Microsoft Files Software Piracy Lawsuits Against Five Houston-Based Resellers

Commitment to Protect Customers and Resellers Reinforced As Crackdown Against Counterfeit Software Continues

HOUSTON - Aug. 5, 1999 - Microsoft Corp. today announced that the company has filed lawsuits against five resellers in Houston for allegedly distributing counterfeit software and installing unlicensed software on computers - a practice called hard disk loading.

The five lawsuits represent Microsoft's continued efforts to protect consumers and legitimate resellers and to lessen the negative effects of software piracy on the Texas economy. According to Microsoft, in 1997 software piracy cost Texas more than 10,200 jobs, translating into $340 million in wage and salary losses. The state also lost $44 million in tax revenue that otherwise could have contributed to local and state improvement projects.

"It's honest resellers, such as myself, and consumers who are most impacted by the illegal distribution of software by dishonest resellers," said Russell Duckworth, president of infoQuest in Garland, Texas. "We are grateful to companies like Microsoft that are making a concerted effort to stop the people behind this."

"Microsoft is listening to resellers and consumers. We receive and follow up on thousands of software piracy leads each month that we receive through our anti-piracy hot line and e-mail," said Janice Block, corporate attorney at Microsoft. "The reality is that pirated software results in lost revenues for honest resellers and gives illegal operators an unfair competitive advantage vis-à-vis companies that obey the law. Moreover, the inferior quality of counterfeits tarnishes the channel and the software vendor's image."

Most investigations are initiated by tips called in to the Microsoft anti-piracy hot line by customers or other 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 illegal activity. Microsoft then determines whether the suspect company has continued its illegal activity before filing a lawsuit. The complaints, which were filed in the U.S. District Court for the Southern District of Texas, allege hard disk loading and/or the distribution of counterfeit software to investigators, as follows:

• Copy & Computer Master of Houston allegedly distributed counterfeit copies of the Microsoft® Windows® 95 operating system and allegedly hard disk loaded Office 97 Professional Edition and Windows 95 (Case No. H-99-2481).
• Datamini Systems (USA) Inc. allegedly distributed counterfeit components of Office Pro 97 and allegedly hard disk loaded Windows 95 and Office Pro 97 (Case No. H-99-2480).
• Detek Computer Services Inc. allegedly distributed counterfeit Windows 98 and allegedly hard disk loaded Windows 98 (Case No. H-99-2479).
• Multi-Tech Group Inc. allegedly distributed counterfeit Windows 98 and counterfeit components of Office Pro 97 (Case No. H-99-2477).
• Sunny World Inc. allegedly distributed counterfeit Windows 98 and counterfeit components of Office Pro 97 (Case No. H-99-2478).

Microsoft cautions that consumers who acquire pirated software could find, in addition to the increased potential for viruses, that they are missing key elements such as user manuals and 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.

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 software or software that has been misdirected, such as software authorized for distribution only to educational institutions that is being offered to the general public.
• Backup 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.

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

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

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