Microsoft Takes Action Against Nine Companies in Pennsylvania, New York and New Jersey in Continuation of Anti-Piracy Efforts

Understanding Warning Signs Necessary to Avoid Acquisition of Illegal Software

REDMOND, Wash. - April 8, 1999 - Microsoft Corp. officials today announced that the company has filed software piracy lawsuits in Pennsylvania, New York and New Jersey as part of the company's increased commitment to protect legitimate distributors and customers from the negative effects of software piracy. Complaints were filed against nine businesses suspected of illegally distributing counterfeit products and installing unlicensed software on computers sold to consumers.

"As a computer reseller, it is very frustrating to compete for business with merchants who are profiting from distributing illegal products, often to customers who believe that what they are getting is genuine," said Tom Franceski of DJS Marketing Group dba Computer Professionals International.

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 businesses that it suspects them of acting illegally and then determines whether the behavior has continued before filing a lawsuit.

Three businesses in New York, two in Pennsylvania and two in New Jersey allegedly distributed counterfeit copies of Microsoft software to undercover investigators. The complaints are as follows:

• Accucom LLC of Orchard Park, N.Y., allegedly distributed counterfeit copies of the Windows® 95 operating system, Office Professional 97 and an end-user license agreement (Civil Action No. 99-cv-0240 (EF)).
• Griggs Communications of Northfield, N.J., allegedly distributed counterfeit copies of end-user license agreements (Civil Action No. 99-cv-1487 (JBS)).
• L&M Computers of Philadelphia, Pa., allegedly distributed counterfeit copies of Windows 95, Office 95 and Office Professional 97 (Civil Action No. 99-cv-1692 (NS)).
• Laser Computer and Networking Inc. of Pemberton, N.J., allegedly distributed counterfeit and hard-disk-loaded copies of Windows 95 and Office Professional 97 (Civil Action No. 99-cv-1488 (JEI)).
• Liage International Inc. of Garnerville, N.Y., allegedly distributed counterfeit copies of Windows 95 and Office Professional 97 (Civil Action No. 99-cv-2399).
• MA Computers of Great Neck, N.Y., allegedly distributed counterfeit copies of Windows 95, the Windows NT® Server operating system, Windows NT Workstation and Office Professional 97 (Civil Action No. 99-cv-1839).
• R30 Computers of Berwyn, Pa., allegedly distributed counterfeit and hard-disk-loaded copies of Windows 98 and Office Professional 97 (Civil Action No. 99-cv-1631 (JCS)).

"The amount of counterfeit software being distributed in the area should serve as a warning sign to consumers that they need to exercise caution when obtaining software, whether standalone packages or preloaded on computers," said John Bliss, president of the International Anti-Counterfeiting Coalition (IACC), a multinational organization dedicated to combating product counterfeiting. "Prices that seem too good to be true, or documentation that seems incomplete or mismatched, are key warning signs that the product may be illegal. Piracy is obviously a problem in the mid-Atlantic region, and awareness is one of our best defenses."

Two other Pennsylvania lawsuits allege hard disk loading, the practice of loading unauthorized copies of Microsoft software onto the hard drives of computers they sell:

• Camera Sound of Berwyn allegedly hard disk loaded Windows 98 (Civil Action No. 99-cv-1630 (JCJ)).
• SWM Systems of Denver, Pa., allegedly hard disk loaded Windows 95 and Office Professional 97 (Civil Action No. 99-cv-1629 (FVA)).

"We lose a significant amount of business to other so-called legitimate solution organizations that do not respect the legal implications of software copying and distribution," said Dan Rodgers, vice president of professional services at West Chester, Pa.-based StrategicLink Consulting, a business software and network solutions provider. "We see the lawsuits announced today as a positive step toward keeping the industry clean of piracy, which is a major concern especially here in Pennsylvania, New Jersey and New York, where we have a high percentage of literate computer users."

"Software piracy threatens the economic livelihood of every region it touches. Pennsylvania, New York and New Jersey each lost more than half a billion dollars in combined wages, tax revenues and retail sales in 1997," said Nick Psyhogeos, Microsoft corporate attorney. "Unfortunately, many software pirates are fully aware that what they are doing is illegal, but persist in dealing in illicit product despite prior notice and despite the significant risks that they are passing on to consumers."

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 and even software code. Counterfeit product also comes without warranty protection, technical support, or the right to free or discounted upgrades. Microsoft is continually 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.

The company 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 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, 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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