Microsoft and ITAC settle legal dispute

Microsoft and UK reseller ITAC have reached a settlement regarding lawsuits filed by both companies against each other. The dispute, which rumbled on throughout 2005, centred on allegations that ITAC had been selling grey software — also referred to as parallel imports — sourced from the Middle East.

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By  Stuart Wilson Published  March 5, 2006

Microsoft and UK reseller ITAC have reached a settlement regarding lawsuits filed by both companies against each other. The dispute, which rumbled on throughout 2005, centred on allegations that ITAC had been selling grey software — also referred to as parallel imports — sourced from the Middle East. The two companies released a short joint statement concerning the settlement of the legal dispute: “Microsoft and ITAC are pleased that they have settled their respective lawsuits amicably. Microsoft is happy to acknowledge that ITAC is a reputable company and will be pleased to do business with ITAC in the future.” Microsoft had launched a US$7m legal case in the UK against ITAC in January 2005, alleging that parallel import software sales had been discovered when end-user customers realised that they were being sold software that had not been made for sale in the UK market. It was also claimed that this software had been sourced from an unauthorised distributor in the Middle East. Speaking at the time, Microsoft compliance officer Alex Hilton, stated: “Parallel importing and breach of trademark and copyright are serious issues that we do not take lightly. Our priority is to protect the vast majority of our channel partners, which are operating legally.” The case took a further twist in February 2005 when ITAC launched libel proceedings claiming that accusations made by Microsoft on its website and circulated to UK press labelling ITAC a ‘rogue trader’ were groundless. At the time, ITAC issued a statement outlining its position: “Despite the fact Microsoft presented these allegations to the media as if they were proven, not one piece of evidence has bee produced in support of their claim.” “In view of the serious allegations made against them, ITAC (UK) and their directors have issued proceedings for libel against Microsoft Corporation and Microsoft Limited, along with certain other companies and certain individuals employed by those companies,” the statement continued. In March 2005, distributor Actebis apologised to ITAC for republishing the allegations made by Microsoft in its original ‘media alert’ about ITAC. Roger Mather, managing director at Actebis UK, offered a full and unreserved apology to ITAC, following ITAC’s threat of legal proceedings against Actebis for republishing the allegations that were first made in a Microsoft ‘media alert’. “Microsoft’s media alert contained a number of allegations ITAC considers to be seriously defamatory of it, which were wrongly presented as if they were a matter of fact,” stated Mather. “We have apologised to ITAC for our republication of Microsoft’s media alert and the allegations made in it. We did not intend to endorse the allegations made by Microsoft or to suggest that we were aware of any evidence to support them.” With Microsoft and ITAC now reaching a settlement, the Middle East source of the software at the centre of the allegations remains unclear. During the past year, Microsoft has worked hard to strengthen its channel engagement model in the Middle East and also carried out a distributor audit with its regional partners. With Microsoft now publicly acknowledging that ITAC is a ‘reputable company’ and dropping its court case seeking US$7m in damages, the reseller has cleared its name.

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