Microsoft Alleges That Four Northern California Companies Distributed Counterfeit Software

Area Businesses and Consumers Invited to Learn How to Guard Against Software Piracy At "Ask, Is It Licensed?" Day

REDMOND, Wash. -- Oct. 15, 1999 - Microsoft Corp. today announced that the company has filed software piracy lawsuits against four Northern California companies. The lawsuits, alleging copyright violations and trademark infringements, were filed against software distributors in the San Francisco, Sacramento and Fresno areas for allegedly distributing counterfeit Microsoft® software. A result of the company's ongoing anti-piracy efforts, the lawsuits are aimed at protecting California's customers and legitimate distributors from the negative effects of software piracy.

In an effort to heighten awareness among Northern California businesses and consumers about intellectual property, proper software licensing and software piracy issues, Microsoft is co-hosting "Ask, Is It Licensed?" Day in San Francisco on Friday, Oct. 15, with Adobe Systems Inc., ASAP Software Inc. and other technology companies. This event is an opportunity for businesses and consumers to learn what they can do to protect themselves against the negative effects of counterfeit software on California businesses and the state's economy. Consumers are encouraged to bring any software they suspect might be counterfeit -- with proof of purchase -- to Justin Herman Plaza, located at Embarcadero Center (across from the ferry terminal) in downtown San Francisco, on Friday, Oct. 15, between 10 a.m. and 2 p.m. Microsoft will have product identification specialists on hand to examine suspect software and help determine whether it is illegal. Information will be provided on proper software licensing and what consumers should do if they have acquired counterfeit software. Local resellers are also available to discuss software asset management. There will be a limited supply of free gifts, so consumers are invited to come early.

"As the center of the high-tech industry, California has been severely affected by software piracy," said Anne Murphy, corporate attorney for Microsoft. "For the software industry to continue making a significant contribution to the economy, it is imperative that businesses work together with consumers and government to fight this growing problem."

According to a recent study by International Planning & Research Corp., software piracy in California has increased at the third-fastest rate in the country, up nearly 8 percentage points from the 1997 rate of 21.8 percent to 29.7 percent in 1998. The study indicates that California's high software piracy rate, which is nearly 5 percent higher than the national average, cost the state 18,344 jobs in 1998 and accounted for more than $1 billion in unrealized wages, salaries and tax revenue -- dramatically higher than any other state.

"It is really distressing to see how much money we lose every year to resellers who sell counterfeit software," said Chuck Page of Acclaim Technology. "We're glad that Microsoft is helping to level the playing field for businesses that obey the law."

In the past two years, counterfeiting has grown dramatically in California and around the world. For Microsoft's fiscal year 1999, the company reported more than 4.3 million units of counterfeit software seized by law enforcement authorities -- nearly five times the amount recovered in 1998. Much of the counterfeit software was recovered in California. In a recent bust in Paramount, Calif., $56 million worth of Microsoft software was found, and eight people were indicted by a federal grand jury.

All of the lawsuits allege that the defendants distributed counterfeit copies of Microsoft software to investigators. The complaints are as follows:

Filed in the United States District Court for the Northern District of California in San Francisco:

• DC Computers of Fremont allegedly distributed counterfeit Office 97 Professional Edition (Case No. C-99-4561 [MEJ]).

Filed in the United States District Court for the Eastern District of California in Sacramento:

• SBI Computer Products Inc. dba Computer Warehouse of Sacramento allegedly distributed counterfeit Office 97 Professional and Microsoft Windows® 98 (Case No. CIV S-99-2014 [LKK DAD]).
• Surplus Stuff of Sacramento allegedly distributed counterfeit Windows 95 and Office 97 Professional (Case No. CIV S-99-2015 [WBS PAN]).

Filed in the United States District Court for the Eastern District of California in Fresno:

• Advanced Technology Distributors Inc. dba Adtech Computers of Ceres allegedly distributed counterfeit Windows 95, Windows 98 and Office 97 Professional (Case No. CIV F 99-6509 [REC SMS]).

Most of the businesses named in the complaints were investigated as a result of tips to the Microsoft anti-piracy hot line. The 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.

Microsoft cautions that consumers who acquire counterfeit software have a higher chance of obtaining viruses, may find that their software lacks key elements -- including software code -- and are not eligible for technical support, upgrades and warranty protection.

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

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.

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