Microsoft Charges Five South Carolina Resellers With Illegal Software Distribution

Study Indicates That Software Piracy in State Cost Economy $50 Million in 1998 Alone

COLUMBIA, S.C. - Oct. 21, 1999 - Microsoft Corp. today announced that it has filed lawsuits against five South Carolina businesses as part of its ongoing effort to curb software piracy nationwide. The lawsuits, which allege that the companies distributed counterfeit Microsoft® software and/or installed unlicensed software on computers for sale, aim to protect consumers and honest resellers from the widespread effects of this illegal activity.

According to a recent study by International Planning & Research Corp., 29.6 percent of all business software distributed in South Carolina in 1998 was illegal. As a result, 1,763 jobs were lost, in addition to approximately $50 million in potential wages, salaries and tax revenues. Software piracy is having a significant impact on state and local economies across the country. In 1998, software piracy caused losses to the U.S. economy amounting to nearly $1 billion in taxes and 109,000 jobs.

"My livelihood and the health of my business depends on my ability to compete," said Diana Anderson, owner of Columbia-based PC builder Anderson Computers. "When other resellers load unlicensed software onto computer systems, they are able to sell at 'too good to be true' prices and take away valuable customers. The lawsuits announced today are a positive step toward protecting businesses that obey the law."

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. The complaints allege hard disk loading or the distribution of counterfeit software or software components to investigators and/or customers.

Microsoft filed the following complaints in the U.S. District Court for the District of South Carolina, Columbia Division:

• BWC Products Inc. of Charleston allegedly distributed counterfeit Microsoft Windows® 95 and Windows 98 and counterfeit components of Office 97 Professional Edition (Case No. 399345417).
• CD Rom's of Charleston allegedly distributed counterfeit components of Office Pro 97 (Case No. 399345717).
• Computer M.D. of Columbia allegedly hard disk loaded Office Pro 97 and Windows 98 (Case No. 399343517).
• The Computer Store of Walterboro allegedly distributed counterfeit components of Office Pro 97 and counterfeit Windows 95 (Case No. 399345617).
• Microsoft Office Liquidator of Greenville allegedly distributed counterfeit components of Office Pro 97 and counterfeit Windows 98 (Case No. 399345517).

"Almost one in three business software applications installed on PCs in South Carolina is pirated," said Nick Psyhogeos, Microsoft corporate attorney. "In addition to the economic losses this causes in the local community, this conduct harms resellers as well as consumers, who are apt to receive incomplete or infected code and may find themselves without customer support when they need it."

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.

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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