Microsoft Attempts to Reduce Widespread Software Piracy in Nevada

Company Files Suits Against Five Resellers in State With Country's Third-Highest Piracy Rate

REDMOND, Wash. - Sept. 29, 1999 - Microsoft Corp. today announced that the company has filed software piracy lawsuits in Nevada as part of its ongoing efforts to protect consumers and legitimate distributors and customers from the detrimental effects of software piracy and to lessen the impact of software piracy on both state and national economies. The lawsuits were filed against two computer resellers doing business in Las Vegas for allegedly distributing counterfeit Microsoft® software and/or installing unlicensed software on computers sold to consumers.

A study of software piracy across the United States by International Planning & Research Corp. reveals that the piracy rate in Nevada is on the rise, up 5 percent in 1998 to 45 percent - the third-highest in the country. Software piracy not only harms the U.S. economy but also has a dramatic impact on state and local economies. According to the same study, this illegal activity potentially cost Nevada 822 jobs in 1998, equating to approximately $25 million in lost wages and salaries. Software piracy in Nevada also was responsible for the loss of more than $7 million in taxes in 1998.

"Living in a state where almost half of the software used is illegal makes it very difficult for me to maintain a healthy business. I'm up against resellers who are illegally pricing honest resellers out of the market," said Rick Pogue, business development manager at Las Vegas-based Software Plus. "Microsoft is doing a great service by pursuing these resellers, who hurt my company as well as consumers by selling incomplete and illegitimate software."

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.

One of the lawsuits alleges that the defendants distributed counterfeit copies of Microsoft software to investigators. The other case alleges the distribution of a computer system after hard disk loading, the practice of loading unauthorized copies of software onto the hard drives of computers that are sold to customers. Microsoft filed the following complaints in the U.S. District Court for the District of Nevada:

• Compulink Inc., a k a Trenlink, of Las Vegas allegedly hard disk loaded the Microsoft Windows® 98 operating system (Case No. CV-S-99-1354-PMP (RJJ)).
• Software Surplus, doing business in Las Vegas, allegedly distributed counterfeit Office Pro 97 (Case No. CV-S-99-1355-HDM (RJJ)).

"Counterfeiting and illegally selling software is a disservice to consumers and threatens the health of businesses throughout the supply chain," said Anne Murphy, Microsoft corporate attorney. "A state like Nevada - which has such a high rate of software piracy - can only gain by cracking down on software piracy. Microsoft is committed to helping Nevada fight this serious problem in order to alleviate the harmful effects of piracy to Nevada's economy, its citizens and businesses."

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

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