Microsoft Files Record Number of Software Piracy Lawsuits Related to a Single Undercover Sweep in North America

Eight Southern California Computer Resellers Snagged at Computer Swap Meets

REDMOND, Wash. - Dec. 3, 1997 - Officials of Microsoft Corp. today announced the company has filed a record eight lawsuits resulting from a single investigative sweep of Southern California computer resellers suspected of installing unlicensed software and illegally distributing counterfeit products via computer swap meets.

The lawsuits, which charge the companies with copyright and trademark infringement, were filed in November in the U.S. District Court, Central District of California. They represent the second round of a "continuous sweeps" program Microsoft initiated this year in key North American regions to combat "hard disk loading," or the installation of pirated software on computers that are in turn sold to customers.

"Microsoft has never before filed so many lawsuits resulting from a single hard disk loading sweep," said Jim Lowe, Microsoft corporate attorney. "This confirms that consumers need to be aware of how much illegal product is distributed at swap meets. There are numerous signs that can help buyers identify suspect product. It's a matter of educating yourself and not being a victim."

In the Southern California sweep, 13 companies were investigated for alleged illegal activities. Five have settled with Microsoft, and eight are named in the lawsuits for allegedly distributing counterfeit products, committing hard disk loading or being involved in both. Microsoft had previously sent cease and desist letters to all eight.

Those eight companies are Omnix Technology Corp. (also known as Omni Tech) of City of Industry, Calif.; Cybertech Connections Inc. of Walnut, Calif.; MXN International Inc. of Walnut, Calif.; Pan Computer & Service of Santa Ana, Calif.; Syscon Technology (doing business as American STI Inc.) of Rosemead, Calif.; Vatadata Systems Inc. of Monterey Park, Calif.; Victech Electronics Inc. of City of Industry, Calif.; and Radius Enterprises Company Inc. of Azusa, Calif.

The products involved included the Microsoft® Windows® 95 operating system and Office 97 Professional Edition. The illegal activities were discovered over a three-month period by undercover investigators at various computer trade shows or "swap meets" throughout Southern California. Investigators posing as customers canvassed swap meets, contacting vendors of software and computer systems for counterfeit product and illegally preloaded software. The swap meet promoters and cities in which the alleged activities occurred are National Productions (Buena Park, Reseda and Santa Barbara), Market Pro (Ventura), Computer Super Shows (Riverside) and American Mega Show (Northridge).

"We primarily target the types of vendors that do not conduct business the way a legitimate company would," said one undercover Microsoft investigator. "This can include companies that are reluctant to provide identifying information such as addresses and telephone numbers, those that appear to do the vast majority of their business at computer swap meets only, and those selling software or preloaded computer systems for well below the prices of legitimate retailers. If the price seems too good to be true, it generally is."

The following is a breakdown of the allegations and products involved with each company:

• Cybertech Connections Inc. - counterfeit Windows 95, hard disk loading Office Pro 97
• MXN International Inc. - hard disk loading Windows 95 and Office Pro 97
• Omnix Technology Corp. - counterfeit Windows 95, hard disk loading Office Pro 97
• Pan Computer & Service - hard disk loading Windows 95 and Office Pro 97
• Radius Enterprises Company Inc. - counterfeit Windows 95 and Office Pro 97
• Syscon Technology dba American STI Inc. - hard disk loading Windows 95 and Office Pro 97, counterfeit Mouse
• Vatadata Systems Inc. - hard disk loading Windows 95 and Office Pro 97
• Victech Electronics Inc. - counterfeit Windows 95, hard disk loading Office Pro 97

"Legitimate resellers have nothing to worry about, and in fact should be pleased with our efforts to level the playing field for them," said Geoff Goetz, anti-piracy program manager for Microsoft's OEM sales division. "But the resellers that illegally distribute Microsoft products should be very concerned about these ongoing enforcement efforts in Southern California."

Companies that build PCs and want to obtain Microsoft OEM product for inclusion with their systems should obtain product only from Microsoft's 11 authorized Delivery Service Partners (DSPs), Goetz added. A list of DSPs is available at http://www.microsoft.com/oem/.

Microsoft receives more than 2,000 calls and e-mails each month that are reviewed by investigators to identify computer retailers and end users that are using or distributing Microsoft software illegally. In addition to increasing enforcement efforts, Microsoft is working to help consumers recognize warning signs that could indicate they are acquiring illegal or counterfeit software, such as the following:

• Prices that are "too good to be true"
• No certificate of authenticity
• Microsoft products on the retail shelf that include a line on the front cover of the users guide that states, "For distribution with a new PC only": Microsoft's agreements with computer manufacturers prohibit them from distributing Microsoft software without accompanying PC hardware.
• No end user license agreement
• No product registration card
• No backup disks, manuals or other materials for software installed on a new computer system
• Backup disks that have handwritten labels, are not shrink-wrapped, or appear to be of inferior quality
• Manuals that are photocopied, are not shrink-wrapped, or appear to be of inferior quality

Customers or resellers with questions about the legitimacy of Microsoft products should contact the Microsoft Anti-Piracy Hotline toll free at (800) RU-LEGIT (785-3448) or send
e-mail to piracy@microsoft.com or visit Microsoft's Web site at http://www.microsoft.com/piracy/default.asp. To receive more information about software piracy, they can call the Business Software Alliance (BSA) Anti-Piracy Hotline at (888) NO PIRACY (667-4722) or send e-mail to software@bsa.org or visit BSA's Web site at (http://www.bsa.org/).

Founded in 1975, Microsoft (NASDAQ "MSFT") is the worldwide leader in software for personal computers. The company offers a wide range of products and services for business and personal use, each designed with the mission of making it easier and more enjoyable for people to take advantage of the full power of personal computing every day.

Microsoft and Windows are either registered trademarks or trademarks of Microsoft Corp. in the United States and/or other countries.

Other product and company names herein may be trademarks of their respective owners.

Note to editors: If you are interested in viewing additional information on Microsoft, please visit the Microsoft Web page at http://www.microsoft.com/presspass/ on Microsoft's corporate information pages.