Microsoft Files Software Piracy Lawsuits on Behalf of Customers And Resellers in Maryland and Virginia

Prevalence of Piracy in the Area Underscores Need for Recognizing Warning Signs Before Acquiring Software

REDMOND, Wash. - April 6, 1999 - Microsoft Corp. officials today announced that the company has filed nine software piracy lawsuits in Maryland and Virginia as a result of the company's ongoing anti-piracy investigations. The lawsuits are intended to protect the region's legitimate distributors and customers from the negative effects of software piracy as well as to lessen the impact on the Maryland and Virginia economies, which have already lost more than $1 billion dollars and 8,300 jobs to piracy.

"The number of lawsuits in the areas where I do business clearly indicates that consumers need to be more aware than ever about obtaining counterfeit and pirated software," said solution provider Jim Townsend, president of Information Strategies and member of the national Microsoft Partner Advisory Council. "This will not only ensure that they obtain complete, working software, but it will help lessen the amount of illegal distribution that severely hampers the ability of legitimate resellers to thrive in Maryland and Virginia."

"The software industry is one of the most significant drivers of growth in the economy. Intellectual property rights are the lifeblood of this industry and must be protected from the counterfeiters and other perpetrators of software piracy," said John Bliss, president of the International AntiCounterfeiting Coalition, a multinational organization dedicated to combating product counterfeiting. "Cooperation among government, legal and business communities as well as consumers is critical in the fight to curtail this dangerous threat to innovation and prosperity."

Seven lawsuits against Maryland companies were filed in the U.S. District Court for the District of Maryland. Complaints against four of the companies allege that the defendants distributed counterfeit copies of Microsoft® software to undercover investigators:

• Datasoftworks Inc. of Beltsville allegedly distributed counterfeit copies of the Windows® 95 operating system and Office Professional 97 (Civil Action No.
  AMD-99-886).
• Halifax Technology Services Co. of Hanover allegedly distributed counterfeit copies of Windows 95 and Office Professional 97 (Civil Action No. AMD-99-892).
• Micro General Inc. of College Park allegedly distributed counterfeit copies of Windows 95 and the Microsoft Mouse (Civil Action No. AMD-99-884).
• Smart Computer Systems Corp. of Baltimore allegedly distributed counterfeit copies of Windows 95 and the Microsoft Mouse (Civil Action No. AMD-99-893).

In addition, the three remaining Maryland complaints allege the distribution of counterfeit software to undercover investigators as well as hard disk loading, a practice by which computer system builders sell PCs with illicit software preinstalled. The complaints are as follows:

• Aerocom Computer Technology LC of Clinton allegedly distributed counterfeit copies of Windows 98 and Office Professional 97 and allegedly hard disk loaded Windows 98 and Office Professional 97 onto computers they sold (Civil Action No. AMD-99-885).
• Alpha Computers of Baltimore allegedly distributed counterfeit copies of Office Professional 97 and the Microsoft Mouse and allegedly hard disk loaded Office Professional 97 (Civil Action No. AMD-99-891).
• Global Computer Systems Inc. of Gaitherburg allegedly distributed counterfeit Office Professional 97 and allegedly hard-disk-loaded Office Professional 97. The company also allegedly violated a previous settlement agreement with Microsoft, whereby it agreed not to infringe Microsoft trademarks and copyrights (Civil Action No.
  AMD-99-894).

"We've lost a significant number of sales to disreputable systems builders," said Chris Maier, director of sales, CMC Computers Inc., a Westminster-based systems builder. "We fully support Microsoft in its decision to take action against rogue companies and appreciate its efforts to protect and support legitimate businesses."

Two Virginia companies also allegedly distributed counterfeit Microsoft products to undercover investigators:

• Natco Terminal Support Inc. of Lorton allegedly distributed counterfeit Windows 95 (Civil Action No. 99-447-A). This case was filed in the U.S. District Court for the Eastern District of Virginia.
• Netcom Computer Technology of Springfield allegedly distributed counterfeit copies of Windows 95 and the Microsoft Mouse as well as a counterfeit End User License Agreement for Office Professional 97 (Civil Action No. 99-446-A). This case was filed in the U.S. District Court for the Eastern District of Virginia.

In most cases, investigations are initiated by tips called in to the Microsoft anti-piracy hot line by customers who have obtained suspicious products or other resellers. Microsoft customarily notifies the defendants that it suspects them of acting illegally and then determines whether the behavior has continued before filing a lawsuit.

"It's unfortunate that in more than one instance, the infringing parties are repeat offenders and have had ample warning to alter their business practices," said Nick Psyhogeos, Microsoft corporate attorney. "In light of the serious risks to consumers in using pirated software, resellers must take responsibility for ensuring that they pass along legitimate software to their customers."

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 continually researches the viability of new anti-piracy technologies, such as the hologram on the hub of the Windows 98 CD, to maintain the integrity of the distribution channel and reduce the costs of piracy.

Consumers should 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 are 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.

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