Microsoft Charges Five Louisiana Resellers With Software Counterfeiting

Company Attempts to Curb Piracy in State Where More Than 42 Percent Of Software Is Illegal

REDMOND, Wash. - Oct. 6, 1999 - Microsoft Corp. today filed lawsuits against five Louisiana businesses as part of its nationwide effort to reduce software piracy and its detrimental effects on consumers, legitimate distributors and state and national economies. The lawsuits charge that the resellers distributed counterfeit versions of Microsoft® Office and the Microsoft Windows® operating system.

A study of software piracy across the United States by International Planning & Research Corp. reveals that the piracy rate in Louisiana has been increasing, up nearly 4 percent in 1998 to 42 percent - the fourth highest in the country. Software piracy not only depresses the U.S. economy as a whole but also has a dramatic impact on state and local economies. According to the study, this illegal activity potentially cost Louisiana 1,837 jobs in 1998, equating to more than $44 million in lost wages and salaries. Software piracy in the state also was responsible for the loss of more than $7 million in taxes in 1998.

"Many customers don't understand that counterfeit software can cost them more in the end by increasing their potential for obtaining viruses, lacking key elements including software code, and making them ineligible for valuable technical support, warranty protection and upgrades," said Steve Walkup, president of Intelligent Technology Corp. "We often find that customers don't even know that they didn't receive legal licenses from the computer suppliers who - as a result - have placed them in an illegal position. We support Microsoft's decision to protect consumers and businesses by filing these lawsuits in order to help stop software piracy."

"Software piracy undermines the competitive ability of honest resellers and causes us to lose significant amounts of money each year to businesses that distribute counterfeit items," said Dwayne Farbe, president of Bellwether Technology. "We see today's lawsuits as a positive step toward protecting businesses that obey the law, and ultimately helping to strengthen the local technology industry and state economy."

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.

Microsoft filed the following complaints in the U.S. District Court for the Eastern, Middle and Western Districts of Louisiana alleging the distribution of counterfeit software or components to investigators and/or customers:

• Advanced Computer and Communications Inc. dba Computer Heaven of Baton Rouge allegedly distributed counterfeit Office 97 Professional Edition (Middle District, Case No. 99-822).
• Base Distributors Inc. of Kenner allegedly distributed counterfeit versions of Windows 95 and Windows 98, and counterfeit components of Office 97 Professional Edition (Eastern District, Case No. 99-3014).
• Capital PC Warehouse Inc. a k a PC Warehouse of Baton Rouge allegedly distributed counterfeit Office 97 Professional (Middle District, Case No. 99-821).
• Computer Networking Specialists Inc. of New Orleans allegedly distributed counterfeit Office 97 Professional (Eastern District, Case No. 99-3015).
• Full Speed Services Inc. a k a Full Speed Computers of New Llano allegedly distributed counterfeit components of Office 97 Professional and counterfeit Windows 98 (Western District, Case No. CV99-1817).

"Software piracy has reached critical proportions, not just in Louisiana but throughout the country," said Janice Block, Microsoft corporate attorney. "Honest Louisiana resellers are forced to compete in a market where prices are artificially low because two out of five business software applications are counterfeit, and consumers are being fooled into buying counterfeit software that could cause numerous problems for them down the road."

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.

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