Microsoft Acts to Curb Software Piracy in Ohio

Company Files Lawsuits Against Five Resellers in Ohio, Where Nearly 20 Percent of Distributed Software Is Illegal

CLEVELAND - Oct. 21, 1999 - Microsoft Corp. today announced that it has filed lawsuits against five computer resellers in Ohio. The lawsuits are part of Microsoft's ongoing efforts to protect legitimate software distributors and consumers from the negative effects of software piracy and to lessen the impact of software piracy on both state and national economies. The lawsuits allege that the companies distributed counterfeit Microsoft® software and/or installed unlicensed software on computers.

According to a recent study by International Planning & Research Corp., software piracy cost Ohio 5,992 jobs in 1998, which equates to over $180 million in unrealized wages and salaries. Lost tax revenues due to piracy amounted to more than $25 million - funds that otherwise could have contributed to state and local improvement projects.

"A large percentage of the software distributed in this state is illegal, and the effect on our business is severe," said Thomas L. Sample, director of technology at MicroAge/Smart Solutions Inc. "We applaud the software industry and local law enforcement for cracking down on this kind of intellectual property theft. Not only does software piracy hurt sales in our business, but it has a broad impact on small and medium-sized businesses and consumers that can't be ignored."

Four of the lawsuits allege that the defendant distributed counterfeit copies of Microsoft software to investigators and/or customers. Two of the suits allege that the defendant distributed computer systems to investigators and/or customers after hard disk loading, the practice of installing unauthorized copies of software onto the hard drives of computers that are sold to customers.

The following complaints were filed in the United States District Court for the Northern District of Ohio, Eastern Division:

• Enhanced Computers & Consulting Inc. of Cleveland allegedly distributed counterfeit copies of the Microsoft Windows® 98 operating system and components of Office Professional 97 (Case No. 1:99 CV 2518).
• Peter's Office Equipment Inc. d/b/a Electronic Business Systems of Cleveland allegedly hard disk loaded Office 97 Professional Edition (Case No. 1:99 CV 2520).
• Skyline Microsystems Inc. of Mansfield allegedly distributed counterfeit Windows 95, Windows 98 and components of Office Professional 97 (Case No. 1:99 CV 2519).

The following complaint was filed in the United States District Court for the Northern District of Ohio, Western Division:

• Innovative Computers Inc. of Berlin Heights allegedly distributed counterfeit Office Professional 97 (Case No. 3:99 CV 7653).

The following complaint was filed in the United States District Court for the Southern District of Ohio, Eastern Division:

• HZS Systems Inc. d/b/a GLC Systems Microcomputers of Columbus allegedly distributed counterfeit components of Windows 95 and hard disk loaded Windows 95 (Case No. 2:99 CV 1084).

"Unwary customers who get a seemingly fantastic deal on their new, nicely loaded computer often end up having been duped," said Janice Block, corporate attorney for Microsoft. "When it comes to these purchases, if the price seems too good to be true, it probably is. Consumers who have purchased pirated or counterfeit software could find their systems plagued with incomplete code or a virus, not to mention ineligibility for customer support or upgrades. Microsoft is dedicated to raising customer awareness and will continue to pursue resellers that engage in this illegal practice."

Microsoft has announced that, in addition to its other community affairs activities, the company expects to donate an estimated $25 million over the next five years - half of its anticipated software piracy recoveries in that time period. Funds will be donated to a variety of nonprofit organizations 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.

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