Microsoft Files Actions Against Five Georgia Businesses For Distribution of Counterfeit Software

Software Piracy Harms Area Businesses, Consumers and Georgia Economy

ATLANTA - Aug. 5, 1999 - Microsoft Corp. today announced the company has filed software piracy lawsuits in the state of Georgia. The lawsuits were filed against five computer resellers in the Atlanta area for allegedly distributing counterfeit software and installing unlicensed software on computers sold to consumers. The lawsuits are part of Microsoft's ongoing efforts to protect legitimate distributors and customers from the negative effects of software piracy and to lessen the impact of software piracy on both state and national economies.

The software industry lost more than $11 billion in revenue to software piracy in 1998, according to a recent Business Software Alliance (BSA) study. Georgia's economy has also suffered serious losses due to software piracy. According to data gathered by International Planning & Research Corp., Georgia lost more than 4,500 jobs and more than $430 million in wages, tax revenues and retail sales in 1997.

"We lose a considerable amount of business each year simply because the distribution of counterfeit software makes it difficult for legitimate software and hardware resellers to compete," said Brett Berto of Concentric Systems, an Alpharetta, Ga.-based system builder. "We applaud Microsoft's continuing legal actions against dishonest resellers, and we appreciate the company's efforts to support legitimate businesses across the country."

"We realize the huge impact that software piracy has on resellers, consumers, and metro Atlanta's and Georgia's economies," said Sam A. Williams, president of the Metro Atlanta Chamber of Commerce. "If we want Georgia's high-tech economy to continue to flourish and contribute to the economic growth both of our state and our region, we must support the software industry in its fight against piracy."

All five lawsuits allege that the defendants distributed counterfeit copies of Microsoft® software to investigators. Two of the cases also allege hard disk loading, the practice of loading unauthorized copies of software onto the hard drives of computers to be sold. The complaints are as follows:

• Atlanta Computers Inc. of Norcross allegedly distributed a counterfeit copy of the Microsoft Windows® 95 operating system, counterfeit components of Office 97 Professional Edition and a counterfeit Microsoft Serial Mouse (Case No. 1:99-cv-1996).
• CompuTime International Inc. of Norcross allegedly distributed counterfeit copies of Windows 95, Windows 98 and Office Professional 97, and allegedly hard disk loaded Windows 98 and Office Professional 97 (Case No. 1:99-cv-1995).
• Microseconds Inc. of Duluth allegedly distributed counterfeit components of Windows 95 and Office Professional 97, and allegedly hard disk loaded Windows 95 (Case No. 1:99-cv-1998).
• Net-Sol Inc. aka Network Solutions aka NSI of Oakwood allegedly distributed counterfeit copies of Windows 98 and Office Professional 97 (Case No. 2:99-cv-0128).
• Tierra Computer Inc. of Doraville allegedly distributed counterfeit copies of Windows 95 and Windows 98 and counterfeit components of Office Professional 97 (Case No.1:99-cv-1997).

All the complaints were filed in the U.S. District Court for the Northern District of Georgia, Atlanta Division, with the exception of Net-Sol Inc., which was filed in the U.S. District Court for the Northern District of Georgia, Gainesville Division.

Most investigations are initiated by tips to the Microsoft anti-piracy hot line from customers or resellers who have obtained suspicious software. Microsoft customarily notifies a company that it is suspected of acting illegally and asks the company to stop the suspected illegal activity. Microsoft then determines whether the suspect company has continued its illegal activity before filing a lawsuit.

"The number of lawsuits we've seen in the past year clearly indicates that there is a significant amount of software piracy occurring in the United States," said Nick Psyhogeos, corporate attorney at Microsoft. "This means that consumers need to be more aware than ever about the risks of obtaining counterfeit software as well as the warning signs to help protect themselves against these risks."

Microsoft cautions that consumers who acquire pirated software could find, in addition to the increased potential for viruses, that such software is missing key elements such as user manuals, product identifications, Certificates of Authenticity, end-user license agreements and even software code. Customers with pirated software are also ineligible for technical support or upgrades. Microsoft continually researches the viability of new anti-piracy technologies, such as the holograms on the hub of Windows 98 and Office 2000 CD-ROMs, 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"
• 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 of inferior quality
• Software 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
• Microsoft OEM Windows 98 or OEM Office 2000 that is not accompanied by a user manual that incorporates a Certificate of Authenticity as the cover, as well as backup media and an end-user license agreement that is visible on-screen when the programs are first run

Customers or resellers with questions about the legitimacy of Microsoft software 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.

About Microsoft

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.

Microsoft and Windows are either registered trademarks or trademarks of Microsoft Corp. in the United States and/or other countries.

Other product and company names herein may be trademarks of their respective owners.

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Laurie Rieger, Waggener Edstrom, (425) 637-9097, laurier@wagged.com

Devin Driggs, Waggener Edstrom, (503) 443-7000, devind@wagged.com

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