Federal Court in Illinois Awards Microsoft $1.5 Million In Software Piracy Case

Chicago-based Logical Choice Computers to Pay for Software Piracy

CHICAGO, Feb. 1, 2001 — The severity of software piracy was recently underscored when Judge Rebecca R. Pallmeyer of the U.S. District Court (Northern District of Illinois, Eastern Division) awarded Microsoft Corp. damages of more than $1.5 million in its software piracy case against Chicago-based Logical Choice Computers Inc.

Judge Pallmeyer issued a 33-page opinion on Jan. 19, in which she found Logical Choice Computers had distributed counterfeit copies of Microsoft® Office Professional 97 and Windows® 95 software. In the opinion, Microsoft Corp. v. Logical Choice Computers Inc., filed in U.S. District Ct., N.D. Ill. No. 99 C 1300, the court held that Logical Choice Computers' "actions amounted to willful infringement and ignorance of Microsoft's legal rights." The court found that the actions violated the Federal Copyright Law, Federal Trademark Law, Illinois Uniform Deceptive Trade Practices Act, the Illinois Consumer Fraud and Deceptive Trade Practices Act and the Illinois common law of unfair competition.

Microsoft received its first tip regarding Logical Choice Computers' alleged distribution of counterfeit software more than two years ago. Despite sending a cease and desist letter demanding it stop distributing counterfeit Microsoft software, Microsoft investigations verified that Logical Choice Computers continued to distribute counterfeit Microsoft software to unsuspecting consumers. Judge Pallmeyer's ruling enjoins Logical Choice Computers from further infringement on Microsoft's copyrights and trademarks.

"We applaud the U.S. District Court's decision against Logical Choice Computers," said Janice Block, a Microsoft corporate attorney based in Chicago. "Our primary goal in this case was to seek a permanent injunction where Logical Choice Computers would no longer be able to distribute counterfeit software. Software piracy makes it incredibly difficult for distributors of genuine software to compete in the marketplace and puts consumers at risk of spending good money on fake software."

According to a study by International Planning and Research Corp., Illinois' software piracy rate is 21.2 percent - meaning that more than one in five software products in the state is pirated. During 1999, the state lost more than 4,000 jobs due to software piracy, resulting in lost wages and salaries exceeding $217 million. Federal and state tax losses stemming from software piracy robbed Illinois of more than $72.1 million during 1999 alone - money that could have otherwise contributed to state and local improvement projects.

"In one year (1999), combined financial losses for Illinois - including wage and salary, tax revenue, and retail dollars for business software applications - totaled more than $403 million, due to software piracy," said Block. "Software piracy is incredibly harmful to our state's economic health and cannot be tolerated. The ruling of the Illinois Court against Logical Choice Computers is a promising step forward in the fight against piracy."

The impact of software piracy on communities throughout the United States and around the world is vast. In addition to its other community affairs activities, Microsoft has committed to donating an estimated $25 million over five years - half of its software piracy recoveries - to nonprofit organizations focused primarily on providing access to technology in disadvantaged communities.

To avoid spending good money on counterfeit 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 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 software piracy is available at http://www.microsoft.com/piracy/ . Consumers can also obtain more 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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