Microsoft Works to Thwart Software Piracy in Connecticut and Rhode Island

Illegal Software Distribution Costs These Two New England States More Than 2,500 Jobs

PROVIDENCE, R.I. - Oct. 27, 1999 - Microsoft Corp. today filed five lawsuits against software resellers in Connecticut and Rhode Island as part of its ongoing effort to protect consumers and honest resellers from the detrimental effects of software piracy. The lawsuits were filed against three resellers in Connecticut and two resellers in Rhode Island for allegedly distributing counterfeit software and/or installing unlicensed software on computers.

A study of software piracy across the United States by International Planning & Research Corp. reveals that software piracy is declining in these two New England states, which in 1997 had among the highest piracy rates in the country, but that more education and enforcement is needed. The study found that from 1997 to 1998, Rhode Island's piracy rate dropped from 36.5 percent to 20.5 percent and Connecticut's piracy rate dropped from 38.1 percent to 25.8 percent. Although this trend is positive, fully one-fifth to one-fourth of all personal computers in these states are running counterfeit or pirated software.

Software piracy not only depresses the United States as a whole but has a dramatic impact on state and local economies. According to the same study, Connecticut lost approximately 1,945 jobs in 1998, equating to more than $89 million in lost wages and salaries; Rhode Island lost 516 jobs and an associated $17 million in wages and salaries. Software piracy in the two states also was responsible for more than $21 million in tax losses in 1998, money that otherwise could have supported local and state improvement projects.

"In addition to putting customers at risk, software piracy gives illegal operators a competitive advantage over honest businesses like mine," said Bob Gregory, president of Ocean State Computers. "I appreciate that Microsoft is playing an active role in curbing piracy and urge the software industry and local law enforcement to keep up the pressure on resellers that aren't operating legally."

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.

The following complaints were filed in the U.S. District Court for the District of Rhode Island:

• County Computer Inc. of Warren allegedly hard disk loaded Office 97 Professional Edition (Case No. 99-529 T).
• HC Electronics of Providence allegedly distributed counterfeit components of Office 97 Professional and the Windows® 95 operating system (Case No. 99-530 ML).

The following complaints were filed in the U.S. District Court for the District of Connecticut:

• Custom Computers of America Inc. of Newington allegedly distributed counterfeit components of Office 97 Professional, including a counterfeit end user license agreement (EULA) (Case No. 3:99 CV 02051 [WWE]).
• Guaranteed Business Services LLC of West Hartford allegedly distributed counterfeit components of Office 97 Professional and a counterfeit EULA (Case No. 3:99 CV 02052 [JBA]).
• Plymouth Computers LLC of Waterbury allegedly hard disk loaded Office 97 Professional and Windows 98 (Case No. 3:99 CV 02048 [AHN]).

"Software piracy is not a victimless crime: Consumers, honest resellers and the economies of states like Connecticut and Rhode Island are severely impacted by this illegal activity," said Nick Psyhogeos, Microsoft corporate attorney. "Microsoft is making a concerted effort to educate customers about the importance of acquiring genuine software. Not only is there a possibility that consumers may obtain poor quality product -- owners of pirated software are not eligible for customer support and upgrades."

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.

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