Microsoft Takes Steps to Protect Consumers and Honest Channel Partners In Iowa and Nebraska

Company Aims to Stop Distribution of Counterfeit Software

REDMOND, Wash., May 3, 2000 — Microsoft Corp. today announced that it has filed software piracy lawsuits against three companies in Iowa and one in Nebraska. 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.

"Revenue from products sold allows vendors like Microsoft to spend more in research and development to enhance products with new features. Counterfeit software also makes it challenging for legitimate resellers to compete fairly in the marketplace," said Beth Tinsman, president of Twin State Technical Services Ltd. "We understand the necessity for Microsoft to educate consumers and take legal action to protect its channel partners and consumers of its 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 run pirated software. According to International Planning & Research Corp. (IP & R), Iowa has a piracy rate of 23.9 percent, and Nebraska follows close behind with a piracy rate of 21.7 percent. Software piracy cost the states an estimated 3,365 jobs in 1998, according to a recent study by IP & R. The study indicates that these unrealized jobs equate to more than $43 million in lost wages and salaries in Iowa and more than $44 million in Nebraska. Furthermore, the drain on tax revenues from piracy in the two states amounted to nearly $17 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.

Some 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 resellers or from consumers who acquire suspicious software. 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 Northern District of Iowa:

• Compushop International Computers of Humboldt allegedly distributed counterfeit Microsoft Windows 95, Windows 98 and counterfeit components of Microsoft Office 97 Professional Edition (Case No. C003032).
• Run Time Data of Buffalo Center allegedly distributed counterfeit Windows 95 and counterfeit components of Office Pro 97 (Case No. C003033).

Filed in the United States District Court for the Southern District of Iowa:

• Tri-State Computers Sales & Service of Keokuk allegedly distributed counterfeit components of Office Pro 97 and Windows 95 (Case No. 3-00-CV-90059).

Filed in the United States District Court for the District of Nebraska:

• American Starlex International Co. of Omaha allegedly distributed counterfeit Office Pro 97 (Case No. 8:00CV275).

"There are three primary issues at stake here - consumers deserve to acquire legitimate working Microsoft software; resellers need a fair marketplace in which to compete; and intellectual property rights must be upheld," said Janice Block, Microsoft corporate attorney. "Through education and awareness, as well as legal actions, Microsoft is dedicated to curbing software piracy."

Through the implementation of new anti-counterfeiting features, Microsoft is taking steps to make counterfeit software easier to spot and to assist honest resellers and OEM system builders in distributing genuine software.

Microsoft recently announced new anti-counterfeiting features for Windows 2000, including an edge-to-edge CD-ROM hologram and a new certificate of authenticity (COA) label. These features will make it more difficult for counterfeiters to pass off counterfeit software as genuine to unsuspecting customers.

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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