PC Case Gear has won $250,000 in damages from its former insurance broker to cover a previous copyright settlement to Microsoft.
A judgement in the Federal Court entitled the OEM reseller to damages from Instrat Insurance Brokers following a 2016 out-of-court settlement related to PC Case Gear sourcing up to 4,000 Microsoft Windows 7 licences from an unauthorised third party.
PC Case Gear then sued the-now defunct Instrat for breach of contract and negligence due to Instrat failing to advise the reseller of the availability of cover for copyright infringement.
Presiding judge Justice Anderson said Instrat was liable for the copyright breach and as such PC Case Gear is eligible for $250,000 in damage, the sum of the original settlement.
“The payment of that sum by [PC Case Gear] to Microsoft was, as a matter of law, caused by Instrat’s breach,” Anderson said.
The new ruling also found that while PC Case Gear was indeed liable for the damage caused, the risk should have been identified by Instrat.
“Moreover, there is no merit in the argument that [PC Case Gear]’s own negligence wholly or partly caused its loss. In the context of their relationship, it was not [PC Case Gear]’s responsibility to highlight for Instrat the risks that [PC Case Gear] faced,” the justice said.
Instrat denied liability, claiming it was likely the risk of copyright infringement was discussed between the two parties but no specifics could be remembered.
The broker also contended that even if it did breach its duties, the loss incurred by PC Case Gear was not caused by they themselves. If PC Case Gear was advised on the options for copyright infringement risk, Instrat believed they would not have been selected, the ruling said.
The basis for Instrat’s breach came down to three key aspects: Instrat failed to make adequate enquiries to understand the risks and operations of PC Case Gear’s business; failed to identify and characterise PC Case Gear’s exposure to copyright infringement and failed to raise the fact that PC Case Gear was not covered for the risk of copyright infringement.
Following the initial claim from Microsoft, PC Case Gear instructed Instrat to cancel its cyber liability insurance policy and contacted Business Insurance Specialist to transfer its insurance brokering.