Microsoft and Video Update Settle Copyright Infringement Dispute

REDMOND, Wash., Sept. 29, 2000 — Microsoft Corp. and Video Update Inc. announced today that they have settled their copyright infringement dispute for an undisclosed sum. Video Update Inc., headquartered in St. Paul, Minn., owns and operates video rental stores and franchises throughout the United States and Canada. Microsoft’s suit alleged that Video Update was involved in a practice known as corporate copying — the illegal loading of one piece of software onto more computers than the software’s license agreement allows. Video Update generally denies the allegations brought forth in this case and believes that any license deficiency was the result of the company’s acquisition of 20-plus video rental chains over the past four years.

“Settlements for copyright infringement cases are typically much more expensive than the cost of fully licensing the software in the first place,”
said Janice Block, corporate attorney at Microsoft.
“Effective software management in the workplace can eliminate the risks associated with piracy and provide substantial benefits as well as cost savings to a business organization.”

As part of the settlement agreement, Video Update agreed to acquire certain software licenses and also agreed to an injunction against infringement in the future.

Microsoft commends Video Update for addressing its current licensing requirements as well as ensuring that future use of its software is properly accounted for and licensed. As a company whose ability to succeed and profit is based on the legal use of intellectual property, Video Update supports the fight against software piracy and encourages its patrons to comply with copyright laws as well.
“It is important for our customers and the public to understand that rented videos cannot be duplicated and passed around freely,”
said Dan Howard, Video Update’s chief operating officer.

The protection of intellectual property is essential for the continued growth and prosperity of the economy and the various industries that create valued intellectual property. The use of illegal software is not only wrong, it stifles innovation and has a severe negative impact on our nation’s economy in the digital age. One in every four PCs in the United States is running pirated software. This level of software piracy presents a significant drain on the nation’s high-tech industry and economy.

Customers or resellers with questions about the legitimacy of Microsoft software should contact the Microsoft anti-piracy hotline, toll free, at (800) RU-LEGIT (785-3448) or send e-mail to [email protected]. In addition, a list of authorized distributors and details regarding the OEM System Builder program are available at . Consumers can obtain more information about software piracy by calling the Business Software Alliance anti-piracy hotline at (888) NO-PIRACY (667-4722) or sending e-mail to [email protected].

About Video Update

Video Update Inc. is headquartered in St. Paul, Minn., and owns, operates and franchises video specialty stores under the name Video Update throughout the United States and Canada. Matters discussed in this news release, including expectations express or implied, as to Video Update’s future operating results contain forward-looking statements that involve risks and uncertainties. Future operating results or other events may differ materially and significantly from such forward-looking statements and can be impacted by many of the risk factors and concerns described in Video Update’s SEC reports, including but not limited to competition, weather, limited cash flow, and consumer acceptance of then available new release movie titles. These and other risks related to Video Update’s operations are detailed from time to time in the Company’s SEC reports, including Form 10-K for the year ended April 30, 1999, and its most recent quarterly report for the period ended Jan. 31, 2000.

About Microsoft

Founded in 1975, Microsoft (Nasdaq
) is the worldwide leader in software, services and Internet technologies 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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