U.S. Customs Cracks Down on Software Counterfeiting in Georgia

Microsoft Also Launches Statewide Software Integrity Campaign to Protect Consumers

ATLANTA, Aug. 16, 2000 — Microsoft Corp. and the U.S. Customs Service today announced recent criminal actions taken against two Georgia-based businesses for the alleged distribution of counterfeit Microsoft® software. To impede the distribution and flow of counterfeit software in the local Georgia market, Microsoft also launched its "Software Integrity Campaign."

After executing search warrants at Compunet Systems of Griffin, Ga., and Tierra Computer Inc. of Doraville, Ga., U.S. Customs officials uncovered large quantities of counterfeit Microsoft software, including Office 2000 Professional Edition and the Windows® 98 operating system, with a combined total value of nearly $1 million. Both companies are subject to criminal penalties for trafficking in counterfeit goods. Under federal trademark law, criminal penalties include fines of up to $2 million and 10 years in jail per infringement; federal copyright laws include fines of up to $250,000 and five years in jail per violation.

"We appreciate the swift and professional work of the U.S. Customs Service in Atlanta, which led to uncovering these illegal actions," said Nick Psyhogeos, corporate attorney for Microsoft. "These dedicated law enforcement officials have taken effective steps toward stemming the growing tide of software piracy here in Georgia."

The investigation and raid of Compunet Systems and Tierra Computer was the culmination of investigative efforts by law enforcement and Microsoft in response to reports received about the illegal activities of the two companies. Based on these reports, investigators conducted a series of sample test purchases from the companies, the results of which confirmed they were distributing illegal software.

Only months ago, Shaofang (Michelle) Qian, owner of Tierra Computer, was involved in a civil lawsuit that Microsoft filed against her and her company in the U.S. District Court for the Northern District of Georgia, Atlanta Division, for alleged distribution of counterfeit software. Qian and Tierra agreed to a settlement of that lawsuit through payment of monetary damages and consent to the entry of a court-ordered permanent injunction. These defendants are now subject to a contempt order from the court for violation of that injunction.

The protection of intellectual property rights is a top priority for the U.S. Customs Service. Customs has seen a steady increase in the seizure of counterfeit or pirated goods. In 1999 alone, Customs seized more than $98 million in counterfeit merchandise. The theft of intellectual property is not just a local problem -- it also hurts the world economy.

"The prevalence of counterfeiting demands that industry and law enforcement work together to combat this illegal activity," said Robert Gattison, special agent in charge of the U.S. Customs office in Atlanta. "We know that as an emerging technology market, Georgia is at particular risk for increased piracy and criminal counterfeiting activity. Our group is aggressively investigating high-tech crimes throughout the state and worldwide."

Software piracy is on the rise in Georgia. The current rate is nearly 26 percent, an increase from 24 percent in 1998, resulting in yearly statewide tax and wage losses of $206 million. Moreover, in the past two years alone, Microsoft has received over 650 individual reports of piracy about Georgia-based software vendors dealing in illegal Microsoft software.

Microsoft's newly announced Software Integrity Campaign, a localized software piracy education and enforcement program to protect consumers, is intended to dramatically reduce the prevalence and availability of counterfeit Microsoft software on the streets of Georgia. "This will be achieved," Psyhogeos added, "through increased education about the risks and warning signs of piracy and heightened investigations and enforcements against illegal vendors that continue to victimize consumers. We will investigate every report of piracy in Georgia during the next several months and will take appropriate action against those companies that persist in selling illegal Microsoft software."

Consumers are urged to consider the warning signs of counterfeit software and exercise cautious shopping practices to help ensure that the software they acquire is genuine. Warning signs of counterfeit 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 products should contact the Microsoft anti-piracy hotline at (800) RU-LEGIT (785-3448), or send e-mail to piracy@microsoft.com. Information about software piracy can also be obtained by calling the BSA anti-piracy hotline at (888) NO-PIRACY (667-4722) or via e-mail at software@bsa.org.

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