Microsoft Takes Action Against Five New Jersey Businesses For Distributing Pirated Software

Company Encourages Customers and Resellers to Look for Warning Signs That Help Avoid Harmful Effects of Piracy

REDMOND, Wash. - Sept. 8, 1999 - Microsoft Corp. today announced that the company has filed software piracy lawsuits in New Jersey as part of its 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 lawsuits were filed against five computer resellers in the state for allegedly distributing counterfeit Microsoft® software and installing unlicensed software on computers sold to consumers.

According to a recent study by International Planning and Research, despite the fact that New Jersey's piracy rate decreased 3 percent from 1997 to 1998, software piracy cost New Jersey more than 4,200 jobs and more than $669 million in combined wages, retail sales and tax revenue in 1998. According to a recent Business Software Alliance (BSA) study, the United States' piracy rate of 25 percent cost the national economy 109,000 jobs, $4.5 billion in wages and nearly $1 billion in lost taxes during the same year.

"Pirated software threatens our livelihoods and creates an uneven playing field that undermines the competitive abilities of businesses that obey the law," said Ken Lukowiak, sales manager for Matthijssen Inc., a family-owned business in East Hanover that provides full-service office and computer solutions. "We're pleased that Microsoft is undertaking these investigations, not only on behalf of honest distributors such as us, but also on behalf of consumers who are unwittingly being victimized by suppliers of counterfeit software."

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

Filed in the United States District Court for the District of New Jersey, Newark Vicinage:

• D & F Computers of Roselle Park allegedly distributed counterfeit components of Office 97 Professional Edition and allegedly hard disk loaded Office 97 Professional (Case No. 99-cv-4169 (WHW)).
• PC Warehouse of East Hanover allegedly distributed counterfeit components of Office 97 Professional and allegedly hard disk loaded Office 97 Professional (Case No. 99-cv-4171 (NHP)).
• JBS Systems of Linden allegedly distributed counterfeit components of Office 97 Professional and allegedly hard disk loaded Office 97 Professional (Case No. 99-cv-4170 (NHP)).
• Wayne Computer of Wayne allegedly distributed counterfeit components of Office 97 Professional and allegedly hard disk loaded Office 97 Professional (Case No. 99-cv-4173 (MTB)).

Filed in the United States District Court for the District of New Jersey, Trenton Vicinage:

• STM Robotics of Hamilton allegedly distributed counterfeit copies of the Microsoft Windows® 98 operating system and counterfeit components of Windows 95 and Office Professional 97 (Case No. 99-cv-4159 (GEB)).

Most of the businesses named in the complaints were investigated as a result of tips to the Microsoft anti-piracy hot line, which typically are phoned in from honest resellers or from consumers who receive suspicious products. According to allegations in the complaints, each of the defendants continued to distribute unauthorized Microsoft software even after receiving a written request from Microsoft to stop unlawful activities.

"Pirated software can pose a serious threat to consumers who acquire it," said Nick Psyhogeos, corporate attorney at Microsoft. "It exposes consumers to an increased potential for obtaining viruses, and it could be missing key elements such as user manuals, Certificates of Authenticity, end user license agreements and even software code. It also makes the consumer ineligible for valuable technical support, warranty protection and upgrades."

Microsoft has announced that, in addition to its other community affairs activities, it plans to donate an estimated $25 million over the next five years - half of its anticipated software piracy recoveries during that time period - to nonprofit organizations worldwide. These funds will be donated to a variety of organizations focused on providing access to technology for disadvantaged communities. In 1998, software piracy caused losses amounting to nearly $1 billion in taxes and 109,000 jobs in the United States.

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"
• 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 incorporating 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 by 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 software 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.

Note to editors: If you are interested in viewing additional information on Microsoft, please visit the Microsoft Web page at http://www.microsoft.com/presspass/ on Microsoft's corporate information pages.