Clerk's Pirated Software Case Remanded for Further Finding of Facts

According to documents provided to News for Public Officials by Akhilesh Agarwal, owner of Aditya International, the United States Sixth Circuit Court of Appeals has ordered that the default judgment rendered in Digital Filing Systems, Inc, vs. Aditya International by the District Court for the Eastern Division of Michigan should be vacated in part and the action remanded for additional findings of fact.

Digital Filing Systems (Michigan) alleged Aditya International (India)  infringed on their copyright of a computer software product known as ProFile when Aditya (India) incorporated ProFile into a product named DigiFile.

When Aditya failed to comply with discovery proceedings the district court issued a default judgment against Aditya on April 22, 2005.

Digital moved for injunctive relief prohibiting further sales and transfer of the DigiFile software and called for the impoundment and destruction of the offending programs.

Attached to the motion was a list of thirty purchasers purportedly holding a total of ninety copies of the "infringing software". The motion  proposed an order that awarded relief not only with respect to DigiFile, but also to a previously unknown product known as DigiCourt.

The district court granted Digital's motion and awarded statutory damages in the amount of $750 for each infringing product, attorney's fees in the amount of $27,870.55, and injunctive relief as requested, including an injunction against DigiCourt.

On May 15th, 2006 the United States Court of Appeals for the Sixth Circuit vacated some of the provisions of the district court order while upholding others.

Excerpts from the appeals court decision follow:

Although the plaintiff clearly is entitled to statutory damages for each sale of a software product impermissibly derived from Profile, the plaintiff presented insufficient evidence to district court to support its claim that the customers listed in its motion had in fact purchased one or more software products derived from ProFile.

In her declaration, the plaintiff's manager, Pearl M. Holforty, did not indicate the name of the infringing product purchased or otherwise verify that the infringing product was derived from ProFile. Moreover, Holforty's declaration generally lacks sufficient specificity. Three statements in particular are worth noting.

First, the declaration states that "most customers on Attachment 1 were provided by Frontier Consulting and verified by contacting two of the listed customers," but the declaration does not indicate who the two customers were or provide affidavits from them.

Second, the declaration states that other customers "were verified by direct correspondence" but the declaration does not include copies of the correspondence or furnish other corroboration.

Third, the declaration states that "the number of licenses at each customer site is an estimate based on discussions with three counties," but the declaration again does not name the counties or detail detail the discussions. Because the declaration does not give adequate information about the infringing software or the customers, the award of statutory damages will be vacated.

The injunction likewise will be vacated in part. The defendants correctly point out that DigiCourt was not named in the complaint as an infringing software product. While the plaintiff derived from Profile, the plaintiff contends that it has done so through a software catalog provided to the district court as well as through "uncontested declarations." However, the plaintiff has neither indicated where in the record these items can be found, nor provided copies to this court. Thus the injunction will be vacated to the extent that it contains references to DigiCourt, but affirmed in all other respects.

We affirm the award of attoney's fees. The defendants do not make any specific challege to this award, and the award was justified the the need to compensate the plaintiff and to deter the defendants from further infringement and dilatory litigation tactics.

We deny the plaintiff's request for attorney's fees on appeal because the appeal was not frivoluous and because the plaintiff did not file a separate motion.

Accordingly, we affirm the district court's order with respect to the award of attorney's fees, but we vacate the order and remand the action for further fact-finding as to the award of statutory damages and as to injunctive relief pertaining to DigiCourt. All pending motions, including the request for oral argument, are denied.

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