Microsoft Announces 15 Civil Lawsuits in Largest Sweep to Protect Legitimate Software Distributors and Customers in Florida

Company Also Teams With Florida Law Enforcement to Seize Pirated Software

REDMOND, Wash. - April 28, 1999 - Microsoft Corp. today announced that it has filed civil software piracy lawsuits against 15 Florida businesses suspected of illegally distributing counterfeit products and installing unlicensed software on computers sold to consumers. This first major statewide sweep, which includes lawsuits against eight businesses in the Miami and Fort Lauderdale area, three in the Orlando area and four in the Tampa area, is Microsoft's latest attempt to protect legitimate software distributors and customers in Florida. It is also one of the company's largest anti-piracy initiatives in any one state.

These civil actions were concurrent with criminal searches conducted by law enforcement at businesses in both Tampa and Clearwater, Fla., in which allegedly counterfeit Microsoft® software was seized.

On April 26, 1999, the Tampa Police Department and investigators executed a search warrant at the residence of Felix Smud, a reseller suspected of distributing counterfeit Microsoft software, and seized software and sales records allegedly reflecting the distribution of illicit product. The search led to the arrest of two individuals with a third arrest pending. On April 27, the Florida Department of Law Enforcement (FDLE) searched Proline Technologies of Clearwater and found allegedly counterfeit software and evidence of counterfeit software distribution. The investigations against both companies are ongoing.

"We're finding that there is a substantial increase of technology-related crime in the state," said Phil Ramer, director of the Florida Department of Law Enforcement Office of Statewide Intelligence, which is establishing a center to assist in solving computer crimes. "Organized crime rings have begun to include software piracy in their roster of other illegal activities because of the large sums of money that they stand to make as well as relatively minimal penalties. This week's search resulted from our criminal investigations of dealers who are suspected of distributing counterfeit software."

Such illicit activity takes its toll on the industry and the Florida economy at large. Economic data recently released by Microsoft indicates that in 1997 software piracy caused the loss of more than 7,000 jobs and roughly $490 million in combined wages, tax revenues and retail sales in Florida.

"I lose about one-fifth of my annual software business to dishonest resellers who distribute illegal product and set up customers with systems that ultimately can fail," said Steven Thomas, vice president and general manager of Tampa-based Bay Resources, a leading Florida systems integrator. "We applaud Microsoft's actions to reduce the illegal distribution of software that threatens the livelihood of legitimate resellers in Florida."

In most cases, investigations are initiated when resellers or customers who have obtained suspicious product call the Microsoft anti-piracy hotline. In some of these cases, the company has received information from customers or resellers in Latin America that have obtained suspicious product from exporters in Florida. The civil cases brought by Microsoft include businesses that allegedly distributed counterfeit copies of Microsoft software to undercover investigators and businesses that allegedly loaded unauthorized copies of Microsoft software onto the hard drives of computers that they sell. The complaints are as follows:

• ACL Computers of Hialeah allegedly distributed counterfeit copies of the Windows® 95 operating system (Civil Action No. 99-1196-CIV-Ungaro-Benages).Atlantic Computer Center of Fort Lauderdale allegedly hard disk loaded Windows 98 and Office Professional 97 (Civil Action No. 99-6527-CIV-Moreno).
• Azkegen Computers Inc. of Sunrise allegedly hard disk loaded Windows 98 and Office Professional 97 (Civil Action No99-6526-CIV-Graham).
• BTI Computers Inc. of Miami allegedly distributed counterfeit copies of Windows 95, the Windows NT® operating system and Office Professional 97 (Civil Action No. 99-1199-CIV-Moreno).
• Chip Tech. of Hollywood allegedly distributed counterfeit copies of Office Professional 97 (Civil Action No. 99-6530-CIV-Ferguson).
• Computer Parts & Accessories of Miami allegedly distributed counterfeit copies of Windows 95 and Office Professional 97 (Civil Action No. 99-1195-CIV-Moore).
• Computer Universe Tech. of North Miami Beach allegedly hard disk loaded Windows 98 (Civil Action No. 99-1193-CIV-Moreno).
• Delta International Computers of Tampa allegedly distributed counterfeit copies of Windows 95 and Office Professional 97 (Civil Action No. 99-70-CIV-25-B).
• EZ Software Distributors of Dania allegedly distributed counterfeit copies of Office Professional 97 (Civil Action No. 99-6525-CIV-DiMitrouleas).
• Jasmine Computer Co. of Orlando allegedly hard disk loaded Windows 98 and Office Professional 97, and allegedly distributed counterfeit copies of Office Professional 97 (Civil Action No. 99-503-CIV-ORL-19A).
• Mu Computers Corp. of Winter Park allegedly distributed counterfeit copies of Office Professional 97 (Civil Action No. 99-502-CIV-ORL-18B).
• Natcom of Orlando allegedly hard disk loaded Windows 98 and Office Professional 97, and allegedly distributed counterfeit copies of Office Professional 97 (Civil Action No. 99-504-CIV-ORL-22B).
• R. M. S. International of Tampa allegedly distributed counterfeit copies of Office Professional 97 (Civil Action No. 99-968-CIV-T-17-C)
• Salco International of Clearwater allegedly distributed counterfeit copies of
  Windows 95, Windows 98 and Office Professional 97 (Civil Action No. 99-973-CIV-T-23 (B)).
• Tech Direct of Clearwater allegedly distributed counterfeit copies of Office Professional 97 (Civil Action No. 99-969-CIV-T-23-C).

"Florida is a gateway to Latin America and we are concerned that counterfeit product is easily exported to Latin American countries, harming a large number of consumers and honest businesses," said Tony Viera, Microsoft corporate attorney with responsibility for anti-piracy efforts in Latin America. "The overall regional piracy rate in Latin America is 62 percent, which already seriously inhibits Latin American economies from reaping the benefits of a strong technology sector. We hope that these efforts will help diminish the many negative effects software piracy has had on the economy and people of Latin America."

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.

"It's astounding that many software pirates disregard the significant risks that they pass on to consumers," said Nick Psyhogeos, Microsoft corporate attorney. "The lawsuits we've brought today will require these resellers to shoulder some of the responsibility for the potential harm they've brought to consumers and honest resellers in the area."

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.

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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