Reseller fined by Microsoft over copyright PC Tek calls in administrators

[Wilhelm]

A PC reseller that previously settled out-of-court with Microsoft over copyright infringement has been placed under administration, citing a lack of foot traffic for its woes.

Melbourne-based computer retailer PC-Tek, formally registered as XXIT Pty Ltd, has sought the services of Dye & Co on 17 May following a voluntary winding-up order.

Dye & Co director Nicholas Giasoumi said sales were affected after an extended period of time of roadworks and railway-related construction being done close to the PC-Tek's shopfront. 

The company has since sold its assets to an unspecified buyer prior to the appointment of Dye & Co and continues to operate. PC-Tek had four employees before the new owners took over.

Giasoumi adds that the out-of-court settlement with Microsoft did not play any role in the company's demise.

According to documents obtained by CRN, the company owes $279,000 to its unsecured creditors. Of that, $149,000 is owed to Adelaide distributor Leader Systems, while $8000 is owed to the Australian Taxation Office (ATO).

Leader Systems confirmed the debt to CRN. "[PC-Tek] is a very old bad debtor. We have debtors insurance so it's all covered," Leader managing director Theo Kristoris told CRN. 

PC-Tek also has another $14,400 owed to the ATO’s superannuation guarantee section, plus $18,000 in holiday pay claims by the company’s employees, for a total of more than $32,000 in employee entitlements.

In 2016, PC-Tek settled with Microsoft out of court before the copyright infringement claim was escalated to formal court proceedings. It agreed to pay the vendor $25,000 in damages.

The company also admitted to pirating copies of Windows 7 Professional by peeling off authenticity stickers from second-hand PCs, putting them onto new computers, then activating the unauthorised software for resale.

"Microsoft's investigators purchased a new computer system from XXIT which had a Multinational Account Original Equipment Manufacturer Certificate of Authenticity attached, and an unauthorised copy of Windows 7 Professional installed," the vendor said at the time.

It was also the second time that the company had reached a similar settlement, with the first made in 2013.

PC-Tek operates with two retail stores in Melbourne and through its e-commerce website. The company sells laptops, desktop PCs, televisions, as well as small whitegoods including airconditioning units and an air fryer.

Mount IT, a reseller that was ordered to pay Microsoft $22,000 for copyright infringement as well, was placed into liquidation by the Federal Court last month following a winding up application from the ATO.