Microsoft Files Actions Against Five New York Businesses for Allegedly Distributing Counterfeit Software

New York State Has Third-Highest Wage and Tax Losses Due to Software Piracy

REDMOND, Wash. - Oct. 6, 1999 - Microsoft Corp. today announced it has filed software piracy lawsuits against five New York companies. The lawsuits, alleging copyright violations and trademark infringements, were filed against software distributors in Manhattan and Long Island for allegedly distributing counterfeit Microsoft® software and installing unlicensed software on computers sold to consumers. The lawsuits are aimed at protecting New York's customers and legitimate distributors from the negative effects of software piracy.

Software piracy has a significant impact on state and local economies across the country, as well as throughout the world. According to a recent study by International Planning & Research Corp., in 1998 New York lost over $386 million in combined wage, salary and tax revenue to software piracy. The state lost more than 7,500 jobs because of the severe impact of piracy, as well as more than $49 million in tax revenue - money that otherwise could have contributed to local and state improvement projects. According to a recent Business Software Alliance (BSA) study, the United States' software 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.

"It's becoming more and more difficult for us to compete with counterfeit software vendors and the artificial prices they offer," said Robert Morse, president of Morse Micro Solutions Inc. "We commend Microsoft for watching out for small businesses like mine and taking these actions to help honest resellers be competitive in a tough marketplace."

Most of the businesses named in the complaints were investigated as a result of tips to the Microsoft anti-piracy hot line. These tips are typically phoned in from honest resellers or from consumers who acquire 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.

Three of the lawsuits allege that the defendants distributed counterfeit copies of Microsoft software or software components to investigators and/or customers. Four of the cases also allege that the defendants distributed either counterfeit end-user license agreements or computer systems after hard disk loading, the practice of loading unauthorized copies of software onto the hard drives of computers that are sold to customers. The complaints are as follows:

Filed in the United States District Court for the Southern District of New York:

• Alliance Technology of Manhattan allegedly hard disk loaded the Microsoft Windows® 98 operating system (Case No. 99 Civ. 10254).

Filed in the United States District Court for the Eastern District of New York:

• 1 Stop Camera & Computers of Great Neck allegedly distributed counterfeit Windows 98 and counterfeit components of Office 97 Professional Edition (Case No. 99 Civ. 6303).
• Core Computer of Cedarhurst allegedly distributed counterfeit end-user license agreements and counterfeit components of Office 97 Professional (Case No. 99 Civ. 6292).
• Distinctive Business Solutions of Great Neck allegedly distributed counterfeit end-user license agreements and counterfeit Office 97 Professional (Case No. 99 Civ. 6310).
• Superior Computer Outlet of Hempstead allegedly hard disk loaded Windows 95 (Case No. 99 Civ. 6309).

"Consumers need to be aware that if they see software offered at a price that seems too good to be true, it probably is," said Nick Psyhogeos, Microsoft corporate attorney. "In the long run, pirated software can cost them a lot more by increasing the potential for obtaining viruses, lacking key elements including software code, and making users 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 focused on providing access to technology for disadvantaged communities.

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

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