Software Piracy Cost Washington State Economy $719 Million

REDMOND, Wash., March 9, 1999 — Microsoft Corp. today released statistics revealing that software piracy cost Washington state over $719 million in combined lost wages, tax revenues and retail sales. Software piracy also cost the state approximately 3,700 jobs, translating into $200 million in wage and salary losses. In addition, the data shows that more than $41 million in tax revenues were lost because of the piracy problem in Washington state.

The information was released as part of an educational effort to raise awareness that software piracy – the theft of software through illegal copying of genuine programs or through counterfeiting and distribution of imitation products – adversely affects local businesses and economies, as well as the value placed on people’s ideas. International Planning & Research Corp. (IPR) of Redmond, Wash., utilized data from a 1997 international piracy study published by the Business Software Alliance (BSA) and the Software Publisher’s Association (SPA) along with additional data and analysis of piracy in Washington.

“Contrary to what some people may think, software piracy is not a victimless crime,”
said Brad Smith, general counsel, international law and corporate affairs at Microsoft.
“To put in perspective the impact of software piracy on our taxes alone, consider that we’ve lost 41 times the amount already donated to the John Stanford Book Fund – and could have purchased well over a million new books for our schools.”

The IPR study showed that the software piracy rate in Washington reached 22 percent in 1997, which means that more than one in every five copies of software on the desktop was illegal.

“In addition to hampering our economy, software piracy damages the integrity of intellectual property, one of the keys to the success of Washington’s software entrepreneurs,”
said Bob Watt, president of the Seattle Chamber of Commerce.
“For the software industry to continue making such a significant contribution to our local economy, it is imperative that businesses work together with consumers and government to fight software piracy.”

Because of the large losses to piracy and the strength of the local software industry, Microsoft is also working to gain support in Olympia for laws that better protect intellectual property in the state. Washington is one of the 28 remaining states that has not yet enacted an anti-counterfeiting felony provision in the state legislature. The EHB 1007 has recently passed the House and is now waiting for a hearing in the Senate Judiciary Committee.

“At a time when piracy is on the decline in every country but the United States and counterfeiting is on the rise because of its allure to organized criminals and the ease of distribution on the Internet, it’s time that we put a stake in the ground on this issue,”
said Rep. Renee Radcliff, one of the sponsors of EHB 1007.
“We hope that the passage of this bill will provide a stimulus to start shifting the tide against piracy in Washington state.”

The software industry is a significant driver of the current economic prosperity in the United States, accounting for the creation of more than 2 million jobs, $102.8 billion in software and software-related services, and payment of $7.2 billion in taxes. However, software piracy threatens the ability of the industry to continue to contribute to the American economy. According to a 1997 study by Nathan Associates of Arlington, Va., commissioned by the BSA,

software piracy in 1996 resulted in the loss of 130,000 jobs in the United States, $5.3 billion in wages and salaries and nearly $1 billion in tax revenues.

Customers or resellers with questions about the legitimacy of Microsoft products should contact the Microsoft anti-piracy hot line, toll free, at (800) RU-LEGIT (785-3448), or send
e-mail to [email protected]. More information about software piracy can also be obtained by calling the Business Software Alliance anti-piracy hot line at (888) NO-PIRACY (667-4722) or sending e-mail to [email protected].

Founded in 1975, Microsoft (Nasdaq
) 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.

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