Lawsuits Confirm Commitment to Protect Texas Consumers, Honest Resellers

DALLAS, Nov. 2, 1998 — Microsoft Corp. officials today announced that lawsuits were filed against seven Texas companies. Six companies were charged with both copyright and trademark infringement and alleged distribution of counterfeit products; one company was charged with copyright and trademark infringement. The suits were filed Oct. 27 in the U.S. District Courts for the Southern District of Texas Houston Division and the Northern District of Texas Dallas Division.

Six of the defendants allegedly distributed counterfeit Microsoft® products. The Texas businesses, locations and the software products allegedly involved are as follows:

  • SMI Liquidation Inc., formerly known as Silicon Microsystems, Dallas: Windows 95 operating system (Civil Case No. 3-98-CV2532-X)

  • Essex Computers Inc., dba Computer Center, a k a Today’s Computer Business Center, Houston: Windows 95 (Civil Action No. H-98-3594)

  • Biway International Technology, Inc., dba Biway Technology, Houston: Windows 95, the Windows NT Server 4.0 and Windows NT Workstation 4.0 operating systems (Civil Action No. H-98-3593)

  • ACS Technology Inc., dba AMPAC, Houston: Windows 95 and MS-DOS 6.22 (Civil Action No. H-98-3596)

  • CPU Distributing Inc., Houston: Windows 95 and Office Professional 97 (Civil Action No. H-98-3595)

  • AR Technologies Inc., Garland: Windows 95 and Office Professional 97 (Civil Case No. 3-98-CV2535-J)

In addition to allegedly distributing counterfeit Microsoft products, AR Technologies Inc., Garland, also allegedly sold computer systems with unauthorized copies of Windows 95 and Microsoft Office Professional 97 installed – a practice known as
“hard disk loading.”
The seventh company named in one of the suits, Megadyne Company dba Precision Computers (Civil Action No. H-98-3592) of Houston, is charged with copyright and trademark infringement for allegedly selling computer systems with unauthorized copies of Microsoft Office Professional 97.

Hard disk loading, counterfeit distribution by resellers and unauthorized multiple installations of software in businesses are the three most prevalent forms of software piracy.

The companies were investigated as a result of tips to the Microsoft Anti-Piracy Hotline, most of which are received from honest resellers or from customers who receive suspicious products. Microsoft receives more than 2,000 calls and e-mail messages each month that are reviewed by investigators to identify computer resellers and end users that are using or distributing Microsoft software illegally.

“Law enforcement action against software piracy and the theft of intellectual property is clearly on the rise,”
said Molly Richard of the Dallas law firm Strasberger & Price.
“Recent efforts by local and federal law enforcement agencies, such as the FBI raid of the First Saturday Computer Swap meet in Dallas this past February, are alerting consumers that some of the software they’re acquiring at ‘swap meet’ prices is often counterfeit product.”

Microsoft encourages consumers to become familiar with the warning signs that can help them identify counterfeit or illegal software.

  • Prices that are
    “too good to be true.”
    This may be counterfeit product or product that has been misdirected, such as product authorized for distribution only to educational institutions but is being offered to the general public.

  • Backup disks or CD-ROMs with handwritten labels, or components that appear to be of inferior quality

  • Manuals that appear to be photocopied or are of inferior quality

  • Products marked with a phrase, such as
    “For distribution with a new PC only,” “Special CD for licensed customers only,” “Not for retail or OEM distribution”
    or
    “Academic price – not for use in a commercial environment,”
    that does not describe the transaction.

In addition, when users acquire a new computer system, it will include operating system software. If that software is the Microsoft Windows 98 operating system, it will be accompanied by a user manual that incorporates a Certificate of Authenticity as the cover. The customer will also receive a CD-ROM with the software program. There must be an end-user license agreement (visible online when the program is first run). If any of these elements is missing, the product is suspect.

“Software piracy hurts the core of the Texas economy, as evidenced by a loss of 10,000 jobs and $920 million in combined lost wages, tax revenues and retail sales in 1997,”
said Rob Graham, vice president of Strategic Relationships and General Counsel at Software Spectrum Inc., citing a 1997 IPR study on the economic impact of piracy in the state of Texas. “Approximately half of the jobs lost to software piracy are jobs lost in the distribution channel. We applaud Microsoft’s recognition of piracy’s impact on businesses in Texas and that the company is fighting offenders proactively.”

Customers or resellers with questions about the legitimacy of Microsoft products should contact the Microsoft Anti-Piracy Hotline toll free at (800) RU-LEGIT (785-3448) or send e-mail to piracy@microsoft.com. They can obtain more information about software piracy by calling the Business Software Alliance (BSA) Anti-Piracy Hotline at (888) NO PIRACY (667-4722) or sending e-mail to software@bsa.org.

Founded in 1975, Microsoft (Nasdaq
“MSFT”
) is the worldwide leader in software for personal 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.

Microsoft, MS-DOS, Windows and Windows NT are either registered trademarks or trademarks of Microsoft Corp. in the United States and/or other countries.

Other product and company names herein may be trademarks of their respective owners.

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