Court deals Microsoft setback in piracy case

Microsoft has encountered a significant setback in its lawsuit claiming that a Utah company distributed pirated versions of Windows software.

A federal appeals court last week tossed out an earlier ruling in Microsoft's favor, saying that more hearings were necessary before MBC Enterprises, a family-owned company in Salt Lake City, could be found liable for copyright infringement.

Microsoft alleges that MBC bought bootleg versions of Windows and Office software from a Texas company called Bantech and resold it. A district court had granted Microsoft's request for summary judgment, noting that an FBI search of Bantech's offices turned up counterfeit products, including 300 units of Windows software that were packaged and labeled for FedEx shipment to MBC's address.

But the 10th Circuit Court of Appeals has reversed the lower court's decision, saying that MBC had raised enough questions about what took place that it deserved a chance to argue its case completely.

Judge Mary Beck Briscoe wrote that "there is a genuine issue of material fact concerning whether MBC resold any counterfeit software received from Bantech." The case has been sent back to the district court for additional proceedings.

In 2000, MBC agreed to pay around $93,000 to Novell to settle similar allegations of copyright infringement.