IN THE UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF INDIANA

FORT WAYNE DIVISION

MICROSOFT CORPORATION, a

Washington Corporation

Plaintiff,

v.

ACE RECYCLING, INC., an Indiana

corporation; and KEVIN CAWOOD, an

individual,

Defendants.

)

)

)

)

)

)

)

)

)

)

)

)

CASE NO. 1:15-CV-32

COMPLAINT

Microsoft Corporation (“Microsoft”) brings this action against Defendants Ace

Recycling, Inc., an Indiana corporation (“Ace Recycling”), and Kevin Cawood, an individual

(collectively “Defendants”) alleging that they engaged in copyright and trademark infringement;

false designation of origin; false description and representation; and unfair competition.

Microsoft seeks damages, an accounting, the imposition of a constructive trust upon Defendants’

illegal profits, and injunctive relief.

I. THE PARTIES

1. Microsoft is a Washington corporation with its principal place of business located

in Redmond, Washington. Microsoft develops, markets, distributes and licenses computer

software.

2. Upon information and belief, defendant Ace Recycling does business on Internet

websites and in Fort Wayne, Indiana. Ace Recycling is engaged in the business of advertising,

USDC IN/ND case 1:15-cv-00032-JVB-SLC document 1 filed 01/27/15 page 1 of 16
2

marketing, installing, offering, and distributing computer hardware and software, including

purported Microsoft software.

3. Upon information and belief, defendant Kevin Cawood, an individual, is an

owner, operator, officer, shareholder, and/or otherwise controls Ace Recycling. Upon

information and belief, Kevin Cawood resides and transacts substantial business in this district.

Upon information and belief, Kevin Cawood (a) personally participated in and/or (b) had the

right and ability to supervise, direct and control the wrongful conduct alleged in this Complaint,

and (c) derived direct financial benefit from that wrongful conduct.

II. JURISDICTION

4. This Court has subject matter jurisdiction over Microsoft’s claims for trademark

infringement, copyright infringement and related claims pursuant to 15 U.S.C. § 1121, 17 U.S.C.

§ 501, 28 U.S.C. §§ 1331 and 1338(a).

5. This Court has supplemental jurisdiction over Microsoft’s claims arising under

the laws of Indiana pursuant to 28 U.S.C. § 1367(a) because these claims are so related to

Microsoft’s claims under federal law that they form part of the same case or controversy and

derive from a common nucleus of operative fact.

III. VENUE

6. Venue is proper in this Court pursuant to 28 U.S.C. § 1391(b) and § 1400(a)

because (a) Defendants reside in the Northern District of Indiana, and/or (b) a substantial part of

the events giving rise to Microsoft’s claims occurred in the Northern District of Indiana.

USDC IN/ND case 1:15-cv-00032-JVB-SLC document 1 filed 01/27/15 page 2 of 16
3

IV. FACTS COMMON TO ALL CLAIMS

7. Microsoft develops, advertises, markets, distributes, and licenses a number of

computer software programs. The Microsoft software programs mentioned below are recorded

on discs, and they are packaged and distributed together with associated components.

8. Microsoft Windows XP: Microsoft has developed, advertised, marketed,

distributed, and licenses a software package known as Microsoft Windows XP Professional

(“Windows XP”). Windows XP is an operating system for desktop and laptop computer

systems. It performs a number of computer-related operations including, but not limited to,

providing support for various applications and allowing remote access to data and applications

stored on Windows XP desktops from network connections. Microsoft holds a valid copyright in

Windows XP (including user’s reference manuals, user’s guides, and screen displays) that was

duly and properly registered with the United States Copyright Office. A true and correct copy of

the Registration Certificate for Microsoft Windows XP, bearing the number TX 5-407-055, is

attached hereto as Exhibit 1 and is incorporated by reference.

9. Microsoft Windows Vista: Microsoft has also developed, advertised, marketed,

distributed, and licenses software packages known as Microsoft Windows Vista (“Windows

Vista”). Windows Vista is an operating system for desktop and laptop computer systems. It

performs a number of computer-related operations including, but not limited to, providing

support for various applications and allowing remote access to data and applications stored in

Windows Vista desktops from network connections. Microsoft holds a valid copyright in

Windows Vista (including user’s reference manuals, user’s guides, and screen displays) that was

duly and properly registered with the United States Copyright Office. A true and correct copy of

USDC IN/ND case 1:15-cv-00032-JVB-SLC document 1 filed 01/27/15 page 3 of 16
4

the Registration Certificate for Microsoft Windows Vista, bearing the number TX-6-508-905, is

attached hereto as Exhibit 2 and is incorporated by reference.

10. Microsoft has also duly and properly registered a number of trademarks and a

service mark in the United States Patent and Trademark Office on the Principal Register,

including, but not limited to:

A. “MICROSOFT,” Trademark and Service Mark Registration No.

1,200,236, for computer programs and computer programming services;

B. “MICROSOFT,” Trademark Registration No. 1,256,083, for computer

hardware and software manuals, newsletters, and computer documentation;

C. WINDOWS, Trademark Registration No. 1,872,264 for computer

programs and manuals sold as a unit; and

D. COLORED FLAG DESIGN, Trademark Registration No. 2,744,843, for

computer software;

True and correct copies of the Trademark Registrations for A through D above are

attached hereto as Exhibits 3 through 6, respectively, and are incorporated by reference.

V. DEFENDANTS’ INFRINGEMENT

11. Defendants advertised, marketed, installed, offered and distributed unauthorized

copies of Microsoft software after Microsoft warned them of the consequences, infringing

Microsoft’s copyrights, trademarks and/or service mark.

12. Defendants advertise that the computers that they sell come installed with

Microsoft software, and in their advertisements, Defendants misappropriate and/or infringe

Microsoft’s copyrights, advertising ideas, style of doing business, slogans, trademarks and/or

service mark.

USDC IN/ND case 1:15-cv-00032-JVB-SLC document 1 filed 01/27/15 page 4 of 16
5

13. The computers sold by Defendants actually have infringing copies of Microsoft

software installed.

14. In or about April 2013, Defendants distributed to an investigator refurbished

computer systems with unauthorized copies of Windows XP installed on them.

15. By letter dated June 5, 2013, Microsoft asked Defendants to cease and desist from

making and distributing infringing copies of Microsoft software on computers.

16. Nevertheless, in or about May 2014, Defendants distributed to an investigator a

refurbished computer system with an unauthorized copy of Windows Vista on it.

17. On information and belief, these are not isolated incidents. Rather, Defendants

have been and continue to be involved in advertising, marketing, installing, offering, and/or

distributing counterfeit and infringing copies of Microsoft’s software and/or related components

to unidentified persons or entities.

18. On information and belief, Defendants have committed and are continuing to

commit acts of copyright and trademark infringement against Microsoft. On information and

belief, at a minimum, Defendants were willfully blind and acted in reckless disregard of

Microsoft’s registered copyrights, trademarks and service marks.

19. On information and belief, Microsoft has been harmed by Defendants’ activities,

including their advertising activities and unauthorized use of Microsoft’s copyright protected

material, and the unauthorized use of Microsoft’s marks to describe the items that Defendants are

distributing.

USDC IN/ND case 1:15-cv-00032-JVB-SLC document 1 filed 01/27/15 page 5 of 16
6

VI. FIRST CLAIM

[Copyright Infringement – 17 U.S.C. § 501, et seq.]

Against Defendants

20. Microsoft repeats and incorporates by this reference each and every allegation set

forth in paragraphs 1 through 19, inclusive.

21. Microsoft is the sole owner of Microsoft Windows XP and Windows Vista and of

the corresponding copyrights and Certificates of Registration.

22. Defendants have infringed the copyrights in Microsoft’s software, including but

not limited Microsoft Windows XP and Windows Vista, by advertising, marketing, installing,

offering, and/or distributing infringing materials in the United States of America without

approval or authorization from Microsoft.

23. At a minimum, Defendants acted with willful blindness to and in reckless

disregard of Microsoft’s registered copyrights.

24. As a result of their wrongful conduct, Defendants are liable to Microsoft for

copyright infringement. 17 U.S.C. § 501. Microsoft has suffered damages. Microsoft is entitled

to recover damages, which include any and all profits Defendants have made as a result of their

wrongful conduct. 17 U.S.C. § 504. Alternatively, Microsoft is entitled to statutory damages

under 17 U.S.C. § 504(c).

25. In addition, for the reasons set forth above, the award of statutory damages should

be enhanced in accordance with 17 U.S.C. § 504(c)(2).

USDC IN/ND case 1:15-cv-00032-JVB-SLC document 1 filed 01/27/15 page 6 of 16
7

26. Microsoft is also entitled to injunctive relief pursuant to 17 U.S.C. § 502 and to an

order impounding any and all infringing materials pursuant to 17 U.S.C. § 503. Microsoft has no

adequate remedy at law for Defendants’ wrongful conduct because, among other things, (a)

Microsoft’s copyrights are unique and valuable property which have no readily determinable

market value, (b) Defendants’ infringement harms Microsoft such that Microsoft could not be

made whole by any monetary award, and (c) Defendants’ wrongful conduct, and the resulting

damage to Microsoft, is continuing.

27. Microsoft is also entitled to recover its attorneys’ fees and costs of suit. 17 U.S.C.

§ 505.

VII. SECOND CLAIM

[Trademark Infringement – 15 U.S.C. § 1114]

Against Defendants

28. Microsoft repeats and incorporates by this reference each and every allegation set

forth in paragraphs 1 through 27, inclusive.

29. Defendants’ activities constitute infringement of Microsoft’s federally registered

trademarks and service mark in violation of the Lanham Trademark Act, including but not

limited to 15 U.S.C. § 1114(1).

30. Because Microsoft advertises, markets, distributes, and licenses its software under

the trademarks and service mark described in this Complaint, these trademarks and service mark

are the means by which Microsoft’s software is distinguished from the software and related items

of others in the same or related fields.

USDC IN/ND case 1:15-cv-00032-JVB-SLC document 1 filed 01/27/15 page 7 of 16
8

31. Because of Microsoft’s long, continuous, and exclusive use of these trademarks

and service mark, they have come to mean, and are understood by customers, end users, and the

public to signify, software programs or services of Microsoft.

32. The infringing materials that Defendants have and are continuing to advertise,

market, install, offer, and distribute are likely to cause confusion, mistake, or deception as to

their source, origin, or authenticity.

33. Further, Defendants’ activities are likely to lead the public to conclude,

incorrectly, that the infringing materials that Defendants are advertising, marketing, installing,

offering, and/or distributing originate with or are authorized by Microsoft, to the damage and

harm of Microsoft, its licensees, and the public.

34. Upon information and belief, Defendants advertised, marketed, installed, offered

or distributed infringing material with the purposes of misleading or confusing customers and the

public as to the origin and authenticity of the infringing materials and of trading upon

Microsoft’s business reputation.

35. At a minimum, Defendants acted with willful blindness to and in reckless

disregard of Microsoft’s registered marks.

36. As a result of their wrongful conduct, Defendants are liable to Microsoft for

trademark infringement. 15 U.S.C. § 1114(1). Microsoft has suffered damages. Microsoft is

entitled to recover damages, which include any and all profits Defendants have made as a result

of their wrongful conduct. 15 U.S.C. § 1117(a).

USDC IN/ND case 1:15-cv-00032-JVB-SLC document 1 filed 01/27/15 page 8 of 16
9

37. In addition, because Defendants’ infringement of Microsoft’s trademarks and

service mark as described above, the award of actual damages and profits should be trebled

pursuant to 15 U.S.C. §1117(b). Alternatively, Microsoft is entitled to statutory damages under

15 U.S.C. § 1117(c).

38. Microsoft is also entitled to injunctive relief pursuant to 15 U.S.C. § 1116(a) and

to an order compelling the impounding of all infringing materials advertised, marketed, installed,

offered or distributed by Defendants pursuant to 15 U.S.C. § 1116, subsections (a) and (d)(1)(A).

Microsoft has no adequate remedy at law for Defendants’ wrongful conduct because, among

other things, (a) Microsoft’s trademarks and service mark are unique and valuable property

which have no readily determinable market value, (b) Defendants’ infringement constitutes harm

to Microsoft’s such that Microsoft could not be made whole by any monetary award, (c) if

Defendants’ wrongful conduct is allowed to continue, the public is likely to become further

confused, mistaken, or deceived as to the source, origin or authenticity of the infringing

materials, and (d) Defendants’ wrongful conduct, and the resulting damage to Microsoft, is

continuing.

39. Microsoft is also entitled to recover its attorneys’ fees and costs of suit. 15 U.S.C.

§ 1117.

VIII. THIRD CLAIM

[False Designation Of Origin, False Description And Representation –

15 U.S.C. § 1125 et seq.]

Against Defendants

40. Microsoft repeats and incorporates by this reference each and every allegation set

forth in paragraphs 1 through 39, inclusive.

USDC IN/ND case 1:15-cv-00032-JVB-SLC document 1 filed 01/27/15 page 9 of 16
10

41. Because Microsoft advertises, markets, distributes, and licenses its software under

the trademarks and service mark described in this Complaint, these trademarks and service mark

are the means by which Microsoft’s software is distinguished from the software or products of

others in the same field or related fields.

42. Because of Microsoft’s long, continuous, and exclusive use of these trademarks

and service mark, they have come to mean, and are understood by customers, end users, and the

public to signify, software or services of Microsoft.

43. Microsoft has also designed distinctive and aesthetically pleasing displays, logos,

icons, graphic images, and packaging (collectively, “Microsoft visual designs”) for its software

programs.

44. Defendants’ wrongful conduct includes the use of Microsoft’s marks, name,

and/or imitation visual designs, specifically displays, logos, icons, graphic designs, and/or

packaging virtually indistinguishable from Microsoft visual designs, in connection with their

goods and services.

45. Upon information and belief, Defendants engaged in such wrongful conduct with

the purpose of misleading or confusing customers and the public as to the origin and authenticity

of the goods and services advertised, marketed, installed, offered or distributed in connection

with Microsoft’s marks, name, and imitation visual designs, and of trading upon Microsoft’s

goodwill and business reputation. Defendants’ conduct constitutes (a) false designation of

origin, (b) false or misleading description, and (c) false or misleading representation that the

imitation visual images originate from or are authorized by Microsoft, all in violation of § 43(a)

of the Lanham Trademark Act, set forth at 15 U.S.C. § 1125(a).

USDC IN/ND case 1:15-cv-00032-JVB-SLC document 1 filed 01/27/15 page 10 of 16
11

46. Defendants’ wrongful conduct is likely to continue unless restrained and enjoined.

47. As a result of Defendants’ wrongful conduct, Microsoft has suffered and will

continue to suffer damages. Microsoft is entitled to injunctive relief and to an order compelling

the impounding of all imitation marks and visual designs being used, advertised, marketed,

installed, offered or distributed by Defendants. Microsoft has no adequate remedy at law for

Defendants’ wrongful conduct because, among other things, (a) Microsoft’s marks, name and

visual designs are unique and valuable property which have no readily-determinable market

value, (b) Defendants’ advertising, marketing, installation, or distribution of imitation visual

designs constitutes harm to Microsoft such that Microsoft could not be made whole by any

monetary award, and (c) Defendants’ wrongful conduct, and the resulting damage to Microsoft,

is continuing.

IX. FOURTH CLAIM

[Indiana Common Law Unfair Competition]

Against Defendants

48. Microsoft realleges, and incorporates by this reference, each and every allegation

set forth in paragraphs 1 through 47, inclusive.

49. The acts and conduct of Defendants as alleged above in this complaint constitute

unfair competition pursuant to the common law of the State of Indiana.

50. Defendants’ acts and conduct as alleged above have damaged and will continue to

damage Microsoft and have resulted in an illicit gain of profit to Defendants in an amount that is

unknown at the present time.

USDC IN/ND case 1:15-cv-00032-JVB-SLC document 1 filed 01/27/15 page 11 of 16
12

X. FIFTH CLAIM

[For Imposition Of A Constructive Trust Upon Illegal Profits]

Against Defendants

51. Microsoft repeats and incorporates by this reference each and every allegation set

forth in paragraphs 1 through 50, inclusive.

52. Defendants’ conduct constitutes deceptive and wrongful conduct in the nature of

passing off the infringing materials as genuine Microsoft software or related components

approved or authorized by Microsoft.

53. By virtue of Defendants’ wrongful conduct, Defendants have illegally received

money and profits that rightfully belong to Microsoft.

54. Upon information and belief, Defendants hold the illegally received money and

profits in the form of bank accounts, real property, or personal property that can be located and

traced.

55. Defendants hold the money and profits they have illegally received as

constructive trustees for the benefit of Microsoft.

XI. SIXTH CLAIM

[Accounting]

Against Defendants

56. Microsoft repeats and incorporates by this reference each and every allegation set

forth in paragraphs 1 through 55, inclusive.

57. Microsoft is entitled, pursuant to 17 U.S.C. § 504 and 15 U.S.C. § 1117, to

recover any and all profits of Defendants that are attributable to their acts of infringement.

USDC IN/ND case 1:15-cv-00032-JVB-SLC document 1 filed 01/27/15 page 12 of 16
13

58. Microsoft is entitled, pursuant to 17 U.S.C. § 504 and 15 U.S.C. § 1117, to actual

damages or statutory damages sustained by virtue of Defendants’ acts of infringement.

59. The amount of money due from Defendants to Microsoft is unknown to Microsoft

and cannot be ascertained without a detailed accounting by Defendants of the precise number of

units of infringing material advertised, marketed, installed, offered or distributed by Defendants.

PRAYER FOR RELIEF

WHEREFORE, Microsoft respectfully requests judgment as follows:

(1) That the Court enter a judgment against Defendants as indicated below:

(a) that Defendants have willfully infringed Microsoft’s rights in the

following federally registered copyrights, in violation of 17 U.S.C. § 501:

(1) TX 5-407-055 (“Windows XP”); and

(2) TX 6-508-905 (“Windows Vista”);

(b) that Defendants have willfully infringed Microsoft’s rights in the

following federally registered trademarks and service mark, in violation of 15 U.S.C. § 1114:

(1) 1,200,236 (“MICROSOFT”);

(2) 1,256,083 (“MICROSOFT”);

(3) 1,872,264 (“WINDOWS”); and

(4) 2,744,843 (COLORED FLAG DESIGN);

(c) that Defendants have committed and are committing acts of false

designation of origin, false or misleading description of fact, and false or misleading

representation against Microsoft, in violation of 15 U.S.C. § 1125(a);

(d) that Defendants have engaged in unfair competition in violation of Indiana

common law; and

USDC IN/ND case 1:15-cv-00032-JVB-SLC document 1 filed 01/27/15 page 13 of 16
14

(e) that Defendants have otherwise injured the business reputation and

business of Microsoft by the acts and conduct set forth in this Complaint.

(2) That the Court issue injunctive relief against Defendants, and that Defendants,

their officers, agents, servants, employees, and all others in active concert or participation with

Defendants, be enjoined and restrained from:

(a) imitating, copying, or making any other infringing use or infringing

distribution of the software programs, components , end user license agreements (“EULA”),

certificates of authenticity (“COAs”) and/or things protected by the following copyright

Certificate Registration Nos.:

(1) TX 5-407-055 (“Windows XP”); and

(2) TX 6-508-905 (“Windows Vista”);

or the software programs, components and/or things protected by Microsoft’s registered

trademarks and service mark, including, but not limited to, the following Trademark Registration

Nos.:

(1) 1,200,236 (“MICROSOFT”);

(2) 1,256,083 (“MICROSOFT”);

(3) 1,872,264 (“WINDOWS”); and

(4) 2,744,843 (COLORED FLAG DESIGN);

and any other things or works now or hereafter protected by any Microsoft trademark or

copyright;

(b) manufacturing, assembling, producing, distributing, offering for

distribution, circulating, selling, offering for sale, advertising, importing, promoting, or

displaying any software program, component, EULA, COA and/or item bearing any simulation,

reproduction, counterfeit, copy, or colorable imitation of any of Microsoft’s registered

trademarks, service mark, or copyrights, including, but not limited to, the Trademark, Service

Mark, and Copyright Registration Numbers listed in Sections (2)(a) above;

USDC IN/ND case 1:15-cv-00032-JVB-SLC document 1 filed 01/27/15 page 14 of 16
15

(c) using any simulation, reproduction, counterfeit, copy, or colorable

imitation of Microsoft’s registered trademarks, service mark, or copyright including, but not

limited to the Trademark, Service Mark, and Copyright Registration Numbers listed in Section

(2)(a) above, in connection with the manufacture, assembly, production, distribution, offering for

distribution, circulation, sale, offering for sale, import, advertisement, promotion, or display of

any software program, component, EULA, COA, and/or item not authorized or licensed by

Microsoft;

(d) using any false designation of origin or false or misleading description or

false or misleading representation that can or is likely to lead the trade or public or individuals

erroneously to believe that any software program, component, and/or item has been

manufactured, assembled, produced, distributed, offered for distribution, circulation, sold,

offered for sale, imported, advertised, promoted, displayed, licensed, sponsored, approved, or

authorized by or for Microsoft, when such is not true in fact;

(e) engaging in any other activity constituting an infringement of any of

Microsoft’s trademarks, service mark and/or copyrights, or of Microsoft’s rights in, or right to

use or to exploit, these trademarks, service mark, and/or copyrights; and

(f) assisting, aiding, or abetting any other person or business entity in

engaging in or performing any of the activities referred to in subparagraphs (a) through (e)

above.

(3) That the Court enter an order pursuant to 15 U.S.C. § 1116(a)(d)(1)(A) and 17

U.S.C. § 503 impounding all counterfeit and infringing copies of purported Microsoft software

and/or materials bearing any of Microsoft’s trademarks or service mark, and any related item,

including business records, that is in Defendants’ possession or under their control;

(4) That the Court enter an order declaring that Defendants hold in trust, as

constructive trustees for the benefit of Microsoft, their illegal profits obtained from their

distribution of counterfeit and infringing copies of Microsoft’s software, and requiring

USDC IN/ND case 1:15-cv-00032-JVB-SLC document 1 filed 01/27/15 page 15 of 16
16

Defendants to provide Microsoft a full and complete accounting of all amounts due and owing to

Microsoft as a result of Defendants’ illegal activities.

(5) That the Court order Defendants to pay Microsoft’s general, special, actual, and

statutory damages as follows:

(a) Microsoft’s damages and Defendants’ profits pursuant to 17 U.S.C. §

504(b), or alternatively, enhanced statutory damages pursuant to 17 U.S.C. § 504(c), and 17

U.S.C. § 504(c)(2);

(b) Microsoft’s damages and Defendants’ profits pursuant to 15 U.S.C. §

1117(a), trebled pursuant to 15 U.S.C. § 1117(b), or in the alternative, statutory damages

pursuant to 15 U.S.C. §1117(c) for each counterfeit mark; and

(c) Microsoft’s damages and Defendants’ profits pursuant to Indiana common

law.

(6) That the Court order Defendants to pay to Microsoft both the costs of this action

and the reasonable attorneys’ fees incurred by it in prosecuting this action; and

(7) That the Court grant to Microsoft such other and additional relief as is just and

proper.

Dated: January 27, 2015 FROST BROWN TODD LLC

By: /s/ James Dimos

James Dimos, #11178-49

201 N. Illinois St., Suite 1900

P.O. Box 44961

Indianapolis, IN 46244-0961

317-237-3800

Fax: 317-237-3900

jdimos@fbtlaw.com

Attorneys for Plaintiff Microsoft

Corporation

EN20176.Public-20176 4830-7913-6545v1

USDC IN/ND case 1:15-cv-00032-JVB-SLC document 1 filed 01/27/15 page 16 of 16