Microsoft Files Its First Piracy Lawsuits in Kansas, Continues Anti-Piracy Efforts in Missouri

Lawsuits Intended to Protect Honest Resellers and Consumers From Harmful Effects of Piracy

REDMOND, Wash. - April 14, 1999 - Microsoft Corp. officials today announced that the company has filed its first software piracy lawsuits in Kansas and has filed an additional lawsuit in Missouri as part of the company's continued commitment to protect legitimate distributors and customers from the negative effects of software piracy. The suits were filed against four businesses suspected of distributing counterfeit software to undercover investigators.

"Businesses, government offices, school districts and other organizations that use competitive bidding are particularly at risk of software piracy because they are usually looking for the lowest-priced systems," said Dave Allen, president of DASH, a wholesale distributor and system builder based in Kansas City. "These organizations using the bidding process should be cautious of resellers that are able to offer computer systems at low prices. They may end up with counterfeit software that can expose their organizations to legal problems and jeopardize their ability to receive future upgrades and support from the software manufacturer."

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.

The three businesses in Kansas allegedly distributed counterfeit software to undercover investigators. The suits were filed in the U.S. District Court for the District of Kansas.

• Elite Technology Inc. of Kansas City allegedly distributed counterfeit components of the Microsoft® Windows® 95 operating system and Office Professional 97 (Case No. 99-2153-KHV).
• 101 Computing Inc. dba A Plus Computers of Lenexa allegedly distributed counterfeit copies of Windows 95 and Office Professional 97 (Case No. 99-2151-KHV).
• Telectronics of Overland Park allegedly distributed counterfeit copies of Windows 95 and Office Professional 97 (Case No. 99-2152-JWL).

The Missouri complaint alleges that Payless Computers Inc. of Kansas City, Mo., distributed counterfeit components of Windows 95, the Windows NT® Server operating system and Office Professional 97 to an undercover investigator (Case No. 99-0362-CV-W-BD). The complaint was filed in the U.S. District Court for the Western District of Missouri.

"Software pirates who bypass normal and legal means of acquiring software rob our economy and legitimate software distributors of a significant number of jobs and substantial retail and tax revenues," said Nick Psyhogeos, Microsoft corporate attorney. "The lawsuits announced today affirm Microsoft's commitment to protecting these honest software distributors and preventing unsuspecting consumers from acquiring software that may be riddled with viruses and lack important documentation."

According to data gathered by International Planning and Research Corp. of Redmond, both Missouri and Kansas suffered serious losses to their local economies as a result of software piracy. Missouri lost $200 million in combined lost wages, tax revenues and retail sales in 1997, including more than $6 million in state taxes that instead could have contributed to local and state improvement projects. Similarly, Kansas lost more than $90 million to software piracy, including $4 million in state taxes.

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, 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 are encouraged 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 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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