Consumer Tips Lead to Lawsuits Against Five Firms Suspected of Software Piracy

REDMOND, Wash., Oct. 25, 1996 — Based on tips from customers and other sources, Microsoft has filed copyright infringement lawsuits against five computer resellers in Pennsylvania and New Jersey for alleged illegal distribution of software, the company announced today.

“These cases demonstrate that consumers can take steps to protect themselves from pirated software,” said Jim Lowe, Microsoft corporate attorney. “Pirated software can carry computer viruses, which can destroy your data and damage your computer. And unlike legal software, pirated software doesn’t provide any warranty, technical support, or assurance of quality.”

Based on consumer tips from the Microsoft Anti-Piracy Hotline and other sources, Microsoft identified nine computer dealers in Pennsylvania and New Jersey who were allegedly selling pirated software. Purchases made by “mystery shoppers” confirmed that the dealers allegedly were installing unauthorized versions of software on computers for sale to the public – an illegal practice known as hard-disk loading.

Five of the suspect dealers refused to sign settlement agreements to prevent software piracy, resulting in copyright infringement lawsuits being filed against the five companies: United Computer Resources of New Jersey and Compu-Wiz, both based in Cherry Hill, New Jersey; and NCL Systems, United Computer Resources of Philadephia, and Penn Micro, based in Philadephia, Pennsylvania. The other four suspect dealers signed voluntary settlements, agreeing to stop any software piracy and to compensate Microsoft for past losses.

In addition to copyright infringement, Compu-Wiz faces a claim for breach of contract for apparent unauthorized distribution of academic software products to non-educational customers.

“Microsoft provides software at discounted prices for use by educational institutions, teachers, and registered students. Unfortunately, some unscrupulous dealers try to take advantage of our low academic prices, to increase their profits or to undercut their competitors who play by the rules. Consumers should report any dealer who tries to sell them products labeled for the academic market,” Lowe said.

“It’s good to see these kinds of compliance efforts by Microsoft,” said Joseph Niu, President of Sunnytech, Inc. in Teterboro, New Jersey. “Keeping piracy in check is vital to legitimate firms, so we can offer competitive prices and good value to the public. Vendors need to support the standards that have been established to protect consumers.”

According to Microsoft, there are a number of “warning signs” that can help consumers identify potentially illegal software products:
* No Certificate of Authenticity

* Prices that are “too good to be true.”

* No end user license agreement.

* No product registration card.

* No backup disks, manuals, or other materials for software installed on a new computer system.

* Backup disks have hand-written labels, are not shrink-wrapped, or appear to be of inferior quality.

* Manuals are photocopied, are not shrink-wrapped, or appear to be of inferior quality.

The Pennsylvania/New Jersey investigation follows five similar anti-piracy sweeps in the Silicon Valley area, Toronto, New York/New Jersey, Texas, and Los Angeles.

The company is currently conducting investigations of suspected piracy in other North American markets.

Consumers or resellers with questions about the legitimacy of Microsoft products should call the Microsoft Anti-Piracy Hotline at 1-800-RU-LEGIT or e-mail piracy@microsoft.com. To receive more information about software piracy, call the Business Software Alliance (BSA) Anti-Piracy Hotline at 1-800-688-2721 or e-mail software@bsa.org.

Founded in 1975, Microsoft (NASDAQ “MSFT”) is the worldwide leader in software for person computers. The company offers a wide range of products and services for business and personal use, each designed with the mission of making it easier and more enjoyable for people to take advantage of the full power of personal computing every day.

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