Parallel importer jailed for up to nine months in Microsoft case

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 …

[Anonymous Coward]

But Why?

I understand that it's taken as a given that it's OK to charge some regions more than others. Why exactly is that?

[Anonymous Coward]

Why is it that

when it suits these companies, it's a global market where it's legal to outsource to the cheapest labour, but when consumers try to take advantage of the global market by buying the cheapest goods, it's suddenly illegal and not a global market?

[Mark]

Weren't we buying licenses?

I thought we were buying "licenses".

And, by the reading of the black-and-white of distribution licenses, only the physical medium is restricted, not the ephemeral license.

Then again, grey imports should be completely legal for a product legal in that country.

[Mark]

"His disregard of the Court's authority is thus very serious indeed."

Course, it's just as well the *Judge* said that, not the Microsoft employee...

[Anonymous Coward]

(untitled)

IMO there should be no "right" to restrict where someone who buys your stuff sells it on to. If you chose to sell something, it isn't yours any longer to dictate about afterwards. All this legal licence stuff is just designed to remove basic rights from the so called "grey importer".

[The BigYin]

Once again...

...the courts block free trade. Why should the EXACT SAME software be sold in different regions at such great price differentials? Why are these restrictive and anti-trade licenses even tolerated by the courts? They should simply be declared unlawful.

This isn't a rant at MS, it is a rant at the courts and their support of the DVD, clothing (e.g. Levi's) and other price-fixing Cartels.

[Anonymous Coward]

Still MS call it piracy

Even though its clearly copyright infringement....

[Stuart]

Why go grey if you can go away?

Cutting of a source of legitmate licensing. Great idea Microsoft!

This is a two way street - if you want us to respect paying for IP then it has to be reciprocated by playing fair with consumers. Banning grey imports/differential regional charging is a denial of level playing field. Its the opposite of fairtrade.

It lessens the morality of dealing with MS. An incitement to pirate or, better, look for free alternatives ...

[Flugal]

Fuck the consumer

Protectionism sucks. This case will just help ensure prices are held artificially high for some markets and not for others. Grey imports should be legal for all products and services - competition should assist fairness in pricing.

Just another reason to still be "evaluating" Windows before committing to purchasing it (for massively OTT pricing).

[Francis Fish]

Unscrupulous?

"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."

How is giving us a better price unscrupulous, assuming that's what he was doing??

[Anonymous Coward]

Ahh blessed be MS!

Lord Bill is vengeful, he giveth ( WIn7 beta ) with one hand and he taketh with the other.

[Anonymous Coward]

Now I'm angry!!!

According to the reasoning in this story, anytime I travel to a new region for business I should be purchasing a new copy of windows, office etc in that region (along with re-installing all of these products on my laptop so I agree to the appropriate EULA for that region). What an utter load of bullsh*t. Microsoft can go screw themselves if they think anyone is going swallow that rubbish.

I also don't see any harm in parallel imports (so long as it can be proven the goods are not counterfeit). In fact it helps to keep the corporations honest on the real value of their products, rather than allowing them to gouge the consumers in affluent countries. Personally I think it should be illegal for corporations to interfere in this sort of activity

[Alan Johnson]

Legalise Grey Imports

The guy has broken court orders so should be punished but I think there are two problems with the law a far as imports go:

1. It should not be legal to restrict or inhibit post-market sales or transfers.

Allowing copmpanis to enforce price or availability restrictions and prevent free resale allows monoply suppliers to distort pricing to their own benefit. I can see no benefit and significant damage to society from this practice.

2. SW sales are not sales but license agreement.

The fiction that when a SW purchase is made it is actually a license agreement that was not seen until after the transaction completes, that can then impose any conditions the manufacturer desires must be restricted. At the very least there should be legislation on what constitutes reasonable license terms and anything outside this should be void. License often attempt to restrict basic rights such as resale, backup, comment on performance, transfer to a different computer etc. In this cse a license that prevents resale should be made void. Personally I think all SW sales should be considered sales and that all licenses for such sales are made void.

[Em]

I still don't get it

If companies like Microsoft and other large corporations are prepared to offshore jobs to locations where costs are lower, why can't they accept people will buy software in countries where it is cheaper?

Such companies lose all credibility when they selectively back the effects of globalisation and I think its about time that they were shamed in public for it.

If an Indian development house can get a particular piece of software for a significant discount, then that actually results in them having slightly lower operating costs. Of course, if you then look to your own home country and see developers who have had to pay more for your own software, you might have to accept that their operating costs are higher.

[Anonymous Coward]

I still think...

....that it is a disgrace that the prices *are* so different in these other territories. I would've bought a copy of Vista when it came out if it wasn't for the fact that it was twice the cost here as it was in the USA.

[Anonymous Coward]

Funny...

How 'Free trade' zealots suddenly don't believe in free trade and 'the global marketplace' anymore when it concerns their own stuff.

[Outcast]

Only Microsoft ?

No harm done then...

Shame it wasn't the RIAA as well.

Better luck next time I guess.

[Paul Bruneau]

Free trade is good unless...

Ask any red blooded american businessman if free trade is good. He'll say yes.

But ask him if that also applies to his own goods and his answer will be different.

Free trade is only good if it makes me rich. Otherwise, you are in violation of "licensing" and you are an "unfair trader".

[David Hicks]

Sick

Restrictions on parallel import are a n abuse of globalisation.

Big companies can but materials and personnel from wherever in the world they like. But when small businesses or individuals try to buy products from other markets we're told it's somehow wrong. Due to "licensing".

Reform of IP laws is needed NOW.

[Anonymous Coward]

Should have sold Linux Distros

see, using MS means you may end up in the clink.

[g e]

...retailers ...cheating ... held accountable ...damaging actions

Cos god forbid that we shouldn't be able to use regional licensing as a price fixing mechanism for our own benefit...

[Anonymous Coward]

Another sad day for punters

Another great day for convicted monopolists.

If I want to buy a legitimate copy of (say) Visual Studio from a US retailer for me to use in the UK, why shouldn't I be able to do so and save a couple of hundred pounds while I'm at it?

This whole business of shrinkwrap software being licenced rather than sold (which is what permits this daftness) is ridiculous - it is blatantly obvious to everyone except software vendors and their lawyers that shrinkwrap software is SOLD NOT LICENCED, and should therefore be classed as goods in free circulation, and then the lawyers would have to find some other loophole to allow monopolists to restrict fair trade.

""We want to make sure that companies caught cheating the system are held accountable for their damaging actions," said anyone who's ever overpaid for Microsoft software, anyone who wants MS to pay the fines legitimately imposed on MS by the EU.

[Dazed and Confused]

who should go to jail here?

OK this guy should be done for being so stupid to break the court order.

But, parallel importing should be legalised. Charging the Great British more than people in other parts of the world should surely be main a criminal offense. The minimum punishment should be life in prison for all directors and all major share holders. Not that the goverment will ever doing anything like that coz they don't give a stuff about us voters, they only care about the large bungs they get (sorry party donations) from big businesses.

It's bad enough that Brown and his cronies rip us all off, without him effectively holding us all down while the likes of MS mug us.

[Grant]

bad and good

Original copyright shit is crap but disobeying a couple of court arders, well yeah they put you in stocks.

[Anonymous Coward]

served concurrently?

Are they going to clone him?

[Anonymous Coward]

Who is unscrupulous?

"which shows how determined we are to protect genuine, honest businesses from being undercut by unscrupulous traders"

This is the same genuine honest business being fined by the EU for anti competitive practices???

[Anonymous Coward]

Robin hood!

"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."

The bloody cheek of it. We want to charge the UK more and he is mking it harder for us.. Good for them!

[Tony Gosling]

Shame

Parallel importers are doing a public service, stopping the software companies from gouging the UK consumer too heavily. A prison sentance is very harsh for something that shouldn't be illegal anyway (if the government or EU were at all interested in real competition and consumers interests).

[James]

The real solution

The real solution to the "problem" of grey importing is to eliminate the concept: buying from one region to sell in another should be permitted without the original manufacturer being permitted to interfere or discriminate in any way. We went through all this with cars a few years ago, where companies had been ripping off British customers by charging higher prices than in Europe for the same car - the car manufacturers weren't allowed to get away with it then, Microsoft shouldn't be now.

If Microsoft sells a product for £10 in one country and demands £50 in another, when someone makes a profit by importing from one to the other and selling for less than £50 the only court action should be against Microsoft, not the person undermining their price discrimination!

[Ted Treen]

Goose & Gander???

Microsoft want to pursue "..unscrupulous traders".

Can I pursue "...unscrupulous companies..." who want to charge me a higher price than elsewhere in the world, for the same product?

[Anonymous Coward]

So we get stuffed by MS

MicroTheft strikes again forcing people to pay overinflated prices for half baked software. Why is this any different to toothpaste or anything else that gets parallel imported quite legally. The World is one big market these days but Mega rip-off corporations think they can stiff people in their respective markets. So much for Adam Smith and Laissez Faire.

[Michael Fremlins]

Why is parallel importing illegal?

Don't say "because the law says so." Why?

[Anonymous Coward]

Common sense?

Maybe if MS sold their software at a fair price in the UK people wouldn't need to buy from grey importers?

Vista home premium 32bit OEM - UK £95 - US $105

Even taking regional taxes and exchange rates into account thats still daylight robbery, the recent 50% cut in the price of home server was also US only (£110 - $95).

[John]

What happend to our freedoms!

Simple,

Software costs £50

USB mouse costs £1

For sale 1 limited edition USB mouse £51 + free copy of software with ever order!

I assume you can give away software for free?

[Mark Finn]

Basic principles of sale...

If I buy it it is mine and I will sell it on to anyone I damn well please at any price I damn well please anywhere I care to do so. If Microsoft sells me a product in China for whatever price and I can sell it wherever else for more, I will do so, while acknowledging the right of the receiving country to levy taxes on it. As long as the taxes are at the same rate levied on similar products from other sources..

I might be persuaded to hold off on that if they can show a contract I signed, with proof that I was not under duress and understood the terms of the contract.

[Anonymous Coward]

Pirate?

I can see the merit in the argument that ITAC overstepped their license by selling products from other countries but I think labelling the guy a s a "pirate" is a bit much.

As far as I can see he was selling legitimate products - not knocked off copies.

I think the real criminal here is Microsoft openly admitting in court that in price terms they royally shaft us Brits compared to our oversees colleagues.

[Tony]

'Grey Imports'

Surely in a free market you should be able to buy goods wherever you damn well please, provided you pay what is being asked for them.

I am sick and tired of getting shafted. International companies are obviously still making a profit when they sell goods in other regions or they wouldn't do it. They just think that it is fair game to sell them at a far higher markup in the UK because we are able to pay more. Where the companies concerned have a sufficiently large market share like Microsoft, this amounts to price fixing and should be illegal. It should be MS in the dock not this bloke.

[Brian]

Ass-backwards

Even if we accept the concept that software is licensed rather than sold, surely the license that should apply to the grey import software is the license of the original country of sale, not the country of resale?

This would mean that Microsoft would have to go after the reseller in the country from which the reseller buys the software - logically the UK courts have no business in enforcing license agreements applicable to third countries.

I'd wager that a test case to the Lords would clarify this issue - it seems pretty clear to me that the UK courts are the wrong place for this type of case to be heard.

[Rolf Howarth]

In defence of protectionism

Suppose I'm a software developer and decide I want to support developing countries by giving my software away free there, while still charging a hefty license fee for the same product in Western countries that can afford it. Should a grey importer be allowed to gather free copies from Africa and sell them here for a profit (if my license explicitly says he can't)?

What if rather than giving it away free I just sell it much, much cheaper in developing countries, why is that wrong?

Or supposing I decide I want control over who I'm going to let use my software. Maybe I have a policy of not selling it to the military, not selling to Israel, or to Russia, or to Libya, or whatever. Shouldn't I have the right not to sell it in particular countries, or impose special conditions if I choose?

Or maybe I've employed a local agent or distributor to sell and support my product in a particular country because I need someone who speaks the local language and that's costing me a lot of money. Shouldn't I be allowed to charge more in that country to recoup some of my costs there?

[david wilson]

Where's the cheapest software, then?

Can Microsoft stop someone buying legitimate MS software in country X on holiday, installing it on their laptop and then bringing the laptop back here?

Are there any places where software price differences could pay for the trip, or even a good fraction of it?

[Andrew Taylor]

@ Rolf Howarth

If you want to put your licence terms in plain english on the packaging then I agree with you, if you want to hide it inside a load of intelligable legal jargon that only appears after I've bought and installed the software then you sir are a cad & a fool. I can only abide by the information provided at point of sale / purchase.

[kain preacher]

I dont get it.

I can import a car from any were in the world.. As long as it was as tested and meets smog/saftey standards its a go.

But I cant buy a ps3 from china ???

[Edward]

Protecting prices vs. wages

Multi-national companies have no problem shifting jobs to wherever wages are lowest.

Providing "inexpensive" copies of software in "poor" regions of the world seems to me to be more about keeping wages down and protecting market share than anything altruistic on the part of the corporation. I'm sure this "parallel importer" was no saint, but I think if corporations are allowed to shift jobs wherever, people should be able to buy and sell goods wherever too. Sauce for the goose being sauce for the gander and what not.

[Anonymous Coward]

@rolf re country-specific licencing

Rolf, you ask fair and valid questions about country-specific licencing, which I can't generally answer even though I've worked for companies whose software licences used to say "no Libya, no nuclear end use, etc". So let's be specific about the vendor in this picture (who I haven't worked for), and their products .

What I do know is that when I buy a Microsoft product in the UK, the delivered product (and its licence) is generally either very similar to (or completely identical with) the same thing bought in the USA, and so is the support. The question of whether UK support does or doesn't cost more than US support also doesn't really arise - everyone with a clue knows there's no point calling local MS support anyway ;)

Same product, same licence, same support? Different location, different price? No cross-border trading? Why? Because Daddy says so? Because they can?

"I'd wager that a test case to the Lords would clarify this issue"

Maybe so, but that's probably the last thing that MS want, just in case it doesn't go their way - in the same way that the banks didn't want a definitive test case on unfair bank charges, in case it went against them (where did that get to?).

[Goat Jam]

Did he break open the shrinkwrap?

Did he install the software he sold?

If not, what specific licence agreement did he break?

[Anonymous Coward]

Missing the point

The article and the comments mostly miss the point.

Software use *is* licensed because the temporary copies made when you run the software are subject to copyright law. (Though this is not true in the USA.)

However, this importer did not make any copies. He bought boxed software in one country and sold it in another. Copyright has nothing to do with it. The fact that Microsoft licenses its resellers also has nothing to do with it.

The precedent for the outlawing of parallel importing was set by Levi Strauss who sued Tesco on the basis of trademark infringement. Their case was sufficiently unconvincing that they had to take it to Europe, but they won in the end.

This has nothing to do with the product being licensed in some sense; jeans aren't licensed. It's about trademarks.

[Azrael]

Re: In defence of protectionism

> Suppose I'm a software developer and decide I want to support developing countries by giving my software away free there, while still charging a hefty license fee for the same product in Western countries that can afford it. Should a grey importer be allowed to gather free copies from Africa and sell them here for a profit (if my license explicitly says he can't)?

This is already resolved. Many companies release educational copies of their software, with different licensing requirements. Heck, I'm allowed to give away free copies of some MS software, as long as I'm giving it to a currently enrolled student, and they don't re-install after they are no longer students. Doesn't mean I can give away free copies to other people, nor that I can sell them. I don't see how allowing parallel importing would restrict this charity-level work, that is already happening within countries where the software is sold.

>What if rather than giving it away free I just sell it much, much cheaper in developing countries, why is that wrong?

It's not. Same as the educational pricing on many software items.

> Or supposing I decide I want control over who I'm going to let use my software. Maybe I have a policy of not selling it to the military, not selling to Israel, or to Russia, or to Libya, or whatever. Shouldn't I have the right not to sell it in particular countries, or impose special conditions if I choose?

Perhaps. Let's remove countries from that question. Suppose you have a policy of not selling it to Asians or Latinos. Should you have the right not to sell it to people of particular skin tone, or impose special conditions if you choose?

There is the legal issue when selling in various countries. Your legal obligation concerning your software may vary from country to country, making it necessary to release country-specific versions, or perhaps making you choose to not release your software in a specific country. Even so, I still don't see that as an argument against grey importing, as I presume you'd be covered by saying "That software was sold for country X so it's reasonable to only fulfill requirements for country X."

> Or maybe I've employed a local agent or distributor to sell and support my product in a particular country because I need someone who speaks the local language and that's costing me a lot of money. Shouldn't I be allowed to charge more in that country to recoup some of my costs there?

I don't know. Are you making losses while selling in that country? Ouch! In that case it's not good business. Are you making profits, but maybe lower than in other countries? Fair enough, sell it for a higher price. Are other people able to parallel import your products and sell them there? Well, those importers still bought the products from you (and from a place that didn't need a local importer) - so you can still increase the costs with your local importer AND allow parallel importing, without taking any additional costs that aren't recovered. The only way you'd loose out would be if you charged *more* than the additional costs. Which is what people take offense to.

People don't like being singled out. People don't like having to pay more for reasons such as their skin colour, their religion, their political beliefs, or the country they happen to be in.

I don't think there's much objection to paying more to cover shipping costs, language translations, etc. - but when those costs can be covered by the importer and *still* sold cheaper? I think that's when people feel singled out and cheated.

[Anonymous Coward]

Ah, I think I see the problem here...

"Products are often priced more cheaply in some parts of the world than others."

This just might be a clue, Watson.

[Brett Weaver]

What about?

If I use a laptop I bought in Wellington NZ in London UK on a business trip I am guilty of piracy?

Kick a mictosoft employee today.

Hard.

No, harder than that..

Really swing that leg..

OK thats about it.

[Anonymous Coward]

One product, one price!!!

I feel no need to be subsidizing another market, especially where there's competition for my job.

[Anonymous Coward]

@Michael Fremlins

It is not illegal as such, it is a breach of contract. Breaching this contract is usually a civil manner (can be punished financially / prevented from doing so further but not jailed etc.) unless it is done on a commercial scale* in which case it could be criminal. The person referred to here was jailed more for breaching court orders than for breaching copyright.

I cannot speak for the rest of the world but in England and Wales if a court makes an order you damn well comply with it. You can appeal, and you may receive redress if the order is overturned and you suffered loss, but until it is overturned you do as you are told. If you don't you probably go to prison, even if the original order is later overturned.

Now, the obvious questions to follow this are if such licenses are valid. legally they are. morally it is a bit greyer. On one hand if I sell something to you and you don't like the terms I am offering you should walk away, however we do also have various unfair contracts laws (you will see virtually every contract in the UK has a line that says something like: "if any part of this contract is found to be unenforceable it only affects that part of the contract, everything else still stands" but in legalese), and it would be reasonable to assume that charging different amounts based solely on location is morally reprehensible at best and racist at worst (you oppressin' me cos I is English?).

*one for the courts to decide

[Turbojerry]

Global arbitrage

This is allowed for labour, stocks, bonds, commodities and currencies but not for copyrighted or trademarked goods, creating inefficient pricing of those goods, this stupidity is spreading for example Kenya and Ethiopia trademarking it's coffee- -

http://www.gachewacoffee.com/2008/03/kenya-repositioned-as-coffee-trade-mark.html

It is a form of protectionism and can only lead to more inefficient markets and lower economic growth.