Microsoft Files Its First Software Piracy Claims in Utah

State's High Software Piracy Rate Negatively Affects Consumers And the Software Distribution Channel

REDMOND, Wash. - March 16, 1999 - Microsoft Corp. officials today announced that the company has filed its first software piracy lawsuits in Utah. The claims against five Northern Utah computer resellers are part of an ongoing effort to help protect customers and legitimate distributors in the state and to decrease the state's high piracy rate of 36.3 percent, which is significantly higher than the national average of 27 percent. Four of the suits were filed against companies that allegedly distributed counterfeit products and a fifth suit was filed against a Salt Lake company that allegedly installed infringing software on hard drives of computers they sold.

"In addition to hampering the economy, software piracy damages the integrity of intellectual property, one of the keys to the success of Utah's software enterprises," said David Bradford, general counsel and senior vice president at Novell Corp. "For the software industry to continue making a significant contribution to the global economy, it is imperative that businesses work together with consumers and government to fight software piracy."

"When more than one in three copies of software on Utah's computers are illegal, it is obviously hampering my ability to distribute legitimate software to customers," said Cal Callanan, Utah branch manager for SoftChoice, a leading provider of information technology products and information services for small and mid-size businesses. "I'm thrilled that Microsoft and the state's software industry are stepping up anti-piracy efforts to help ensure that the channel is honest, so we don't have to compete with companies doing business illegally."

The lawsuits allege copyright violations and trademark infringement under federal statutes and were filed in the U.S. District Court for the District of Utah, Central Division. Microsoft often investigates companies as a result of tips to the anti-piracy hot line by customers who obtained suspicious products or by other resellers. In civil cases, Microsoft customarily notifies the defendants that it suspects them of acting illegally and then determines whether this behavior has continued before filing a lawsuit.

The first four complaints allege that the following defendants distributed counterfeit copies of Office Professional 97 and the Microsoft® Windows® 95 operating system to undercover investigators:

• ACT Computing of West Valley City (Civil Action No. 2:99CV 0163G).
• Computer Recyclers of Orem (Civil Action No. 2:99CV 0160C).
• Echo Communications Inc. of Logan (Civil Action No. 1:99CV 33K).
• United Computer Service of Logan (Civil Action No. 1:99CV 32K).

The fifth complaint alleges that Light Speed Computers Inc. (2:99CV 0161C) of Salt Lake City hard disk loaded copies of Windows 98 and Office Professional 97 onto computers they distributed to an undercover investigator. Consumers who acquire pirated products could find they are missing key elements, such as user manuals and product identifications, Certificates of Authenticity and even software code. Customers may also find that pirated software contains viruses. Microsoft is constantly researching the viability of new anti-piracy technologies that create more value for customers, while maintaining the integrity of the distribution channel and reducing the costs of piracy.

"Customers should be aware of software distributed at a price that seems too good to be true," said Tony Vidal, general manager of CompUSA Inc., Salt Lake City, the nation's leading retailer and reseller of personal computer-related products and services. "Pirated products can actually cost more in the long run, not only because of the potential for bugs but because support and service will be difficult to obtain. However, customers can protect themselves from the risks associated with illegal software by shopping smart and by taking licensing seriously."

Microsoft encourages consumers to become familiar with the following 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 will 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 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 also 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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