Microsoft Cracks Down on Counterfeit Software Sales in Pennsylvania

Legal Actions to Bolster Honest Small Businesses and Reduce Risk to Consumers

PITTSBURGH, Sept. 19, 2000 — Microsoft Corp. today announced that it has brought software piracy lawsuits against three software vendors across the state of Pennsylvania for the alleged distribution of counterfeit Microsoft® software. The businesses, located in the Pittsburgh area, allegedly persisted in distributing counterfeit software to unsuspecting consumers despite prior requests from Microsoft to stop.

"The impact of software piracy threatens both businesses and customers," said Sam Kildare, director of sales and marketing at PC Solutions. "The 'too good to be true' pricing that disreputable software distributors advertise these days make it hard to compete on an even playing field. As we assist our clients to adopt compliance strategies, we appreciate the efforts of Microsoft and others in the software industry to clean up the software distribution channel to ensure that consumers get genuine products and resellers can compete fairly."

The following lawsuits announced today allege that the defendants distributed counterfeit and/or infringing copies of Microsoft software to customers and/or investigators.

Filed in the United States District Court for the Western District of Pennsylvania:

• City Computer of Pittsburgh allegedly distributed counterfeit Office 97 Professional (Case No. 00-1863).
• Computer Ease of Pittsburgh allegedly distributed counterfeit components of Office Pro 97 and the Windows® 95 operating system (Case No. 00-1864).
• VMI of Pittsburgh allegedly distributed counterfeit components of Office 2000 and Office Pro 97 (Case No. 00-1862).

"Consumers are often duped into purchasing merchandise that is not genuine," said Thomas Connolly, president of the Pittsburgh Better Business Bureau. "To help avoid being victims of fraud, it's important for consumers to be smart shoppers and thoroughly research the products they're interested in buying - particularly on the Internet. Microsoft is providing great assistance to customers by stopping the people who might otherwise victimize them."

"Microsoft is committed to fighting software piracy on behalf of Pennsylvania consumers who could find themselves at risk," said Nick Psyhogeos, corporate attorney for Microsoft. "We will continue our work to combat software piracy through technology, education and, when necessary, by taking legal action against companies that sell illegal software so customers feel confident they are receiving genuine software."

Software piracy has a severe negative impact on state and local economies across the country. According to a study released in 1999 by International Planning and Research Corp., the average piracy rate in the United States is 25 percent, which means that one in four computers is running pirated software. A new study by the Business Software Alliance (BSA), a software industry watchdog group, reveals that the piracy rate in Pennsylvania rose significantly from 13.7 percent in 1998 to 21.4 percent in 1999. Additional information about the economic impact of software piracy on the Pennsylvania economy will be released in a study the BSA is announcing next week.

Anti-piracy efforts in Pennsylvania have stepped up in recent months. A few weeks ago the BSA held a truce period in Pittsburgh during which customers, including small businesses, were encouraged to review their software and ensure its compliance.

In June, in one of the largest raids involving counterfeit Microsoft software to date, the Pennsylvania State Police uncovered more than $22 million in counterfeit software. Jim Halkias, the primary owner of the alleged counterfeit operation Automated Distributing Inc. located in Harrisburg, has been indicted on 18 counts of trafficking counterfeit goods in Pennsylvania for the alleged distribution 8,000 copies of counterfeit Microsoft software. His arraignment is scheduled for Oct. 26 at the Dauphin County District Justice Court. Federal charges are pending.

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. Additional information on piracy is available at Microsoft's anti-piracy Web site at http://www.microsoft.com/piracy . Consumers can also obtain information 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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