Microsoft Takes Legal Action to Prevent Software Piracy in Minnesota

Resellers in the State to Pay More Than $162,000 to Microsoft

MINNEAPOLIS, May 17, 2001 — Microsoft Corp. has taken action today to help Minnesota consumers avoid spending good money on potentially bogus software, by filing a software piracy lawsuit against two Minneapolis-area resellers for the alleged distribution of counterfeit and/or infringing Microsoft® software. In addition, the company has announced that it is to receive more than $162,000 in settlements and judgments stemming from legal actions it has taken against four Minnesota-based resellers for the alleged distribution of counterfeit software over the past two years.

Microsoft has taken these actions to protect honest resellers and unsuspecting consumers from the harmful effects of acquiring bogus software. Counterfeit software has an increased potential for obtaining viruses and is often found to be missing key elements, and consumers who acquire it are ineligible for valuable technical support, warranty protection and upgrades.

"When only a handful of resellers distribute counterfeit or illegally licensed software, it creates a negative ripple effect that affects the entire community -- other resellers, customers and, ultimately, the economy as a whole," said Dale Morgan, managing partner of Custom Computer Source L.L.C. " We spend a lot of time discussing software license agreements with company owners and managers, explaining what's legal and why they should stay in compliance with the license agreements. Getting a great deal on software looks great -- until customers realize they've been scammed and that they have no license, no right to use the software and no support."

The 21.2 percent software piracy rate in Minnesota means that more than one in five software applications in the state are pirated. According to the International Planning and Research Corp., in 1999 software piracy cost the state more than 2,302 jobs and more than $235.7 million in combined wages, tax revenues and retail sales of business software applications -- demonstrating that software piracy affects not just unfortunate consumers and honest resellers, but all the state's citizens.

The lawsuits filed by Microsoft allege that the defendants distributed counterfeit and/or infringing copies of Microsoft software or software components to investigators and/or customers. The complaints filed in the U.S. District Court for the District of Minnesota are as follows:

• Microsoft v. Jem Inc., dba Budget Computer of Columbia Heights, alleging distribution of counterfeit Windows NT® Server (Case No. 01-CV-841 DWF/SRN).
• Microsoft v. PC Adventures Inc. of Crystal alleging distribution of counterfeit components of Office Pro 97 and Office 2000 Pro (Case No. 01-CV-842 JRT/FLN).

In many cases, Microsoft receives reports from the public regarding the distribution and/or advertising of suspicious Microsoft software. In filing these legal actions, Microsoft seeks permanent injunctions that would prevent companies that distribute counterfeit software from violating Microsoft's copyrights and trademarks in the future. These violations, if allowed to continue, would ultimately put Minnesota consumers at risk of acquiring potentially harmful pirated software.

"As a leader in the software industry, we feel that it is our responsibility to not only help protect consumers from the detriments of pirated software, but also to help curb the negative impact that software piracy and criminal counterfeiting have on local communities," said

Janice Block, corporate attorney at Microsoft. "In addition to its other community affairs activities, Microsoft will be donating the net proceeds of its anti-piracy recoveries and settlements -- including those announced today in Minnesota -- to nonprofit organizations worldwide focused on providing access to technology for disadvantaged communities."

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.

Founded in 1975, Microsoft (Nasdaq "MSFT" ) is the worldwide leader in software, services and Internet technologies for personal and business computing. The company offers a wide range of products and services designed to empower people through great software -- any time, any place and on any device.

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