Microsoft Moves to Combat Software Piracy in State With the Nation's Highest Piracy Rate: Mississippi Company Continues Anti-Piracy Efforts in Alabama

REDMOND, Wash. -- Feb. 23, 2000 - Microsoft Corp. today announced that it has filed software piracy lawsuits against two companies in Alabama and three in Mississippi. The lawsuits, alleging copyright violations and trademark infringements, were filed against businesses in both states for allegedly distributing counterfeit and/or infringing Microsoft® software. The lawsuits aim to protect customers and legitimate distributors from the effects of software piracy.

"With Mississippi having a high software piracy rate, honest businesses like mine are finding it difficult to compete, often losing bids to resellers who sell counterfeit software at unreasonably low prices," said Mike Treat, president of American Computer Services Inc. "My company is committed to following the rules and is grateful to all software companies that make a concerted effort to stop those who distribute illegal software."

Software piracy has a significant impact on state and local economies across the country, as well as throughout the world. The average piracy rate in the United States is 25 percent, which means that one in four computers are running pirated software. At 46.8 percent, Mississippi has the highest piracy rate in the United States; Alabama follows close behind with a piracy rate of 42.1 percent. In 1998, Software piracy cost the states an estimated 3,200 jobs, according to a recent study by International Planning & Research Corp. The study indicates that these unrealized jobs equate to $27 million in lost wages and salaries in Mississippi and more than $50 million in Alabama. Furthermore, the drain on tax revenues from piracy in the two states amounted to nearly $18 million -- money that otherwise could have contributed to local and state improvement projects. According to a study by Nathan Associates commissioned by the Business Software Alliance (BSA), software piracy cost the national economy 109,000 jobs, $4.5 billion in wages and nearly $1 billion in lost taxes during the same year.

"We are glad that Microsoft is educating consumers and taking legal action here in Alabama, where the abundance of counterfeit software makes it so difficult for legitimate resellers to compete," said Anil Patel, sales manager for Entré Computers. "Software piracy harms our customer relationships in numerous ways by creating unrealistic pricing and service expectations, as well as giving our industry a bad reputation."

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 and/or infringing 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 Southern District of Alabama, Southern Division:

• PCS Computer Services of Mobile allegedly hard disk loaded Microsoft WindowsÒ 98 (Case No. 00-157-P).
• Quest Computers of Mobile allegedly hard disk loaded Windows 95 (Case No. 00-158-CB).

Filed in the United States District Court for the Southern District of Mississippi, Jackson Division:

• The Computer Doctor of McComb allegedly distributed counterfeit Windows 98 and counterfeit components of Office 2000 and Office 97 Professional Edition (Case No. 3:00CV126BN).
• DataStar Inc. of Picayune allegedly distributed counterfeit components of Office 97 Professional Edition and distributed infringing World Wide Fulfillment supplemental components of Office 2000 and a counterfeit Office 2000 end user license agreement (Case No. 1:00CV73GR).
• Eagle Computers of McComb allegedly distributed counterfeit components of Office Pro 97 and hard disk loaded Office Pro 97 (Case No. 3:00CV125LN).

"By distributing incomplete, unlicensed software, these resellers not only hurt customers but compromise the health of honest businesses up and down the supply chain," said Nick Psyhogeos, Microsoft corporate attorney. "Honest resellers that provide consumers with legitimate software and great service need a fair, competitive playing field in order to survive and prosper."

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"
• Suspicious methods of delivery and/or payment
• Retail products distributed in jewel cases only, rather than in full-color retail boxes
• Products marked with a phrase, such as "For distribution with a new PC only" or "Special CD for licensed customers only," that does not describe the transaction. These phrases are often used to dupe customers into purchasing counterfeit software.

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.

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