Microsoft Corp. v. DAK Industries, Inc.
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Microsoft Corp. v. DAK Indus., Inc. 66 F.3d 1091 (9th Cir 1995) is a court case in which Microsoft contended that in being licensed rights to sell Microsoft Word (Word) software, the then-bankrupt DAK Industries had been granted permission to use this intellectual property, so Microsoft was entitled to receive payments during post-bankruptcy in the form of royalties.
Microsoft Corp. v. DAK Indus., Inc. | |
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Court | United States Court of Appeals for the Ninth Circuit |
Full case name | Microsoft Corporation v. Dak Industries Incorporated |
Decided | October 2, 1995 |
Citation(s) | 66 F.3d 1091 |
Case history | |
Prior action(s) | 27 Bankr.Ct.Dec. 118 (Denied Microsoft's administrative expense claim) |
Court membership | |
Judge(s) sitting | William A. Fletcher, Melvin T. Brunetti, and Thomas G. Nelson |
Case opinions | |
Buying a lump sum of software was found to be equivalent to buying a lump sum of physical goods when considering the 'economic realities' of the deal, even if it was sold under a license providing a 'permission-to-use' the intellectual property. |
The Ninth Circuit disagreed, believing that the 'economic realities' of the agreement in which payments for a certain number of copies of Word were made in the form of installments meant that the agreement should be considered as a 'lump sum sale of software units' even if the agreement was called a license that required 'royalties' instead of 'payments'. Microsoft was therefore unable to claim special interest over the bankruptcy claim as it was a transfer of goods in the form of a sale, making it an unsecured creditor.[1]