Microsoft Takes Legal Action Against Southeast Software Businesses

Company Working to Curb Piracy and Protect Consumers in Florida and Georgia

REDMOND, Wash., July 12, 2001 — Microsoft Corp. has taken action today to help protect consumers in Florida and Georgia from spending money on potentially bogus software. The company has filed a software piracy lawsuit against a Florida reseller, United Factory Computers Inc., and a Georgia reseller, Computer Exchange, for allegedly distributing counterfeit and/or infringing Microsoft® software. Microsoft also sent cease-and-desist letters to 12 Atlanta-area resellers for the alleged distribution of counterfeit Microsoft software and/or "hard disk loading," the practice of installing unlicensed software onto personal computers sold to consumers.

"As long as software piracy persists, we will take the necessary steps to protect Microsoft's channel partners and consumers from its negative impact," said Mary Jo Schrade, corporate attorney for Microsoft. "Our goal is to work with resellers to address issues of software piracy and counterfeiting -- but when resellers continue to distribute counterfeit software, legal action is often necessary."

The software piracy rate is 30.7 percent in Florida and 25.8 percent in Georgia. This means that between one in three and one in four software applications in those states are pirated. According to the International Planning and Research Corp., in 1999 software piracy cost the two states $341.8 million in wage and salary losses, more than 8,053 jobs, and $124.4 million in tax revenue losses, demonstrating that software piracy affects not just unfortunate consumers and honest resellers, but every citizen in the state.

"The distribution of counterfeit software represents a serious problem for honest businesses like mine and for the industry as a whole," said Mark Rosenhaft, president of Insol, an Atlanta-area reseller. "Piracy is a far-reaching problem that needs to be prioritized. We're glad that companies like Microsoft are taking steps to combat software counterfeiters and level the playing field for honest businesspeople."

Tips called in to Microsoft's anti-piracy hot line by customers or resellers who have obtained suspicious software and/or received suspicious advertisements initiate most of Microsoft's investigations into the distribution of pirated software. Microsoft customarily notifies a company in writing that it is suspected of acting illegally, asks the company to stop the illegal activity, establishes whether the activity has continued, and then determines whether legal action is necessary.

The lawsuits filed by Microsoft allege that the defendants possessed and/or distributed counterfeit and/or infringing copies of Microsoft software or software components. The complaints are as follows:

Filed in the U.S. District Court for the Middle District of Florida:

• United Factory Computers of Tampa allegedly possessed and/or distributed counterfeit copies of the Microsoft Windows® Millennium Edition (Windows Me), Windows 2000, Windows 98, Windows 95 and Windows NT® Server operating systems, Office 2000 Professional, Office 2000 Premium, Office Professional 97, Excel 2000, and Publisher 2000 (Case No. 8:01-CV-1293-27MSS).

Filed in the U.S. District Court for the Southern District of Georgia, Augusta Division:

• Computer Exchange of Augusta allegedly possessed and/or distributed counterfeit components of Office Professional 2000, Office Professional 97 and Windows 95 (Case No. 101-104).

Microsoft's primary objective in filing legal actions is to seek a permanent injunction that would prevent companies from violating Microsoft's copyrights and trademarks. These

violations, if allowed to continue, would put consumers at risk of acquiring potentially harmful pirated software.

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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