Microsoft Takes Legal Actions to Thwart Software Pirates in Tennessee

State Loses More Than $84 Million In Wages, Salaries and Taxes to Software Piracy

NASHVILLE, Tenn., April 19, 2000 — Microsoft Corp. today announced that, in an effort to protect consumers and legitimate software distributors from the harmful impact of software piracy, the company has filed software piracy lawsuits against four Tennessee resellers. The lawsuits allege that the companies distributed counterfeit and/or infringing Microsoft® software.

The high-tech industry is important to Tennessee's economy, and software piracy is seriously impacting economic growth in the state. According to a study published by the American Electronics Association in 1997, Tennessee's high-tech employment is on the rise with more than 42,000 people working in the technology industry. In 1998, software piracy cost the state an estimated 2,656 jobs, resulting in lost wages and salaries of more than $72 million, according to a study by International Planning & Research Corp. The study additionally reported that the drain on tax revenues from software piracy amounted to nearly $12 million - money that otherwise could have contributed to local and state improvement projects.

"Software piracy is a large problem in Tennessee," said Greg Kill, president of Fasser Computer Technologies. "It's hard for us to be competitive when we have to contend with resellers who are offering counterfeit software. We're glad that Microsoft is stepping in and helping to level the playing field for legitimate resellers and warn customers of the risks associated with counterfeit software."

Microsoft's investigations into the distribution of pirated software are often a result of tips to the company's anti-piracy hot line. These tips are often phoned in from resellers or consumers who acquire suspicious software. Many distributors of counterfeit software continue to distribute unauthorized Microsoft software even after receiving a written request from Microsoft to stop unlawful activities.

All four of the lawsuits allege copyright violations and trademark infringements due to the alleged distribution of counterfeit copies of Microsoft software or software components to investigators and/or customers.

Three of the complaints, filed in the United States District Court for the Middle District of Tennessee, are as follows:

• Cardinal Computer Corp. of Gainesboro and on the Internet at http://www.cookeville.com/cardinal/ allegedly distributed counterfeit components of Microsoft® Windows® 95 and Office 97 Professional Edition (Case No. 2-00-0030).
• Computer Outlet of Lebanon allegedly distributed counterfeit components of Office Pro 97 (Case No. 3-00-0355).
• Computer Solutions/Point-N-Shoot of Joelton and on the Internet at http://www.pointnshoot.com/ allegedly distributed counterfeit components of Office Pro 97 (Case No. 3-00-0354).

The fourth complaint, filed in the United States District Court for the Eastern District of Tennessee, is as follows:

• Hi-Tech Systems Inc. of Chattanooga allegedly distributed counterfeit components of Office Pro 97 (Case No. 1:00CV-126).

"Software piracy has a large impact both in Tennessee and throughout the United States," said Janice Block, Microsoft corporate attorney. "We take seriously our responsibility to help educate consumers so they can be smart shoppers and feel confident that they are acquiring genuine software."

Microsoft recently announced new anti-counterfeiting features for the Windows 2000 operating system, including an edge-to-edge CD-ROM hologram and a new Certificate of Authenticity (COA) label. These features make counterfeit software easier to distinguish from genuine copies and also assist honest resellers and OEM system builders in distributing genuine software. Other signs that can help consumers and resellers identify counterfeit or illegal software include:

• 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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