Microsoft Heightens North Carolina Anti-Piracy Efforts

Four Businesses in the State Allegedly Distributed Illegal Software

REDMOND, Wash., April 19, 2000 — Microsoft Corp. today announced that it has discovered four businesses in North Carolina which allegedly distributed counterfeit Microsoft® software. Microsoft is taking action to stop these companies from distributing illegal software in order to help prevent unsuspecting consumers, resellers and the value of intellectual property from the negative impact of software piracy.

"North Carolina is one of the nation's leading technology centers," said Carroll Gray, president of the Charlotte Chamber of Commerce. "It's important that we address criminal activities, such as software piracy, that can have a considerable impact on the consumers, resellers and economies in our community and this state. If we want our local economy to continue to flourish and contribute to the economic growth both of our city and our state, we must support the fight against piracy of all sorts."

In a speech last week, Federal Reserve Chairman Alan Greenspan stated that ongoing advances in the nation's computing and technology industries are driving the thriving U.S. economy that consists of higher productivity, rising incomes and an increasing job market. In North Carolina alone, the high-tech industry employed more than 119,000 people and distributed more than $5.8 billion in wages, according to a 1997 study by the American Electronics Association. The average wage in the high-tech sector in North Carolina is more than 81 percent higher than the average wage in non-technology sectors across the state.

A study of software piracy across the United States by International Planning & Research Corp. revealed that although the piracy rate in North Carolina decreased significantly from 1997 to 1998 (from 34.6 percent to 22.8 percent), software piracy still has a dramatic impact on state and local economies. According to the study, this illegal activity potentially cost North Carolina 3,623 jobs in 1998, equating to more than $108 million in lost wages and salaries. Software piracy in the state also was responsible for the loss of more than $15 million in taxes that same year - money that otherwise could have contributed to local and state improvement projects.

"There is an enormous need to inform consumers in North Carolina about the potential risks associated with counterfeit software and the importance of knowing how to distinguish counterfeit software from genuine," said Nick Psyhogeos, Microsoft corporate attorney. "In light of the serious consequences of using counterfeit software - including possible viruses, faulty software and ineligibility for tech support - resellers must take responsibility for ensuring that they pass along legitimate software to their customers."

Microsoft receives thousands of tips to its anti-piracy hot line each month. These tips are typically phoned in from honest resellers or from consumers who acquire software that either looks suspicious or is not working correctly. 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.

The lawsuits allege that the defendants distributed counterfeit and/or infringing copies of Microsoft software or software components to investigators and/or customers. One of the cases also alleges that the defendant distributed computer systems after hard disk loading, the practice of loading unauthorized copies of software onto the hard drives of computers that are sold to customers. The complaints, filed in the United States District Court for the Western District of North Carolina, allege the following:

• Computer Media Concepts of Pineville allegedly distributed counterfeit components of Microsoft Office 97 Professional Edition, Microsoft Windows® 95 and Windows 98 (Case No. 3:00CV175-MCK).
• Computer Support Services of Charlotte allegedly distributed counterfeit Office Pro 97 components and hard disk loaded Windows 95 (Case No. 3:00CV176-H).
• PC Tech Inc. of Charlotte allegedly distributed counterfeit components of Windows 95 and Office 2000 (Case No. 3:00CV173-MCK).
• System Plus Information Inc. dba PC Warehouse of Charlotte allegedly distributed counterfeit Windows 98 and counterfeit components of Windows 95 and Office Pro 97 (Case No. 3:00CV174-H).

"When resellers participate in the distribution of unlicensed or counterfeit software, not only are they taking advantage of their customers but the industry as a whole. Every software developer, regardless of how large or how small, deserves royalties and maintenance fees for their products to ensure the long-term viability of the developer and product," said Greg Aker, president of InfoVision Inc., a provider of technology-based solutions for small and mid-size companies. "InfoVision is very dependent on our software industry partners for our success. We appreciate Microsoft's efforts to create a fair and competitive marketplace, and are happy to be a part of maintaining the industry's credibility and future."

With the launch of the Windows 2000 operating system, Microsoft announced the implementation of new anti-counterfeiting features - including an edge-to-edge CD-ROM hologram to make it easier for customers to identify genuine copies of Windows 2000 and the upcoming service release of Office 2000. In addition, a new Certificate of Authenticity (COA) label that has more security features than any currency in the world will be included on the tower of all new PCs sold with Windows 2000. Other signs that can help consumers and resellers identify counterfeit or illegal software include the following:

• Prices that are "too good to be true"
• Suspicious methods of delivery and/or payment
• Retail software distributed in jewel cases only, rather than in full-color retail boxes
• Software 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

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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