillance, according to court papers. That private detective said he overheard Omesuh on the phone arranging to transfer money overseas and to go to Africa. It was that which prompted further legal action.

The High Court found that Omesuh had breached a number of court orders and had concealed his assets to prevent them being taken from him.

"There has been deliberate and active concealment and attempts to prevent, or, failing that, delay discovery [of Omesuh's assets]," said Mrs Justice Proudman in the ruling. "His disregard of the Court's authority is thus very serious indeed. There is every reason to suppose that even now the defendant has not made full disclosure."

"Microsoft has obtained a judgment of £2.5 million in damages against Mr Omesuh for his latest infringements, and will be implementing an earlier Court Order entitling it to sell Mr Omesuh’s properties in order to partly discharge his debts to Microsoft," said a company statement.

"Mr Omesuh was also found in contempt of court for breaching Court Orders issued in March 2008. Mr Omesuh was given a total of seven custodial sentences at the Royal Courts of Justice in London, ranging in duration between one and nine months, all of which are to be served concurrently," it said.

"We want to make sure that retailers caught cheating the system are held accountable for their damaging actions," said Graham Arthur, anti-piracy attorney at Microsoft UK. "We caught ITAC trading illegally more than once which shows how determined we are to protect genuine, honest businesses from being undercut by unscrupulous traders."

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OUT-LAW.COM is part of international law firm Pinsent Masons.

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