Microsoft Increases Efforts to Protect Intellectual Property Rights In Washington State

REDMOND, Wash., March 15, 2000 — Microsoft Corp. officials today announced that a year after it last mystery-shopped for genuine software in its back yard, the company has found an even greater need to protect consumers, honest resellers and the value of intellectual property in its home state. Microsoft’s most recent efforts uncovered four Washington state computer resellers that have allegedly distributed counterfeit Microsoft® software. This effort to stop the distribution of counterfeit software comes on the heels of a March 7 guilty plea in a criminal action by a Federal Way man who was manufacturing a large amount of counterfeit software in his apartment.

Why Does Software Piracy Matter?

On March 7, the U.S. Labor Department estimated that the fourth-quarter productivity increase of 6.1 percent was the largest in the past seven years. This increase in worker productivity is widely attributed to ongoing advances in the computing and technology industries. Washington’s technology industry leads the nation in the creation of high-tech companies and the growth of technology employment fueled by those companies, according to a report issued last week. Technology accounts for nearly 12 percent of Washington state’s employment, rising to 38 percent when companies that are impacted and/or in existence as a result of the state’s high technology industry are included. This productivity and growth is threatened, however, by the persistence of software piracy; in Washington state, one in five desktops is running pirated software.

“Washington is a recognized leader in developing the intellectual property that fuels productivity and economic growth at both the state and national level,”
said Tim Cranton, a corporate attorney at Microsoft.
“At the same time that our innovation and resulting productivity is soaring, however, so is intellectual property theft. We feel that it’s Microsoft’s responsibility as a leader in the community and in the industry not only to watch out for consumers and honest resellers, but to work alongside government and law enforcement to ensure that Washington State can make the most of the opportunities created by our new digital economy.”

Counterfeit Software Manufacturing Reaches Washington

In January, Garrett Felender of Federal Way, Wash., was arrested for the suspected sophisticated manufacture and sale of thousands of counterfeit copies of Microsoft Office 2000 and other Microsoft software with a street value estimated in the millions of dollars. Felender’s operation was large enough to rival some organized criminal operations that have been springing up across the country. Under federal statutes, Felender could face up to five years in prison and a $250,000 fine.

In May, Washington became the 23rd state to enact a bill that provides for felony treatment of counterfeiting in the state. Washington also hosts a Computer Crimes Unit of the FBI, one of only a few in the country.

Counterfeit Software Distribution Here, Too

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 investigation 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.

Lawsuits alleging copyright violations and trademark infringements for the alleged distribution of counterfeit software to customers and/or investigators were filed in the U.S. District Court for the Western District of Washington against the following companies:

  • 4th Dimension Computer Corp. (formerly known as PC Pro Computer Systems Inc.) of Olympia (also on the Internet at www.4dcomputers.com) (Case No. C00-5142 RJB)

  • Cyber Bear Computers (also known as Cyberbear Computer & Net Cafe) of Bellevue and Seattle (also on the Internet at www.netcafe.net) (Case No.C00-393 P)

  • PC Magic of Seattle (Case No.C00-394 C)

  • Whidbey Island Technical Services of Oak Harbor (Case No. C00-392 C)

“Software piracy has always been a large problem for us and a long overused strategy of many of the disreputable resellers we are competing against daily,”
said Glen Jones, president and CEO of TechPower Solutions Inc. in Redmond.
“Acquiring counterfeit software is simply illegal and unethical. It is our job to educate consumers about the benefits of legitimate software and the potential harm counterfeit software could bring them, including no technical support and risking damage to their company’s reputation and integrity.”

New Anti-Piracy Features and Warning Signs

With the launch of the Microsoft Windows® 2000 operating system, Microsoft announced the implementation of new anti-counterfeiting features — including an edge-to-edge CD-ROM hologram to make it easier for customers to identify genuine copies of Windows 2000 and the upcoming service release of Office 2000. In addition, a new Certificate of Authenticity (COA) label that has more security features than any currency in the world will be included on the tower of all new PCs sold with Windows 2000. Other signs that can help consumers and resellers identify counterfeit or illegal software include:

  • Prices that are
    “too good to be true”

  • Suspicious methods of delivery and/or payment

  • Retail software distributed in jewel cases only, rather than in full-color retail boxes

  • Software marked with a phrase, such as
    “For distribution with a new PC only”
    or
    “Special CD for licensed customers only,”
    that does not describe the transaction

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. In addition, a list of authorized distributors and details regarding the OEM System Builder program are available at http://www.microsoft.com/oem/ . Consumers can obtain more information about software piracy by calling the Business Software Alliance anti-piracy hot line at (888) NO-PIRACY (667-4722) or by sending e-mail to software@bsa.org.

About Microsoft

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

Microsoft and Windows are either registered trademarks or trademarks of Microsoft Corp. in the United States and/or other countries.

The names of actual companies and products mentioned herein may be the trademarks of their respective owners.

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