Microsoft Alleges That Four Massachusetts Businesses Distributed Counterfeit Software

Commitment to Protect Customers and Distribution Channel Reinforced As Suits Are Filed Against Distributors of Counterfeit Software

REDMOND, Wash. -- Feb. 10, 2000 -- Microsoft Corp. today announced that the company has filed software piracy lawsuits against four Massachusetts companies. The lawsuits, alleging copyright violations and trademark infringements, were filed against software distributors for allegedly distributing counterfeit and/or infringing Microsoft® software.

A result of the company's ongoing anti-piracy efforts, the lawsuits are aimed at protecting Massachusetts' legitimate distributors and customers from the negative impact of software piracy. According to a recent study by International Planning and Research Corp. (IPR), the software piracy rate in Massachusetts was 16.7 percent in 1998. Although Massachusetts' piracy rate is less than the national average of 25 percent, almost one in every five software products running in the state is pirated.

"There cannot be any compromise on issues concerning software compliance. As demonstrated today by Microsoft, the willful misuse of intellectual property will not be tolerated. We fully support Microsoft in this effort," said Peter Grasso, president of Alantris Corp. "Combined with knowing the warning signs of counterfeit software, the implementation of a dedicated software license compliance program can ensure your organization is using legitimate software and will likely prevent problems in the long run."

The IPR study also reports that software piracy cost Massachusetts more than 4,000 jobs and over $470 million in combined wages, tax revenues and retail sales of business software applications in 1998. According to a recent Business Software Alliance (BSA) study, the United States' software piracy rate of 25 percent cost the economy 109,000 jobs, $4.5 billion in wages and nearly $1 billion in lost taxes during the same year.

"Piracy is a serious threat to entrepreneurs, investors and customers, said Joyce Plotkin, president of the Massachusetts Software Council. "For Massachusetts to continue to be successful in the New Economy, we must all work together to combat software piracy."

All of the lawsuits allege that the defendants distributed counterfeit and/or infringing copies of Microsoft software to investigators. The complaints, filed in the United States District Court for the District of Massachusetts, are as follows:

• CompNet Inc. of Fall River allegedly distributed counterfeit Microsoft Windows® 98 and counterfeit components of Office 97 Professional Edition and the Windows 95 operating system (Case No. 00-CV-10235 RGS).
• Computer Palace Inc. of Framingham allegedly distributed counterfeit components of Office Pro 97 (Case No. 00-CV-10236 WGY).
• Metrowest Computer Systems of Framingham allegedly distributed infringing World Wide Fulfillment Supplemental Components of Office 2000 and a counterfeit Office 2000 end user license agreement in violation of prior settlement agreement (Case No. 00-CV-10246 NG).
• PC 2000 Inc. of North Reading allegedly distributed counterfeit components of Office Pro 97 (Case No. 00-CV-10234 WGY).

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 the unlawful activities.

"Honest resellers that provide people with legitimate software and great service need a fair, competitive playing field in order to survive and prosper," said Nick Psyhogeos, Microsoft corporate attorney. "In addition to taking legal action against those who distribute counterfeit or pirated software, we're also dedicated to educating consumers and have implemented innovative anti-counterfeiting features in our products to help consumers distinguish genuine product from counterfeit."

Microsoft has announced that, in addition to its other community affairs activities, it plans to donate an estimated $25 million over 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
• Online distributors who are unwilling or unable to provide adequate descriptions of return and warranty policies. When shopping online, consumers should always ask for full details regarding these policies.
• Consumers should be aware that not everyone is as honest as they are. Counterfeit software is widely available through Internet business and Internet auctions.

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 and business computing. The company offers a wide range of products and services designed to empower people through great software - any time, any place and on any device.

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