REDMOND, Wash., Nov. 30, 2004 — Microsoft Corp. today announced the first results of its effort aimed at identifying and targeting computer resellers who allegedly buy or sell counterfeit Certificate of Authenticity (COA) labels. Microsoft’s test program involves the purchase of hundreds of individual COA labels and computer systems with COA labels attached in an attempt to authenticate unlicensed software.
“The practice of selling or using COA labels that do not correspond with the appropriate software is the same as distributing an appraisal certificate for a diamond separately from the sale of the diamond. A COA label has no independent value if it is separated from the software it authenticates,” said Pip Marlow, general manager for U.S. Partner Enablement at Microsoft. “The purchase program is one way in which Microsoft is responding to the feedback from our partners and customers who tell us that we need to take steps to protect them against dishonest dealers and resellers who are peddling unlicensed and counterfeit software.”
The company filed the first eight lawsuits in California, Illinois, New Jersey, New York, North Carolina, Pennsylvania and Washington against defendants who allegedly distributed counterfeit Microsoft COA labels and those who distributed COA labels in an attempt to authenticate software that was unlicensed.
“Stand-alone” COA labels are used to induce businesses and consumers into acquiring counterfeit or unlicensed software. Customers who acquire Microsoft®
software with counterfeit COA labels or who purchase computers loaded with unlicensed copies of Microsoft software on which COA labels are affixed are unable to obtain the technical support, valuable product upgrades and other value-added services available to customers who have genuine Microsoft software.
The eight lawsuits resulted from a Microsoft test-purchase program conducted over the past 12 months. The lawsuits, which allege copyright and trademark infringement, were filed against Monarch Technology Inc. of San Clemente, Calif.; Kenneth Xu of Union City, Calif.; Era Limited of Lake Zurich, Ill.; Micro Info Tech (USA) Corp. of Edison, N.J.; Affordable Computer Warehouse of Clinton, N.Y.; Warp Systems/Computers LLC of Raleigh, N.C.; Master Computer Inc. of State College, Pa.; and Software Provisions of Vancouver, Wash. Defendants in each case allegedly continued their distribution of counterfeit COA labels or unlicensed software even after they were contacted by Microsoft before the lawsuits were filed requesting that they halt their illegal activities, according to the complaints.
“Resellers who use illegitimate COA labels or pirated product keys to hoodwink consumers undercut honest businesses and create a competitive disadvantage in the marketplace,” said David June, director of development and business relations for Northwest Computer Supplies in Bellingham, Wash. “The lost business opportunities for ethical companies are immediate and painful. We endorse Microsoft’s action to level the playing field for honest businesses.”
Counterfeit labels are sometimes distributed and positioned as valid software licenses by businesses on the Internet. Stand-alone COA labels are often purchased by computer manufacturers that copy unlicensed Microsoft software onto computer systems and attempt to authenticate it with the invalid labels in a practice commonly known as hard-disk loading. Another abuse of COA labels involves software resellers pairing the separated labels with unlicensed or counterfeit software. Such companies unfairly compete in the marketplace with the thousands of legitimate Microsoft partners that deliver honest value to their customers.
A Certificate of Authenticity label helps identify genuine Microsoft software. For preinstalled Microsoft Windows®
operating systems, the COA label should be affixed to the PC chassis and should not be removed from the PC. When the Windows operating system is acquired separately from the computer, the COA is affixed to the top of the box. The COA includes sophisticated anti-counterfeiting features to help verify the software’s authenticity. The COA label also includes a product key code, used if operating system needs to be reinstalled. More information on COA labels can be found at Microsoft’s How to Tell Web site at http://www.microsoft.com/howtotell .
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Case Fact Sheet
The following is a summary of the allegations contained in the eight lawsuits filed by Microsoft Corp. on Monday, Nov. 29, 2004, in the United States.
Filed in the U.S. District Court for the Central District of California:
Microsoft Corp. v. Monarch Technology Inc. of San Clemente, Calif.
Case No. CV04-9685 ABC (SHx)
Allegations: Distribution of counterfeit Certificate of Authenticity labels for Microsoft Windows 2000 Professional, as well as counterfeit Windows 2000 Professional and Office 2000 Professional software components
Filed in the U.S. District Court for the Northern District of California:
Microsoft Corp. v. Kenneth Xu of Union City, Calif.
Case No. C045020 CW
Allegations: Distribution of counterfeit components of Microsoft Windows 2000 Professional and Windows 98 and counterfeit Certificate of Authenticity labels for Microsoft Windows 2000 Professional and Windows 98
Filed in the U.S. District Court for the Northern District of Illinois, Eastern Division:
Microsoft Corp. v. ERA Limited of Lake Zurich, Ill.
Case No. 04-C-7687
Allegations: Distribution of counterfeit Certificate of Authenticity labels for Microsoft Windows 98 and Windows 2000 Professional, as well as counterfeit Office Professional 97 software and/or related components
Filed in the U.S. District Court for New Jersey:
Microsoft Corp. v. Micro Info Tech (USA) Corp. of Edison, N.J.
Allegations: Distribution of infringing Microsoft Windows 98, Office 2000 Premium and Windows XP
Filed in the U.S. District Court for the Northern District of New York:
Microsoft Corp. v. Affordable Computer Warehouse of Clinton, N.Y.
Case No. 04-CV-1376
Allegations: Distribution of counterfeit and infringing Windows XP and Office XP Professional software
Filed in the U.S. District Court for the Eastern District of North Carolina:
Microsoft Corp. v. Warp Systems/Computers LLC of Raleigh, N.C.
Case No. 04-CV-1376
Allegations: Distribution of infringing Microsoft Windows XP and Windows 2000 Professional
Filed in the U.S. District Court for the Eastern District of Pennsylvania:
Microsoft Corp. v. Master Computer Inc. of State College, Pa.
Case No. 4:04-CV-2567
Allegations: Distribution of counterfeit Certificate of Authenticity labels for Microsoft Windows 2000 Professional as well as infringing Windows 2000 Professional software
Filed in the U.S. District Court for the Western District of Washington:
Microsoft Corp. v. Software Provisions of Vancouver, Wash.
Case No. C04-5802 JKA
Allegations: Distribution of counterfeit Certificate of Authenticity labels for Microsoft Windows 98 and Windows 2000 Professional, as well as counterfeit Windows Millennium Edition software components