Microsoft Takes Action Against Five Resellers in Virginia and West Virginia For Alleged Distribution of Counterfeit Software

Software Piracy Costs the Two States Nearly 6,000 Jobs And More Than One-Quarter of a Billion Dollars in Potential Wages

REDMOND, Wash. - Oct. 20, 1999 - Microsoft Corp. today announced that it has filed software piracy lawsuits against three companies in Virginia and two in West Virginia. The lawsuits, alleging copyright violations and trademark infringements, were filed against businesses in both states for allegedly distributing counterfeit Microsoft® software. The lawsuits aim to protect customers and legitimate distributors from the effects of software piracy.

"Most consumers don't realize that software piracy can directly affect them," said Victor Kellan, president and CEO of LAN Solutions Inc. "Consumers who buy counterfeit software not only forfeit the right to technical support, warranty protection and upgrades, but they also open themselves up to a greater risk of viruses or acquiring software that simply may not work."

Software piracy has a significant impact on state and local economies across the country, as well as throughout the world. In Virginia and West Virginia, piracy cost the states an estimated 5,770 jobs, according to a recent study by International Planning & Research Corp. The study indicates that these unrealized jobs equate to $235 million in lost wages and salaries in Virginia and more than $22 million in West Virginia. Furthermore, the drain on tax revenues from piracy in the two states amounted to $45 million - money that otherwise could have contributed to local and state improvement projects. According to a recent Business Software Alliance (BSA) study, the U.S. 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.

"When just a few local resellers don't play by the rules, a harmful ripple effect spreads out among other resellers, customers and, ultimately, the economy as a whole," said Jennifer Shafer of ComputerLand in Huntington, W.Va. "We are pleased that Microsoft is educating consumers and taking legal action here in West Virginia because the 36 percent piracy rate has made it particularly hard for legitimate resellers to compete."

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, each of the defendants continued to distribute unauthorized Microsoft software even after receiving a written request from Microsoft to stop unlawful activities.

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

Filed in the United States District Court for the Eastern District of Virginia:

• Affinity Computer Technology of Dulles allegedly distributed counterfeit Microsoft Windows® 95 and Office 97 Professional Edition (Case No. CA 99-1565-A).
• Compu-Link Inc. of Virginia Beach allegedly distributed counterfeit Microsoft Mouse and counterfeit components of Office Pro 97 (Case No. 2:99CV1758).
• NCC Computer Systems of Springfield allegedly distributed counterfeit Windows 95 and Office Pro 97 (Case No. CA 99-1564-A).

Filed in the United States District Court for the Northern and Southern Districts of West Virginia:

• Dynamic Solutions LLC of Berkley Springs allegedly distributed counterfeit Windows 95 and counterfeit components of Office Pro 97.
• Fanelli Boys Inc. of Parkersburg allegedly distributed counterfeit Windows 98 and counterfeit components of Office Pro 97.

"Thousands of employers around the country base their businesses on developing great software and delivering it to consumers," said Nick Psyhogeos, Microsoft corporate attorney. "By distributing incomplete, unlicensed software, illegal resellers not only hurt customers but compromise the health of honest businesses up and down the supply chain. Ultimately, the cost of piracy to local and state economies is dramatic."

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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