Microsoft Files Its First Software Piracy Lawsuits in Indiana

Customers and Resellers Encouraged to Recognize Warning Signs To Avoid Harmful Effects of Piracy

REDMOND, Wash. - May 19, 1999 - Microsoft Corp. today announced that the company has filed its first software piracy lawsuits in Indiana as part of the company's increased commitment to protecting legitimate distributors and customers from the negative effects of software piracy. The suits against six Indiana businesses were also filed to help diminish Indiana's piracy rate, which indicates that one in three copies of software on Indiana desktops is pirated.

"We are confident that we have lost revenue to businesses that intentionally distribute counterfeit software or sell systems with preloaded pirated software," said Sheri Rossi, director of Software Sales at SARCOM, a national technology and business solutions provider with offices in Indianapolis and other major cities throughout the United States. "We appreciate Microsoft protecting businesses that play by the book by taking action against companies which continue to use piracy as a tool to attract customers. Customers are our No. 1 priority at SARCOM, and it is disheartening to see unethical resellers lead customers down the noncompliancy path."

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

Four of the lawsuits in Indiana allege that the defendants distributed counterfeit copies of Microsoft® products to investigators. Three of the complaints allege hard disk loading where unauthorized copies of Microsoft software had been loaded onto the hard drives of computers that the companies sold to investigators.

• The Computer Clubhouse Inc. of Bloomington allegedly distributed a counterfeit copy of the Windows® 95 operating system and counterfeit components of Office Professional 97 (Case No. IP99-0717C-B/S).
• Crown Computers Inc. of Crown Point allegedly hard disk loaded Windows 95 (Case No. 2:99CV 170RL)
• L and L Computers of Seymour allegedly distributed counterfeit components of Office Professional 97 and also allegedly hard disk loaded Office Professional 97 (Case No. NA99 C 86-B/S).
• Mister Micro Inc., dba Mr. Micro, of Indianapolis allegedly distributed a counterfeit Microsoft Mouse and counterfeit components of Office Professional 97 (Case No. IP99-0718C-H/G).
• Syscom Computer of Indianapolis allegedly hard disk loaded Windows 95 and Office Professional 97 (Case No. IP99-0715C-H/G).
• World Central Computers of Richmond allegedly distributed a counterfeit copy of Windows 95 and counterfeit components of Office Professional 97 (Case No. IP99-0716C-D/F).

All the lawsuits were filed in the U.S. District Court for the Southern District of Indiana, except for the Crown Computers Inc. complaint, which was filed in the U.S. District Court for the Northern District of Indiana.

"In addition to impacting the profitability of legal businesses, pirated software can actually cost customers more in the long run," said Jeff Foresman, general manager of the Network Systems Division at VanAusdall Farrar (VAF), an office automation and software solutions provider based in Indianapolis. "It is important that customers are aware of how to detect counterfeit or otherwise illegal software before they acquire it, so they don't end up with viruses or lack the product upgrades or technical support they need."

According to data gathered by the International Planning & Research Corp. of Redmond, Wash., piracy weakened the local economy in Indiana by robbing the state of more than 3,700 jobs and $20 million in state and federal taxes. The state's piracy rate of 33.6 percent is higher than the average of 27 percent for the United States.

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 and resellers 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 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 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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