Microsoft Launches Worldwide Campaign to Crack Down on Internet Fraud

REDMOND, Wash., Aug. 1, 2000 — Microsoft Corp. today announced that it has launched the first wave of a new global campaign against Internet consumer fraud involving software products. Employing new technology and working with industry partners and law enforcement agencies, Microsoft has taken legal action against more than 7,500 Internet Web and auction site postings allegedly offering counterfeit and other illegal copies of software. The illegal content resided on Internet servers located in 33 countries on six continents.

“The growth of counterfeit software on the Internet is a threat not only to those who create content, but to consumers who are being asked to pay good money for bad products,” said Brad Smith, deputy general counsel, Worldwide Sales at Microsoft. “The goal of this new campaign is to help ensure that Internet commerce is characterized by genuine products and honesty rather than dodgy goods and theft.”

Microsoft is using new technology to support the worldwide campaign, including an Internet monitoring tool that can search suspect sites on the Internet 24 hours a day, 7 days a week to identify illegal online offerings and those behind them. By automating some of the most time-consuming work relating to illegal offerings, Microsoft will be able to identify and address thousands of illegal sites in a single day and work with Internet service providers and auction sites to remove illegal products from the Internet.

In the first wave of the new campaign, Microsoft sought the prompt removal of allegedly counterfeit offerings from Internet sites and then took further action if cooperation was not forthcoming. With the help of law enforcement officials worldwide and often in coordination with the other members of the Business Software Alliance (BSA), the campaign has already led to 64 criminal raids and 17 civil lawsuits in 15 countries worldwide, including Australia, Brazil, Germany, Hong Kong, Israel, South Africa, Sweden, the United Kingdom and the United States.

“While the recent Napster debate highlights the illegal downloading of content for free, we’re also witnessing an upsurge in unauthorized Internet sites fraudulently offering ‘special low prices,’ collecting money, and then delivering fake CD-ROMs to unsuspecting consumers,” said Robert Holleyman, president and CEO of BSA. “Although Napster is not designed to aid directly in the piracy of business software, new technologies can and should enhance ways to access and distribute copyrighted works legally. Unauthorized file sharing and the distribution of illegal creative works, through any means, pose a serious threat to consumers and the global economy.”

“Fraudulent software sales over the Internet have prompted thousands of consumer complaints to Microsoft’s anti-piracy hot lines around the world,” confirmed Tim Cranton, corporate attorney for Microsoft. “In some cases, consumers never received any product at all, while in others they received a defective CD or a download infected with a virus that prevented proper installation of the software. Microsoft’s new campaign should help eliminate some of the risk for consumers, but they must also become savvy Internet shoppers and learn to spot the warning signs of counterfeit and pirated software, such as deals that are too good to be true.”

Microsoft’s new campaign comes as emerging technologies such as Gnutella, Freenet and others seek to make it easier to distribute pirated copies of movies, music and software on the Internet. “We’re committed to developing technology solutions that respond to technology problems,” said Smith. “Ultimately we’re going to need a combination of new technology and new relationships between the public and private sectors that protect the law-abiding interests of both creators and consumers. The protection of intellectual property rights on the Internet is essential to encourage creative individuals and companies to develop new products that will benefit consumers.”

The majority of illegal Internet postings involved in today’s worldwide enforcement efforts were discovered by Microsoft investigative teams using the new Internet technology. Microsoft backs up the automated search tool with a growing number of online and traditional investigators who examine suspect sites, make test purchases, work with ISPs and track down the pirates behind the illegal sites.

In the United States, where more than 3,000 Internet auctions were taken down in July, Microsoft is announcing six Internet anti-piracy lawsuits and two settlements today. One of the cases involves a New York company called Copy USA that uses auctions sites to advertise Microsoft® software at “too good to be true” prices. Microsoft investigators made test purchases from Copy USA and received counterfeit copies of the Windows® 2000 operating system. To date, Microsoft has shut down nearly 600 auctions posted by Copy USA. Microsoft has filed a similar lawsuit against Buy It Cheap Network in Texas for allegedly selling counterfeit Microsoft Office via the Internet.

For tips on how to shop safely for software online, visit Microsoft’s Anti-Piracy Web site at www.microsoft.com/piracy. 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.

About Microsoft

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Microsoft Fights Back Against Internet Fraud

Case Fact Sheet: The first wave of Microsoft’s new campaign against Internet fraud has included legal actions in 33 countries on six continents today:

Argentina, Australia, Austria, Brazil, Canada, Chile, Colombia, Croatia, Denmark, Dominican Republic, France, Germany, Hong Kong, Israel, Italy, Netherlands, Norway, Peru, Poland, Portugal, Romania, Russia, Slovakia, Slovenia, South Africa, South Korea, Spain, Sweden, Switzerland, United Arab Emirates, United Kingdom, the United States and Venezuela.

Highlights of these actions include:

United States

  • A civil action against Buy It Cheap Network (aka Insidernet Internet Marketing, Zsoftware, Software Direct, Surplus Software and Zye Marketing) of Arlington, Texas, for allegedly distributing counterfeit Office 97 Professional Edition through numerous Web sites.

  • A civil action against Online Computer Store of Warner Robins, Ga., for allegedly distributing counterfeit copies of Windows 98, Windows 95 and Office 97 Professional Edition via its Web site.

  • A civil action against Copy USA Technologies of Brooklyn, N.Y., for allegedly distributing illegal CD-R copies of Windows 2000 via auction and e-mail solicitations.

  • A civil action against Black Sea Worldwide Trade Inc. of Virginia Beach, Va., for allegedly selling counterfeit Office 2000 Professional Edition and Office 97 Professional Edition advertised on several Web sites.

  • A civil action against Godabuzz.com of Big Spring, Texas, for allegedly posting copies of Windows 2000 Professional Edition, Windows Millennium and other Microsoft software for illegal download.

  • A civil action against Computers R Us of Westminster, Md., for allegedly distributing illegal downloads of Windows 2000 through an FTP Server.

  • Out-of-court settlement with a college student from Sacramento, Calif., for allegedly distributing CD-R copies of Windows 2000 through unsolicited e-mail and Internet auctions. This resolution will include a prohibition on future sales of illegal software, a charitable donation and/or community service.

  • Out-of-court settlement with “Matt the CD-R Guy,” a student from the Chicago area, for distributing illegal CD-R copies of Windows 2000 through Internet auctions and unsolicited e-mail. This resolution includes a prohibition on future sales of illegal software, a charitable donation and/or community service.

Latin America

  • Argentina: As the first Internet piracy action in Argentina, local Argentine authorities in conjunction with the BSA raided the home of a reseller who was allegedly offering pirated software. More than 400 CD-Rs containing illegal copies of Windows 2000 were seized.

  • Brazil: The Brazilian Software Association – ABES, Microsoft and the Police Department of S
    ã
    o Paulo, Brazil, took down an illegal CD replication lab in the outskirts of the city. The lab owner allegedly distributed counterfeit product over his personal Web site.

  • Chile: ADS/BSA local counsel and local Chilean authorities raided an individual who was alledgedly offering pirated software through the Internet. The authorities arrested the individual and local counsel has proceeded to file a lawsuit against him.

  • Venezuela: The Venezuela police carried out their first raid against a reseller, Soft Trinidad, who allegedly advertised pirated software via the Internet. The tax authorities have opened an investigation of Soft Trinidad for tax evasion.

Europe

  • Germany: Authorities carried out takedowns of more than 700 individual auctions offering copies of suspected illegal software. In the days prior to the official launch of Windows 2000, more than 130 auctions offering suspected counterfeit Windows 2000 software CD-ROMs were identified and removed.

  • Netherlands: A pirate offering illegal copies of Windows 2000 CD-ROMs as well as video games, business software, magazines and film via his Web site Funsoft was raided in the Netherlands in the small village of Horn.

  • United Kingdom: A civil action was filed against Matthew Borum and Warez-Central in London for allegedly distributing illegal copies of over a dozen different Microsoft products including Windows 2000, Windows 98 and Office 2000 via his Web site.

Middle East and Africa

  • Israel: Following the voluntary takedown of dozens of illegal sites, the BSA and Israeli police joined together to raid the home address for a Web site that offered cheap products. The site was run by a 20-year-old male who was caught distributing allegedly pirated Microsoft Windows 2000 over the Internet.

  • South Africa: An ISP and dealer who advertised on the auction site www.bidorbuy.co.za was raided by the Commercial Crime Unit, who seized allegedly counterfeit product. The site owner indicated that he obtained counterfeit product through a U.S. Internet site.

Asia and Pacific

  • Australia: The Federal Police in Australia conducted a raid on Peter Bishop, who was distributing a significant amount of counterfeit Microsoft Office 97 through his Web site.

  • Hong Kong: The recently established Anti Internet Piracy Task Force of Hong Kong Customs carried out its first Internet enforcement operation in Hong Kong against http://fun.zz.st/software. Two suspects were arrested and equipment was seized during the raid.

  • New Zealand: Civil proceedings were filed in the High Court of New Zealand against Mark Jenson for allegedly using false aliases to advertise illegal copies of Microsoft Office 2000 Premium through auction sites.

  • Singapore: Frankie Ng of Singapore was convicted, and fined $20,000 for Internet software piracy. Ng was sentenced to 21 weeks’ imprisonment in default of payment of the fine.

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