UNITED STATES DISTRICT COURT

FOR THE

MIDDLE DISTRICT OF PENNSYLVANIA

MICROSOFT CORPORATION, :

:

Plaintiff, : No. 4:CV-04-2567 

:

vs. : Complaint Filed 11/29/04

:

MASTER COMPUTER, INC., a : (Judge Muir)

Pennsylvania corporation, and :

SUNG KAO a/k/a RICK KAO, :

an individual, :

:

Defendants :

ORDER

October 12, 2005

THE BACKGROUND OF THIS ORDER IS AS FOLLOWS:

On November 29, 2004, Plaintiff Microsoft Corporation, Inc.

(hereinafter “Microsoft”), initiated this action by filing a

complaint containing six counts. The Defendants are an

individual named Sung Kao, who is also known as Rick Kao,

(hereinafter “Kao”) and the company he owns and operates in State

College, Pennsylvania, known as Master Computer, Inc.

(hereinafter “Master Computer”). All of the claims in

Microsoft’s complaint relate to Kao’s allegedly unauthorized

distribution of counterfeit Microsoft computer software. The

computer software at issue is subject to a copyright and

trademarks owned by Microsoft.

On September 1, 2005, Microsoft filed a motion for summary

judgment accompanied by a statement of undisputed material facts,

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a supporting brief, and exhibits. On September 16, 2005, Kao

filed an opposing memorandum, exhibits, and a response to

Microsoft’s statement of material facts. The time allowed for

Microsoft to file a reply brief expired on October 3, 2005, and

to this date no such brief was filed. Microsoft’s motion for

summary judgment is ripe for disposition.

Summary judgment is appropriate only when there is no

genuine issue of material fact which is unresolved and the moving

party is entitled to a judgment as a matter of law. Fed. R. Civ.

P. 56(c). Summary judgment should not be granted when there is a

disagreement about the facts or the proper inferences which a

fact finder could draw from them. Peterson v. Lehigh Valley Dist.

Council, 676 F.2d 81, 84 (3d Cir. 1982). 

Initially, the moving party has a burden of demonstrating

the absence of a genuine issue of material fact. Celotex

Corporation v. Catrett, 477 U.S. 317, 323 (1986). This may be

met by the moving party pointing out to the court that there is

an absence of evidence to support an essential element as to

which the non-moving party will bear the burden of proof at

trial. Id. at 325. 

“When a motion for summary judgment is made and supported as

provided in ...[Rule 56], an adverse party may not rest upon mere

allegations or denials of the adverse party’s pleading....” Fed.

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R. Civ. P. 56(e). Rule 56 provides that, where such a motion is

made and properly supported, the adverse party must show by

affidavits, pleadings, depositions, answers to interrogatories,

and admissions on file that there is a genuine issue for trial.

Fed. R. Civ. P. 56(e). The United States Supreme Court has

commented that this requirement is tantamount to the non-moving

party making a sufficient showing as to the essential elements of

their case that a reasonable jury could find in its favor.

Celotex Corporation v. Catrett, 477 U.S. 317, 322-23 (1986).

When addressing a motion for such a judgment, our inquiry

focuses on “whether the evidence presents a sufficient

disagreement to require submission to the jury or whether it is

so one-sided that one party must prevail as a matter of law.”

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251-52 (1986)

(emphasis added).

As summarized by the Advisory Committee On Civil Rules,

“[t]he very mission of the summary judgment procedure is to

pierce the pleadings and to assess the proof in order to see

whether there is a genuine need for trial.” Fed. R. Civ. P. 56

advisory committee note to 1963 Amendment.

The evidentiary materials submitted to us confirm that the

following facts are undisputed. 

Case 4:04-cv-02567-MM Document 23 Filed 10/12/05 Page 3 of 18
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Microsoft develops, advertises, distributes and licenses

computer software programs. Microsoft software is distributed in

all fifty states of the United States of America and throughout

the world. 

Microsoft’s copyright to its “Windows 2000 Professional”

software was registered with the United States Copyright Office

in compliance with the Copyright Revision Act of 1976 (17 U.S.C.

§ 101, et seq.) and Copyright Office regulations. The copyright

was assigned registration number TX 5-036-267. Microsoft has

been, and still is, the sole owner of all rights, title and

interest in the copyright and Certificate of Registration for its

“Windows 2000 Professional” software.

Microsoft is the owner of valid, federally-registered

trademarks or service marks, or both, in and to the following: 1)

Trademark and Service Mark Registration No. 1,200,236

(“Microsoft”) for computer programs and computer programming

services; 2) Trademark Registration No. 1,256,083 (“Microsoft”)

for computer hardware and software manuals, newsletters, and

computer documentation; 3) Trademark Registration No. 1,872,264

(“Windows”) for computer programs and manuals sold as a unit; 4)

Trademark Registration No. 1,815,350 (Colored Windows Flag Logo)

for computers, computer peripherals, and computer programs and

manuals sold as a unit; and 5) Trademark Registration No.

Case 4:04-cv-02567-MM Document 23 Filed 10/12/05 Page 4 of 18
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1,816,354 (Windows Flag Logo) for computers, computer

peripherals, and computer programs and manuals sold as a unit. 

At all relevant times Microsoft has been the sole owner of all

rights, title, and interest in, and to, those trademarks, service

marks, and registrations. Although there are five different

trademark registrations at issue here, because the first and

second both relate to the term “Microsoft,” there are actually

only four registered marks relevant to this case.

Master Computer is a Pennsylvania corporation in the

business of building new computer systems, some of which are sold

with Microsoft software installed onto the hard disk drives. Kao

started Master Computer in 1987 and he receives his salary from

the business. He is the company’s primary officer, sole owner,

and sole shareholder. 

As the sole owner and operator of the business, Kao has the

right and ability to supervise the employees of Master Computer,

and he is the only person with the authority to hire and fire

employees. Koa is responsible for Master Computer’s overall

operation and he oversees the day-to-day operation of the

business.

Koa selects Master Computer’s vendors and is responsible for

acquiring purported Microsoft software and hardware from master

Computer’s suppliers. Kao personally assembles the computer

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systems distributed by Master Computer, including affixing

Certificate of Authenticity labels onto the computers and

installing software onto those computers.

In October of 2003, an investigator contacted Master

Computer and placed an order with an individual who identified

himself as “Rick” for a computer system with Microsoft Windows

2000 Professional (hereinafter “Windows 2000 Pro”) software

installed. The Defendants distributed to the investigator a

computer system with an infringing copy of Windows 2000 Pro

software installed on the hard disk drive. The computer was

distributed with a Windows 2000 Pro Certificate of Authenticity

label affixed to the system. The label was subsequently

identified as one that had been stolen.

Microsoft packages and distributes its software programs

with associated user manuals, Certificates of Authenticity, end

user license agreements, and other documentation. To help ensure

that computer system dealers, such as Master Computers, are

distributing authorized copies of Microsoft software on their

computers, Microsoft requires that any installed copy of a

software program be distributed with a corresponding authorized

Microsoft CD-ROM containing the program, and a Certificate of

Authenticity or a Certificate of Authenticity label. This

practice helps prevent would-be infringers from taking one CD-ROM

Case 4:04-cv-02567-MM Document 23 Filed 10/12/05 Page 6 of 18
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of Microsoft software, which was licensed for use only on a

single computer, and copying it onto numerous systems which they

then sell to customers. 

The computer system sold to the investigator was not

distributed with the requisite legitimate Microsoft Windows 2000

Pro CD-ROM or end user license agreement. The Defendants are not

authorized to copy and distribute Microsoft software programs on

computer systems without also obtaining and distributing the

software components, which include the appropriate CD-ROM’s.

In two letters dated February 27, 2004, Microsoft notified

the Defendants that they had infringed Microsoft’s copyright and

trademarks by distributing a computer with an infringing copy of

Windows 2000 Pro software installed and a stolen Windows 2000 Pro

Certificate of Authenticity label. The reference line in each

letter requested the Defendants to “Cease and Desist” certain

practices. In the letters Microsoft informed the Defendants of

the proper manner to distribute Microsoft software and of the

dangers associated with distributing Certificate of Authenticity

labels. The Defendants received the two letters dated February

27, 2004.

In October of 2004, the Defendants distributed to an

investigator counterfeit Windows 2000 Pro Certificate of

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Authenticity labels. An individual who identified himself as

Rick took the order from the investigator.

The legitimate function of a Certificate of Authenticity

label is to help a customer verify whether he or she has obtained

genuine Microsoft software, similar to the way that an appraisal

certificate is used to authenticate a diamond. There is no

legitimate reason to distribute a Certificate of Authenticity

label separate from the software program which it was intended to

authenticate.

Microsoft has direct relationships with several large

distributors to distribute Microsoft software to system builders

and software resellers. Microsoft maintains a list of these

authorized distributors on its internet home page. Through that

page, an Anti-Piracy telephone hotline, and a variety of mass

mailings, Microsoft directs system builders and resellers to the

authorized dealers as assured sources of genuine Microsoft

software.

Although the Defendants learned “a long time ago” that

Microsoft had authorized distributors of Microsoft software, the

Defendants chose to deal primarily in purported Microsoft

software components of unknown origin which they acquired from

other sources. The Defendants acquired stand alone Certificate

of Authenticity labels and Microsoft software from vendors which

Case 4:04-cv-02567-MM Document 23 Filed 10/12/05 Page 8 of 18
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they knew were not authorized distributors of Microsoft software. 

The Defendants selected their vendors based on who offered the

best price. The Defendants acquired stand alone Certificate of

Authenticity labels, rather than complete, legitimate packages of

Microsoft software, to maximize their profits.

The Defendants admit that they installed unauthorized copies

of Microsoft software programs onto computer systems using a

single installation CD-ROM, affixed to those systems suspect

separately-acquired Certificate of Authenticity labels, and then

distributed the systems to their customers without the

accompanying CD-ROM. The Defendants admit that they continued

their infringing business practices “a couple of months” after

reading Microsoft’s cease and desist letters in order to make

more profit.

Based on those facts, Microsoft argues that it is entitled

to summary judgment on the claims in its complaint. Before

considering the merits of Microsoft’s arguments, we briefly

recount the claims set forth and relief sought in the complaint. 

The following claims have been asserted in Microsoft’s complaint:

1) Copyright infringement; 2) Trademark infringement; 3) False

designation of origin, false description, and false

representation of Microsoft packaging; and 4) unfair competition

based on Pennsylvania common law. Microsoft seeks a judgment

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providing for injunctive relief; an accounting of and trust to

hold the Defendants’ illegal profits; money damages; and

Microsoft’s costs and reasonable attorneys’ fees incurred by it

in prosecuting this action. In the documents filed by Microsoft

in support of its summary judgment motion, Microsoft specifically

requests damages in the amount of $430,000.00. 

Turning now to the merits of Microsoft’s summary judgment

motion, we first consider whether Microsoft is entitled to

summary judgment with respect to the Defendants’ liability on any

or all of its causes of action. 

Courts have consistently held that in order to prevail on a

claim of copyright infringement, “a plaintiff must establish: (1)

ownership of a valid copyright; and (2) unauthorized copying of

original elements of the plaintiff's work." Kay Berry, Inc. v.

Taylor Gifts, Inc., 421 F.3d 199, 203 (3d Cir. 2005)(quoting Dun

& Bradstreet Software Servs., Inc. v. Grace Consulting, Inc., 307

F.3d 197, 206 (3d Cir.2002)).

With respect to the first element, the Court of Appeals for

the Third Circuit has ruled that “[c]ertificates of registration

issued by the U.S. Copyright Office constitute prima facie

evidence of the validity and ownership of the material. Ford

Motor Co. v. Summit Motor Products, Inc., 930 F.2d 277, 291 (3d

Cir. 1991)(citing Andrien v. Southern Ocean County Chamber of

Case 4:04-cv-02567-MM Document 23 Filed 10/12/05 Page 10 of 18
1. Microsoft requests us to take judicial notice of the validity

of its trademarks and copyright registrations. The Defendants

have not presented any record evidence to dispute the validity of

those registrations. Therefore, it is not necessary for us to

take judicial notice of them.

11

Commerce, 927 F.2d 132, 134 (3d Cir.1991); Williams Electronics,

Inc. v. Artic International, Inc., 685 F.2d 870, 873 (3d

Cir.1982)). By submitting all of the pertinent certificates of

registration, Microsoft has fulfilled that element.1

The undisputed material facts set forth above confirm that

Microsoft has also proven the second element. Kao unlawfully

obtained and resold unauthorized copies of Microsoft’s “Windows

2000 Professional” software, which were at all relevant times

subject to Microsoft’s copyright. Those actions render the

Defendants liable to Microsoft on its copyright claim as a matter

of law.

The next claim to consider is the trademark infringement

cause of action relating to Microsoft’s four trademarks. In

order to prove such a claim, Microsoft is required to prove the

following: (1) it owns the marks at issue; (2) the marks are

valid and legally protectable; and (3) the Defendants’ use of the

marks to identify goods or services is likely to create

confusion. Checkpoint Systems, Inc. v. Check Point Software

Technologies, Inc., 269 F.3d 270, 279 (3d Cir. 2001)(citing

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Commerce Nat'l Ins. Servs., Inc. v. Commerce Ins. Agency, Inc., 

214 F.3d 432, 437-38 (3d Cir.2000)).

None of the material facts relating to Microsoft’s Lanham

Act claim are in dispute. Microsoft registered each of the

trademarks, the computer components and software distributed by

the Defendants contained those marks, and the marks distributed

by the Defendants were likely to create confusion because they

were in fact identical to Microsoft’s protected marks. 

Those same facts establish Microsoft’s entitlement to

recover on the false designation claim in count three and the

state-law unfair competition claim in count four. See Major

League Baseball Promotion Corp. v. Colour-Tex, Inc., 729 F. Supp.

1035, 1039 (D.N.J. 1990)(observing that plaintiff must prove same

elements to establish either federal or common law trademark

infringement and that identical facts would support common law

unfair competition claim and false designation of origin claim

under federal law); J & J Snack Foods Corp. v. Nestle USA, Inc.,

149 F. Supp.2d 136, 157 (D.N.J. 2001)(same); Pa. State Univ. v.

Univ. Orthopedics, Inc., 706 A. 2d 863, 870 (Pa. Super. 1998).

The Defendants’ only argument with respect to their

liability on any of Microsoft’s claims is that their conduct was

not willful. As a matter of law, a plaintiff is not required to

prove willfulness to prevail on a copyright or trademark

Case 4:04-cv-02567-MM Document 23 Filed 10/12/05 Page 12 of 18
2. On page 2 of their opposition brief, the Defendants state

that they “do not dispute Microsoft’s request for a permanent

injunction to prevent any ‘future violations of Microsoft’s

trademarks.’ ... At the inception of this case, Defendants

agreed to that remedy immediately.”

13

infringement claim. See 17 U.S.C. § 501(a); 15 U.S.C. § 1117(c);

Microsoft v. Grey Computer, 910 F. Supp. 1077, 1083, 1086 (D.Md.

1995). 

Consequently, Microsoft is entitled to summary judgement on

the issue of the Defendants’ liability on all of Microsoft’s

claims. We will enter judgment in favor of Microsoft with

respect to the Defendants’ liability.

That conclusion requires us to consider the relief to which

Microsoft is entitled. We need not discuss the merit of

Microsoft’s request for permanent injunctive relief because the

Defendants have already voluntarily provided that relief.2 It is

clear that Microsoft is entitled to such relief and we will grant

its request therefor. We will proceed to consider Microsoft’s

entitlement to damages.

The federal statutes upon which Microsoft’s claims are based

allow a successful plaintiff to choose the method by which the

damages will be determined. A plaintiff may elect to recover

actual damages, or opt for an award of specified statutory

damages. 15 U.S.C. § 1117(c); 17 U.S.C. § 504(c)91). The

Copyright Act provides for statutory damages of up to $30,000.00

Case 4:04-cv-02567-MM Document 23 Filed 10/12/05 Page 13 of 18
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for each copyright infringed, and as much as $150,000.00 for each

willful infringement. 17 U.S.C. § 504(c). The corresponding

figures in the Lanham Act allow for an award of $100,000.00 for

each trademark infringed, enhanced up to $1,000,000.00 for each

willful infringement. 15 U.S.C. § 1117(c). 

As noted above, Microsoft has requested an award of

$430,000.00 in damages. Microsoft bases that figure upon a

$100,000.00 award for each of its four trademarks infringed, and

$30,000.00 for the single copyright at issue. Those figures are

the maximum amounts set forth in the governing statutes for nonwillful violations. The Defendants contend that no award of

damages should be made without conducting a hearing. 

The United States Supreme Court has held that “the Seventh

Amendment provides a right to a jury trial, which includes a

right to a jury determination of the amount of statutory damages”

available pursuant to the Copyright Act. Feltner v. Columbia

Pictures Television, Inc., 523 U.S. 340, 342, 118 S. Ct. 1279,

1282 (1998). The court reached the same conclusion with respect

to statutory damages awarded for the infringement of a trademark. 

Dairy Queen v. Wood, 369 U.S. 469, 477-79, 82 S.Ct. 894, 8

L.Ed.2d 44 (1962)(trademark); see also Alcan Intern. Ltd. v. S.A.

Day Mfg. Co., Inc., 179 F.R.D. 398 (W.D.N.Y. 1998).

Case 4:04-cv-02567-MM Document 23 Filed 10/12/05 Page 14 of 18
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By order dated January 31, 2005, we placed this case on our

December, 2005, Trial List. The matter will remain on that list

with the trial being limited to the amount of damages to be

awarded.

NOW, THEREFORE, IT IS HEREBY ORDERED THAT:

1. Microsoft’s motion (Document 16) for summary judgment

is granted in part and denied in part as provided in

paragraphs 2 through 4 of this order.

2. The Clerk of Court shall enter judgment in favor of

Microsoft and against Master Computer, Inc., and Sung

Kao, a/k/a Rick Kao, on all of Microsoft’s claims.

3. Defendants Master Computer, Inc., and Sung Kao (a/k/a

Rick Kao), their agents, servants, employees,

representatives, successors and assigns, and all

persons or entities acting in concert or in

participation with them, shall be and hereby are

permanently enjoined and restrained from:

a) imitating, copying, or making any other infringing

use or infringing distribution of software programs,

components, end user license agreements or items

protected by Microsoft’s registered trademarks and

service mark including but not limited to the following

Trademark or Service Mark Registration Numbers:

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(1) 1,256,083 (“Microsoft”);

(2) 1,200,236 (“Microsoft”);

(3) 1,872,264 (“Windows”);

(4) 1,815,350 (Colored Windows Flag); and

(5) 1,816,354 (Windows Flag Logo);

or of the software programs, components, end user

license agreements, items or things protected by the

following Certificate of Copyright Registration No.: TX

5-036-267 (Microsoft Windows 2000 Professional);

b) manufacturing, assembling, producing, distributing,

offering for distribution, circulating, selling,

offering for sale, advertising, importing, promoting,

or displaying any software program, component, end user

license agreement, item or thing bearing any

simulation, reproduction, counterfeit, copy, or

colorable imitation of any of Microsoft’s registered

trademarks or service mark including but not limited to

the Trademark and Service Mark Registration numbers

listed in paragraph a) above;

c) using any simulation, reproduction, counterfeit,

copy, or colorable imitation of Microsoft’s registered

trademarks or service mark, including but not limited

to the Trademark and Service Mark Registration numbers

Case 4:04-cv-02567-MM Document 23 Filed 10/12/05 Page 16 of 18
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listed in paragraph a) above, in connection with the

manufacture, distribution, offering for distribution,

sale, offering for sale, advertisement, promotion, or

display of any software, component, end user license

agreement, item or thing not authorized or licensed by

Microsoft;

d) using any false designation of origin or false

description which can or is likely to lead the trade,

the public, or individuals erroneously to believe that

any software, component, end user license agreement,

item, or thing has been manufactured, produced,

distributed, offered for distribution, advertised,

promoted, displayed, licensed, sponsored, approved by

or for Microsoft, when such is not true;

e) using the names, logos, or other variations thereof,

of any Microsoft copyright or trademark-protected

software program in any of Defendants’ trade or

corporate names;

f) engaging in any other activity constituting an

infringement of any of Microsoft’s trademarks, service

marks, or copyrights, or of Microsoft’s rights in, or

right to use or to exploit these trademarks, service

Case 4:04-cv-02567-MM Document 23 Filed 10/12/05 Page 17 of 18
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mark, or copyrights; or constituting any dilution of

Microsoft’s name, reputation, or goodwill; and

g) assisting, aiding, or abetting any other person or

business entity in engaging in or performing any of the

activities referred to in paragraphs a) through f)

above.

4. This matter remains on the December, 2005, Trial List,

for a jury to determine the amount of statutory damages

to which Microsoft is entitled.

s/Malcolm Muir 

MUIR, U. S. District Judge

MM:ga

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