Microsoft Takes Action Against Three Resellers in Upstate New York For Alleged Distribution of Counterfeit Software

BUFFALO, N.Y., March 15, 2000 — Microsoft Corp. today announced that it has filed software piracy lawsuits against three companies in upstate New York. The lawsuits, alleging copyright violations and trademark infringements, were filed against businesses for the alleged distribution of counterfeit and/or infringing Microsoft® software and/or end user license agreements. The lawsuits aim to protect customers and legitimate distributors from the harmful impact of software piracy.

“Consumers who are spending good money on bad software are being taken advantage of,”
said Jack Boyczuk, president of Great Lakes Electronic Distributing.
“We applaud those who are working to educate consumers and the channel about software piracy — and appreciate Microsoft’s steps to curb software piracy and level the playing field so honest companies like mine can compete fairly in the channel.”

The average piracy rate in the United States is 25 percent, which means that one in four computers are running pirated software. New York has a piracy rate below the national average at 18.5 percent, but New York’s consumers, distribution channel and economy are seriously impacted by software piracy. In 1998, software piracy cost the state an estimated 7,570 jobs — ranking third in the nation in job losses next to California and Texas. According to a study conducted by International Planning & Research Corp. in 1998, these unrealized jobs equate to more than $337 million in lost wages and salaries in New York. Furthermore, the drain on tax revenues from piracy amounted to over $49 million — money that otherwise could have contributed to local and state improvement projects.

Software piracy has a significant impact on state and local economies across the country and throughout the world. According to a study by Nathan Associates Inc. commissioned by the Business Software Alliance (BSA), software piracy cost the national economy 109,000 jobs, $4.5 billion in wages and nearly $1 billion in lost taxes during 1998.

Some of the businesses named in Microsoft’s complaints were investigated as a result of tips to Microsoft’s anti-piracy hot line. These tips are by and large phoned in from resellers or consumers who acquire suspicious software. According to allegations, each of the defendants continued to distribute unauthorized Microsoft software even after receiving a written request from Microsoft to stop unlawful activities.

As a result of a three-year investigation against defendant Black Cat Computer Wholesaler, Microsoft’s investigation revealed that test purchases have resulted in the acquisition of over 25 counterfeit samples of Microsoft software — despite the issuance of two cease-and-desist letters. These test purchases were made, in part, as a follow-up to tips received through Microsoft’s anti-piracy hot line regarding this company.

All of Microsoft’s lawsuits allege that the defendants distributed counterfeit and/or infringing copies of Microsoft software, software components or end user license agreements (EULAs) to investigators and/or customers. The complaints are as follows:

Filed in the United States District Court for the Northern and Western Districts of New York:

  • Black Cat Computer Wholesale of Amherst allegedly distributed counterfeit Windows® 98, Windows 95, Windows NT® Server, Windows NT Workstation, components of Office 2000, Office Professional 97, counterfeit Office 2000 end-user license agreements and counterfeit Office Professional 97 end-user license agreements (Case No. 00-CV-0231 A (H)).

  • CGS Computer of Endicott allegedly distributed counterfeit Windows 98, Windows 95 and Office Professional 97 (Case No. 00-CV-0412 (TJM) (GLS)).

  • Computer Excellence of East Rochester allegedly distributed counterfeit Office Professional 97 (Case No. 00-CV-0226 A (H)).

“Consumers deserve to acquire legitimate working Microsoft software – just as the honest distribution channel deserves to compete in a fair marketplace,”
said Nick Psyhogeos, corporate attorney at Microsoft.
“As a result, Microsoft is committed to combating software piracy through education programs and enhanced security features, and by taking legal action against those who distribute counterfeit software.”

“We receive calls to Microsoft’s anti-piracy hot line from consumers and resellers reporting suspicious business practices — including the suspected distribution of counterfeit software via the Internet,”
Psyhogeos said.
“Consumers need to take precautions when purchasing any software products, but particularly online.”

The explosive growth, ease of use and anonymity of the Internet have made it easier for pirates to sell and distribute counterfeit and otherwise illegal software. Online shopping tips include the following:

  • Be aware that not everyone is as honest as you are. Counterfeit software is widely available through Internet businesses and Internet auctions.

  • Get full company addresses and phone numbers up front. Avoid doing business with companies or individuals who are unwilling to verify their identity or full business name or provide a physical street address and telephone number for follow-up after the transaction has occurred.

  • Always ask for full details regarding return, service or warranty policies. Avoid purchasing from online distributors who are unwilling or unable to provide adequate or satisfactory descriptions of these policies.

  • Check product prices to reduce the risk of buying illegal software. If the price seems too good to be true, it probably is.

Through the implementation of new anti-counterfeiting features, Microsoft is taking steps to make counterfeit software easier to spot and to assist honest resellers and OEM system builders in distributing genuine software.

Microsoft has recently announced new anti-counterfeiting features for the Windows 2000 operating system, including an edge-to-edge CD-ROM hologram and a new Certificate of Authenticity (COA) label. These features will make it more difficult for counterfeiters to pass off counterfeit software as genuine to unsuspecting customers.

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.

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