Microsoft reported today that it has nabbed a UK-based software pirate who it estimates has made over £1m from selling bogus copies of Office and Windows.

The software giant said that William Ling has ceased trading after selling unlicensed Microsoft software valued at more than £3.5m over the past five years.

Ling, the proprietor of Oyster Computers, was arrested by the Metropolitan Police in February 2003 and his premises in New Malden were searched after Microsoft received an anonymous telephone call from a member of the public.

Documents seized by the police gave full details of his £3.5m trade in counterfeit and unlicensed software.

Trading records showed that in all but 43 of 1,296 sales Ling had sold Microsoft products at much less than the royalty payable to Microsoft on genuine products, confirming that he was dealing extensively in non-genuine or unlicensed products.

Ling was subsequently charged with a number of offences under the Trade Marks Act 1994 for knowingly dealing in counterfeit and unlicensed products. He pleaded guilty in May 2005 and was made to pay £10,000.

But within two months he had resumed trading in counterfeit and unlicensed products. As a result, Microsoft launched a civil damages claim for £12m, the amount of revenue lost as a result of Ling's illegal trading.

In an out-of-court settlement, Ling has agreed to pay Microsoft "substantial sums" and has given an undertaking not to sell counterfeit Microsoft software in the future.

Michala Alexander, head of Microsoft's anti-piracy programme in the UK, said: "Ling's case should send a message to others who promote this illegal activity.

"Microsoft will always protect honest resellers and consumers by challenging those who persist in dealing with non-genuine or illegal software."

Paul Ramsden, deputy chief executive at the Trading Standards Institute, added: "This case represents a small but vital step in tackling software piracy.

"Illegal traders of this nature adversely affect the customers that they dupe into purchasing unlawful software, and the revenues of genuine technology vendors suffer at the hands of those involved in the illegal software trade.

"We commend action being taken against software pirates since it will prevent the funding of more serious crime."