Microsoft Files First Software Piracy Lawsuits in Nevada

Company Commits to Protecting State's Honest Resellers and Consumers

REDMOND, Wash. - March 4, 1999 - Microsoft Corp. officials today announced that the company has filed its first software piracy lawsuits in Nevada. The suits, alleging copyright violations and trademark infringement, were filed against three computer resellers. A result of the company's ongoing anti-piracy investigations, the lawsuits were conducted to protect Nevada's legitimate distributors and customers from the negative effects of software piracy, as well as to help diminish Nevada's piracy rate of nearly 40 percent, which tops the national average of 27 percent.

"When two of every five copies of software running in Nevada are illegal, it is important that significant steps are taken to more effectively protect Nevada's consumers and honest businesses," said John Bliss, president of the International AntiCounterfeiting Coalition. "We are hopeful that a stronger anti-counterfeiting statute will be enacted in Nevada to better protect the state's consumers, legitimate industry and legitimate businesses operating there."

In most cases, investigations are initiated by tips called in to the Microsoft anti-piracy hot line by honest resellers or customers who obtained suspicious products. Microsoft customarily notifies the defendants that it suspects them of acting illegally and then determines whether or not the behavior has continued before filing a lawsuit.

Lawsuits against Mirage Computers Inc. and Computer Surplus Outlet LLC of Las Vegas, and K&A LLC dba Technology Center of Carson City, Nev., were filed for the companies' alleged distribution of counterfeit copies of Microsoft® software to undercover investigators. Mirage Computers Inc. allegedly distributed counterfeit copies of Office 97 Professional and the Microsoft Windows® 98 operating system (Civil No. CV-N-99-00201-PMP [RJJ]). Computer Surplus Outlet LLC allegedly distributed counterfeit copies of Windows 98, the Microsoft Windows 95 operating system and Office 97 Professional (CV-S-99-00258 LDG [LRL]). K&A LLC allegedly distributed counterfeit copies of Office 97 Professional and Windows 95 (Civil No. CV-N-99-00082-DWH [RAM]). The Mirage Computers Inc. and Computer Surplus Outlet LLC lawsuits were filed in the U.S. District Court for the District of Nevada, Southern Division. The K&A LLC lawsuit was filed in the U.S. District Court for the District of Nevada, Northern Division.

According to a study conducted by International Planning & Research Corp. (IPR) of Redmond, the nearly 40 percent software piracy rate in Nevada cost the state's workers more than 800 jobs, and nearly $25 million in wage and salary losses. The state also lost over $6 million in state tax revenues.

"Piracy hands a generous running start to dishonest resellers and counterfeiters who profit considerably by sidestepping normal and legal means of distributing software, leaving honest resellers in the dust," said Rick Pogue, account manager of corporate sales, Software Plus Inc., a Las Vegas provider of computer software and accessories. "Piracy's adverse effects are magnified, ultimately, by the victimization of unsuspecting consumers, who end up with software that lacks the necessary documentation and which may contain harmful viruses."

Microsoft cautions that, in addition to the increased potential for viruses, consumers who acquire pirated products could find they are missing key elements, such as user manuals and product identifications, Certificates of Authenticity, end-user license agreements and even software code. Microsoft is continually researching the viability of new anti-piracy technologies, like the hologram on the hub of the Windows 98 CD, to maintain the integrity of the distribution channel and reduce the costs of piracy.

Microsoft encourages consumers to become familiar with the warning signs that can help them identify counterfeit or illegal software.

• Prices that are "too good to be true." These may indicate counterfeit product, or product that has been misdirected, such as product authorized for distribution only to educational institutions but is being offered to the general public.
• Back-up disks or CD-ROMs with handwritten labels, or components that appear to be of inferior quality
• Manuals that appear to be photocopied or are of inferior quality
• Products marked with a phrase, such as "For distribution with a new PC only," "Special CD for licensed customers only," "Not for retail or OEM distribution" or "Academic price - not for use in a commercial environment," that does not describe the transaction

In addition, when users acquire a new computer system, it should include operating system software. If that software is the Microsoft Windows 98 operating system, it should be accompanied by a user manual that incorporates a Certificate of Authenticity as the cover. The customer will also receive a CD-ROM with the software program. There must be an end-user license agreement (visible on screen when the program is first run). If any of these elements is missing, the product is suspect.

Customers or resellers with questions about the legitimacy of Microsoft products should contact the Microsoft anti-piracy hot line, toll free, at (800) RU-LEGIT (785-3448), or send e-mail to piracy@microsoft.com. In addition, a list of authorized distributors and details regarding the Original Equipment Manufacturer (OEM) System Builder program is available at http://www.microsoft.com/oem/. Consumers can obtain more information about software piracy by calling the Business Software Alliance anti-piracy hot line at (888) NO-PIRACY (667-4722) or sending e-mail to software@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.

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