Microsoft Files Suits Against Five Minnesota Resellers for Allegedly Distributing Counterfeit Software

Minnesota Lost More Than $140 Million in Wages and Taxes Due to Software Piracy

MINNEAPOLIS - Sept. 23, 1999 - At a press conference today at the IDS Center in Minneapolis, officials of Microsoft Corp. announced that the company has taken legal action to stop five Minnesota computer resellers from allegedly distributing counterfeit Microsoft® software and/or hardware. The lawsuits, alleging copyright violations and trademark infringements, are part of the company's ongoing work to protect consumers and legitimate software distributors from the harmful effects of software piracy and to reduce the toll it takes on the economy. Consumers who obtain counterfeit software have an increased potential for obtaining viruses, often find that their software is missing key elements - including software code - and are ineligible for valuable technical support, warranty protection and upgrades.

Nationwide, software piracy is having a significant impact on state and local economies. According to a recent study by International Planning & Research Corp., Minnesota lost 3,088 jobs to software piracy in 1998, equating to more than $115 million in wages and salaries. In addition, piracy also cost Minnesota more than $25 million in taxes during 1998.

"It's staggering to think about how much software piracy has cost Minnesota's economy," said Bruce Nustad, vice president of the Minnesota High Tech Association. "Dealers who fail to run an honest business are hurting all of us - taking away from our state's economic prosperity and people's livelihoods."

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 suspected company has continued its illegal activity before filing a lawsuit. According to allegations in the complaints, each of the defendants continued to distribute unauthorized Microsoft software even after receiving this written request from Microsoft asking them to stop unlawful activities.

All of the complaints allege the distribution of counterfeit software or software components to investigators and/or customers, and two of the suits also allege that the defendants distributed counterfeit mouse products to investigators and/or consumers. The following complaints were filed in the U.S. District Court for the District of Minnesota:

• Accel Computer Inc. of New Hope allegedly distributed counterfeit versions of a Microsoft mouse and components of Office 97 Professional Edition (Case No. 9-CV-1433 ADM/AJB).
• Applied Microcomputer Solutions Inc. of Plymouth allegedly distributed counterfeit versions of a Microsoft mouse and components of Office Professional 97 (Case No. 9-CV-1434 PAM/JGL).
• Blue Star Marketing Inc. of Columbia Heights allegedly distributed counterfeit components of Office Professional 97 and Windows® 95 (Case No. 9-CV- 1436 JRT/FLN).
• Computer Parts & Peripherals of Eden Prairie allegedly distributed counterfeit Office Professional 97 (Case No. 9-CV-1435 MJD/JGL).
• Que Computers Inc. of Minneapolis allegedly distributed counterfeit components of Office Professional 97 (Case No. 9-CV-1437 DWF/AJB).

"Computer resellers that distribute bogus software seriously hurt my business," said Dan Sundin, chief technology officer of All Systems Go. "Our customer relationships are adversely affected in numerous ways, including unrealistic pricing and service expectations. Once customers find that they cannot get the support they need because they received flawed or incomplete software and hardware, they invariably end up in my shop seeking advice. We're thankful that Microsoft is taking steps to stop these businesses from distributing counterfeit software."

"Protecting our partners in the distribution channel is one reason we're putting this effort into tracking down companies that illegally reproduce and sell our software products," said Janice Block, Microsoft corporate attorney. "Honest resellers that provide people with legitimate software and great service need a fair, competitive playing field in order to survive and prosper."

Microsoft has announced that, in addition to its other community affairs activities, it expects 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 focused on providing access to technology for disadvantaged communities. In 1998, software piracy caused losses to the U.S. economy amounting to nearly $1 billion in taxes and 109,000 jobs.

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 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.

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.