Microsoft Helps Protect Consumers by Addressing Repeat Offender Software Pirates

REDMOND, Wash. — June 9, 2008 — As part of its ongoing efforts to protect its customers and partners from the risks of pirated and counterfeit software, Microsoft Corp. today announced the filing of 21 lawsuits in federal court in 14 states against resellers allegedly engaging in the sale of pirated software, including some alleged repeat offenders. Microsoft also called attention to several resources available to help consumers to ensure they are getting genuine software, including the (800) RU-LEGIT (785-3448) hot line and online validation tools at http://www.microsoft.com/genuine. In the cases announced today, many of the companies identified in the suits are alleged to have misled customers by repeatedly distributing unlicensed copies of Microsoft software pre-installed on the PCs that they sold. Some of these companies continued with their illegal business practices even after settling previous lawsuits with Microsoft.

Pirates often dupe consumers into buying unlicensed or non-genuine software through hard-disk loading, which is the practice of installing unlicensed software onto a PC and then selling the computer to unsuspecting consumers. In many cases customers who have been sold unlicensed hard-disk loaded computer systems do not receive manuals or the original media, although the resellers often charge them the full price. Many customers do not realize that the software pre-installed on the computer systems they purchased is not legitimate until they perform a check through the Windows Genuine Advantage (WGA) or Office Genuine Advantage (OGA) online validation tools, which are provided by Microsoft to assist consumers in verifying the legitimacy of their software.

Evidence for some of these cases stemmed from direct customer reports to Microsoft’s anti-piracy hot line, (800) RU-LEGIT, as well as from reports received through the WGA online validation tool. Microsoft’s investigators received two such leads resulting in today’s filing of lawsuits against Computer Center in Encino, Calif., and Delta Computers in Pine Bluff, Ark.

Microsoft is also hearing from its partner community. “Knowing Microsoft is targeting resellers of illegal software in my area gives me one less thing to worry about,” said Tim Loney, president and CEO of Solutions Information Systems, a Microsoft Gold Certified Partner and Small Business Specialist in Houston. “When the economy is struggling, it is difficult to focus on adding value to your customers when other organizations are using unfair practices to gain an advantage, especially when it comes to pricing of software.”

This Is Not the First Time

Companies identified in eight of the lawsuits announced today are not new to illegal software sales allegations. Microsoft previously filed and settled lawsuits, which alleged the sale of infringing software, including versions of Microsoft Windows and Office, with these same dealers. Despite the filing of the previous actions, these companies have continued to sell infringing software, putting their customers at risk.

“These legal actions are about protecting Microsoft’s customers from falling victim to some dealers who operate a business model of peddling pirated and counterfeit software,” said Sharon Cates, attorney at Microsoft. “Some companies previously involved in these lawsuits have discontinued their illegal business practices; others have not. The cases announced today are indicative of the need to ensure that dealers cease their illegal activity so that customers can be sure that they purchase genuine, fully licensed software.”

Buyer Beware: What to Watch For and What to Do

Microsoft’s customers should also be on the lookout. Piracy and counterfeiting are problems that impact customers and honest businesses both in the U.S. and across the globe. This is especially true for the software industry, and it is important for consumers to be aware of the problem.

Microsoft is committed to ensuring that its customers can obtain genuine, fully licensed Microsoft software in good faith by empowering them through its anti-piracy education programs and technology solutions to make sure they get what they pay for. One such program is helping Microsoft customers validate their software online and avoid situations where they may be defrauded. The WGA and OGA online validation tools allow customers to verify that their copy of software is genuine and fully licensed. If customers learn that they may have non-genuine software, the validation tools will provide an opportunity for the customer to report the source of the software, and customers may even be eligible to receive a genuine replacement copy.

As part of its Genuine Software Initiative, Microsoft also provides a wealth of resources for consumers who are considering a new software purchase. On its Web site dedicated to distinguishing genuine, properly licensed software from pirated software, http://www.howtotell.com, Microsoft provides visual clues to look for, as well as other tips to avoid purchasing counterfeit software. In addition, the Web site provides information to help consumers ensure the software they purchased is properly licensed. This is just another of the many tools that Microsoft provides to its customers to ensure that they receive the full value of genuine software.

New Study Highlights Software Piracy Rates

The cases announced today are part of an ongoing challenge that Microsoft is continuing to address. In fact, according to the fifth annual global PC software piracy study, which was released in May by the Business Software Alliance (BSA), more than one-third of PCs around the world are unlicensed or contain pirated or counterfeit software. In the U.S., the piracy rate in 2007 was 20 percent, a one-point decrease from 2006. However, in that same time period, the economic losses from piracy increased from $7.2 billion in 2006 to more than $8 billion in 2007. Microsoft continues to evaluate ways to fight piracy and counterfeiting in an effort to protect its customers and partners.

Founded in 1975, Microsoft (Nasdaq “MSFT”) is the worldwide leader in software, services and solutions that help people and businesses realize their full potential.

Note to editors: If you are interested in viewing additional information on Microsoft, please visit the Microsoft Web page at http://www.microsoft.com/presspass on Microsoft’s corporate information pages. Web links, telephone numbers and titles were correct at time of publication, but may since have changed. For additional assistance, journalists and analysts may contact Microsoft’s Rapid Response Team or other appropriate contacts listed at http://www.microsoft.com/presspass/contactpr.mspx.

Case Summaries

Filed in the U.S. District Court for the Northern District of Georgia, Atlanta Division

Microsoft Corp. v. Computer Imaging Services, Inc. (Marietta, Georgia), alleging distribution of infringing Office Pro 2003 and Office Access 2003 software after a prior lawsuit and injunction.

Case No. 1:08-CV-1970

Filed in the U.S. District Court for the Southern District of California

Microsoft Corp. v. ARP Computer Solutions, Inc. d/b/a Computer Circulation Center (San Diego, California), alleging distribution of infringing Office Pro 2003 software.

Case No. 08 CV 1026 WQH JMA

Filed in the U.S. District Court for the Central District of California

Microsoft Corp. v. Micro West Tech, Inc. (Chatsworth, California), alleging distribution of infringing Office XP Pro and Office Home and Student 2007 software.

Case No. CV 08-03749 JSL (FMOx)

Filed in the U.S. District Court for the Central District of California

Microsoft Corp. v. Loco Computer (Los Angeles, California), alleging distribution of infringing Windows XP Home and Office Pro 2003 software.

Case No. CV 08-03752 GW (Ex)

Filed in the U.S. District Court for the Central District of California

Microsoft Corp. v. LTI Computer, Inc. (Walnut, California), alleging distribution of infringing Office 2007 software.

Case No. CV 08-03751 RGK (SHx)

Filed in the U.S. District Court for the Central District of California

Microsoft Corp. v. Computer Center (Encino, California), alleging distribution of infringing Office 2007 Pro software after a prior complaint and injunction.

Case No. CV 08-03757 PSG (RZx)

Filed in the U.S. District Court for the Central District of California

Microsoft Corp. v. Tiger Tech (Lancaster, California), alleging distribution of infringing Office Pro 2003 software.

Case No. CV 08-03754 R (MANx)

Filed in the U.S. District Court for the District of Massachusetts, Western Division

Microsoft Corp. v. KNT Computers, Inc. (Chicopee, Massachusetts), alleging distribution of infringing Windows XP Pro and Office Pro 2003 software after a prior lawsuit and consent judgment.

Case No. 3:08-cv-30112

Filed in the U.S. District Court for the Northern District of Ohio, Eastern Division

Microsoft Corp. v. Alvio (Warrensville Heights, Ohio), alleging distribution of counterfeit Office Pro 2003 software after a prior lawsuit and injunction.

Case No. 1:08CV1383

Filed in the U.S. District Court for the District of South Carolina

Microsoft Corp. v. Computer Inferno (Myrtle Beach, South Carolina), alleging distribution of infringing Windows XP Pro, Office 2007, and Office XP Pro software.

Case No. 08-cv-02149

Filed in the U.S. District Court for the Western District of Tennessee, Western Division

Microsoft Corp. v. Advanced Computer Corporation (Memphis, Tennessee), alleging distribution of infringing Office XP Pro software after a prior lawsuit and injunction.

Case No. 2:08-cv-02370-STA

Filed in the U.S. District Court for the Southern District of Texas, Houston Division

Microsoft Corp. v. Quality System (Houston, Texas), alleging distribution of infringing Office 2003 Pro software.

Case No. 4:08-cv-01828

Filed in the U.S. District Court for the Southern District of Texas, Houston Division

Microsoft Corp. v. Easy Computer Company (Houston, Texas), alleging distribution of infringing Windows XP Pro and Office 2003 Pro software.

Case No. 4:08-cv-01825

Filed in the U.S. District Court for the Eastern District of Virginia, Alexandria Division

Microsoft Corp. v. L&Y Electronics, Inc. (Woodbridge, Virginia), alleging distribution of counterfeit and infringing Office Pro 2003 software.

Case No. 1:08 CV 596 GBL/JFA

Filed in the U.S. District Court for the District of Oregon

Microsoft Corp. v. Computer Renaissance (Beaverton, Oregon), alleging distribution of infringing Windows XP Pro and Office 2007 software.

Case No. CV 08 697 KI

Filed in the U.S. District Court for the Eastern District of Arkansas

Microsoft Corp. v. Delta Computers (Pine Bluff, Arkansas), alleging distribution of infringing Windows XP Pro and Office Pro 2003 software.

Case No. 5:08 CV 0168 JMM

Filed in the U.S. District Court for the District of Colorado

Microsoft Corp. v. The Toro Group, Inc. d/b/a Axess Computers (Denver, Colorado), alleging distribution of counterfeit Office Pro 2003 software.

Case No. 08-CV-01227

Filed in the U.S. District Court for the Middle District of Florida, Tampa Division

Microsoft Corp. v. Computer Renaissance (Clearwater, Florida), alleging distribution of infringing Windows XP Pro and Office 2007 Enterprise Edition software.

Case No. 8:08-cv-1107

Filed in the U.S. District Court for the Northern District of Illinois, Eastern Division

Microsoft Corp. v. Myoda Computer Centers (Hoffman Estates, Illinois), alleging distribution of infringing and Office Pro 2007 software after a prior complaint and injunction.

Case No. 08CV3299

Filed in the U.S. District Court for the Western District of Washington at Seattle

Microsoft Corp. v. Twilight Computers (Burien, Washington), alleging distribution of infringing Windows XP Pro and Office 2007 Enterprise Edition software.

Case No. 08-0902 RSM

Filed in the U.S. District Court for the Western District of Washington at Tacoma

Microsoft Corp. v. 1 Source Computer Solutions (Vancouver, Washington), alleging distribution of infringing Office Pro 2003 software.

Case No. 08-5368 RBL