Microsoft Files Lawsuits Against Two Vancouver, B.C., Computer Resellers

Ongoing Coast-to-Coast Investigations of Illegal Distribution Continue

REDMOND, Wash. - March 18, 1998 - Microsoft Corp. officials today announced that the company commenced lawsuits on Feb. 27 against two Vancouver, British Columbia-area companies for copyright infringement, alleging unlicensed software installation and distribution of infringing products.

The lawsuits represent an ongoing Canadian investigation that began over a year ago aimed at stopping the practice known as "hard-disk loading," the installation of pirated software on computers that are in turn sold to customers. Both lawsuits were filed with the Federal Court of Canada, Trial Division, Toronto. The leads originated as hot-line tips called in to the Microsoft anti-piracy hot line.

The two companies named in the lawsuits are Anovation Computer of Richmond, British Columbia, and United Computers Ltd. of Vancouver, British Columbia. Anovation allegedly hard-disk loaded copies of Microsoft® Office 97 Professional Edition and allegedly distributed infringing copies of the Microsoft Windows® 95 operating system CD-ROM and manual. United Computers Ltd. allegedly hard-disk loaded Office 97 Professional Edition.

When the Canadian investigations began early last year, Microsoft originally targeted 13 companies, all based in Ontario, that had received "cease and desist" letters. Five companies were found to be hard-disk loading Microsoft products, and all five came to monetary settlements with Microsoft. The key features of the hard-disk loading investigations are its national scope and continuous nature.

"Canadian systems builders and resellers need to be aware that Microsoft investigators are out there looking for illegal activity," said Jim Lowe, corporate attorney for Microsoft. "We will be doing everything we can to ensure a level playing field for honest vendors." He also said that these investigations will result in additional legal actions this spring in Canada.

According to a 1996 independent study on global software piracy released by the Business Software Alliance (BSA) and Software Piracy Association (SPA), the software piracy rate in Canada for 1996 was 42 percent, resulting in losses of approximately $500 million.

"I appreciate Microsoft taking a hard line with these people," said Wynne Powell, chief operating officer for London Drugs in Richmond, British Columbia. "The software producers, other resellers including ourselves, and particularly consumers lose when resellers don't play by the rules."

Companies that build PCs and want to obtain genuine Microsoft OEM products for inclusion with their systems should obtain the products only from Microsoft's 13 authorized Delivery Service Partners (DSPs). A list of DSPs is available at http://www.microsoft.com/oem/.

According to Microsoft, a number of warning signs can help computer buyers identify potentially illegal software:

• Microsoft's agreements with computer manufacturers prohibit them from distributing Microsoft software without accompanying PC hardware. Microsoft products on the retail shelf should never include a line on the front cover of the users guide that states "For distribution with a new PC only." OEM versions of Microsoft products do not include end-user support.
• No Certificate of Authenticity
• Prices that are "too good to be true"
• 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

Consumers or resellers with questions about the legitimacy of Microsoft products should call the Microsoft anti-piracy hot line at (800) RU-LEGIT (785-3448) or send e-mail to piracy@microsoft.com. To receive more information about software piracy in Canada, call the Canadian Alliance Against Software Theft anti-piracy hot line at (800) 263-9700 or visit the organization's Web site at (http://www.bsa.org/canadadocs/default.htm).

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.

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