Microsoft Cracks Down on Counterfeit Software Auctions Worldwide

REDMOND, Wash. — Oct. 31, 2006 — Less than one week after IDC released a study* sponsored by Microsoft Corp. detailing the risks of using counterfeit software, and six weeks after Microsoft released its own forensic analysis of counterfeit discs, Microsoft announced a series of criminal and civil actions taken against alleged dealers of counterfeit software around the world. Today’s announcement marks the largest enforcement effort by Microsoft and the first time the company has focused its efforts worldwide to bring legal action against online dealers. The 55 legal actions include 15 in the United States, 10 in Germany, 10 in the Netherlands, five in France and five in the United Kingdom, as well as proceedings in Argentina, Australia, Belgium, Korea, Mexico and Poland.

The cases are against sellers who allegedly have misused their eBay or other auction-site accounts to sell counterfeit software to unsuspecting consumers and businesses. Many of the defendants received warnings for infringing behavior before the legal action, including written cease and desist orders and/or removal of their auctions by the online host. In each case subsequent investigation and/or test purchases revealed copyright and trademark infringement by the defendant seller.

Many of the allegedly infringing sellers were identified through tips submitted from consumers through Microsoft’s Windows® Genuine Advantage (WGA) program. As part of the WGA, consumers can verify whether their Microsoft® software is genuine, and in the process receive product downloads, Windows updates and other special offers. The WGA program is designed to differentiate the value of genuine Windows software from non-genuine, and to educate consumers about the potential risks associated with counterfeit software. More program information is available at http://www.microsoft.com/genuine.

“Counterfeit software is defective and dangerous because counterfeiters tamper with the genuine software code, which leaves the door open to identity theft and other serious security breaches,” said Matt Lundy, a senior attorney at Microsoft. “It is simply not worth putting your personal and confidential information at risk to save a few dollars on software; it can cost much more in the long run. For our part, Microsoft is committed to taking the necessary legal action to protect consumers worldwide from the dangers of counterfeit software.”

Microsoft launched the Genuine Software Initiative earlier this year, and since then has intensified its efforts to protect consumers and channel partners from the risks of counterfeit software through an increased focus on education, engineering and enforcement. “Every year, millions of consumers are victimized by unknowingly buying counterfeit software,” said Joe Peterson, corporate vice president of the Market Expansion Platforms Group at Microsoft. “This is a serious problem that requires a significant commitment to help solve. We’re making that commitment as we invest in efforts to show people what to look for and what to avoid, innovations to better protect the software, and legal action to protect consumers when necessary.”

New Study Details Broader Effects of Software Piracy

According to the new study from IDC, acquiring and using counterfeit product keys, pirated software, key generators and crack tools for Windows XP and the Microsoft Office system may increase the risk of exposure to viruses, worms and other damaging code, including spyware, Trojan horses and modified code. In addition, IDC’s study noted that purchasing software through online auctions often results in the acquisition of counterfeit software containing tampered-with code or other known vulnerabilities. The study can be found at http://www.microsoft.com/athome/security/update/wga/default.mspx.

The IDC study comes on the heels of a forensic analysis of counterfeit Windows XP disks conducted by Microsoft in June 2006, which found that 34 percent of the disks could not be installed on a computer, and another 43 percent contained additional programs, or binary code, that are not part of genuine Microsoft Windows. The tampered code, according to Microsoft, could result in trouble such as denial-of-service attacks, bypassed password protections and application memory corruption.

John Gantz, senior vice president of IDC, said that IDC’s new study and other existing evidence should serve as a warning to consumers. “Our research confirmed that searching for and finding counterfeit software on the Internet can be the cyberspace equivalent of driving a car with defective tires,” Gantz said. “It is more important than ever for users to educate themselves about these dangers. Our findings underscore the simple fact that there are real costs in the form of increased risks to security and personal data that can easily outweigh any perceived savings from using counterfeit software.”

Also reported in the study, Microsoft intervenes in about 50,000 eBay software auctions a year that are deemed to be infringing copyright. In tests conducted by Microsoft of 115 copies of physical media purchased on eBay, 39 percent were found to be counterfeit, and another 12 percent contained software that was either counterfeit or had been tampered with. Overall, the study found, the chances of purchasing genuine, legally licensed Microsoft software on eBay is less than 50 percent.

IDC estimates that the cost for an organization to recover from even a single incident of malicious software on a single workstation can run more than $1,000 (U.S.). The cost of lost or compromised data can run into the tens of thousands of dollars per incident for many businesses.

Founded in 1975, Microsoft (Nasdaq “MSFT”) is the worldwide leader in software, services and solutions that help people and businesses realize their full potential.

Note to editors: If you are interested in viewing additional information on Microsoft, please visit the Microsoft Web page at http://www.microsoft.com/presspass on Microsoft’s corporate information pages. Web links, telephone numbers and titles were correct at time of publication, but may since have changed. For additional assistance, journalists and analysts may contact Microsoft’s Rapid Response Team or other appropriate contacts listed at http://www.microsoft.com/presspass/contactpr.mspx.

Worldwide Auction Site Enforcement Announcement

Legal Case Summary

Oct. 31, 2006

United States

1. Filed in the U.S. District Court for the District of Northern California

Microsoft Corp. v. Karon R. Gilbey d/b/a 868ocean and ocean11s, alleging distribution of counterfeit Office 2003 Professional, Windows XP Professional SP2, Windows XP Professional and Windows Server 2003 Standard Edition software and software components

(Case No. 06 CV 6713)

2. Filed in the U.S. District Court for the District of Northern California

Microsoft Corp. v. Eileen Nguyen d/b/a Bigsavingstore, alleging distribution of counterfeit Office 97 Professional software components

(Case No. 06 CV 6704)

3. Filed in the U.S. District Court for the District of Northern California

Microsoft Corp. v. Clifton Crouse d/b/a BiziDealz and ginuwine_dealz, alleging distribution of counterfeit Office 2003 Professional and Windows XP Professional SP2 software and software components

(Case No. 06 CV 6717)

4. Filed in the U.S. District Court for the District of Northern California

Microsoft Corp. v. Ciet Systems Inc. and Aaron D. Markizer, alleging distribution of counterfeit Office 2003 Professional, Windows Server 2003 Standard Edition and Windows XP Professional SP2 software

(Case No. 06 CV 6714)

5. Filed in the U.S. District Court for the District of Northern California

Microsoft Corp. v. Tsunami Trading Inc. and Gordon Snow, alleging distribution of counterfeit Office 2003 Professional software

(Case No. 06 CV 6718)

6. Filed in the U.S. District Court for the District of Northern California

Microsoft Corp. v. E&M Internet Bookstore Inc. aka emeshop.net and Chien-Wei Chen d/b/a emeshopdotnet, alleging distribution of counterfeit Office 2003 Professional and Windows XP Professional SP2 software

(Case No. 06 CV 6707)

7. Filed in the U.S. District Court for the District of Northern California

Microsoft Corp. v. Keyvan Anaraki d/b/a liquidation_enterprises and Deals_Around, alleging distribution of counterfeit Microsoft SQL Server 2000 Standard Edition software components

(Case No. 06 CV 6715)

8. Filed in the U.S. District Court for the District of Northern California

Microsoft Corp. v. Aliaksandr Vasileuski aka Alex Vasileuski d/b/a maximum_ethic, macro_project, alleging distribution of counterfeit Office 2003 Professional, Windows Server 2003 Standard Edition and Windows XP Professional software

(Case No. 06 CV 6716)

9. Filed in the U.S. District Court for the District of Northern California

Microsoft Corp. v. Miles Bassik d/b/a milesb, alleging distribution of counterfeit Office 2003 Professional software

(Case No. 06 CV 6708)

10. Filed in the U.S. District Court for the District of Northern California

Microsoft Corp. v. John Coppola d/b/a misterwrecker, alleging distribution of counterfeit Office 2003 Professional, Windows XP Professional SP2, Windows XP Professional x64 software

(Case No. 06 CV 6701)

11. Filed in the U.S. District Court for the District of Northern California

Microsoft Corp. v. Brian Wade d/b/a Wade-Visions – Investments & Marketing and noriskbizman, alleging distribution of counterfeit Office 2003 Professional software

(Case No. 06 CV 6719)

12. Filed in the U.S. District Court for the District of Northern California

Microsoft Corp. v. Raya Nalbandyan d/b/a rayasoft and Vasil Asryan aka Vaz Asryan d/b/a rayasoft, alleging distribution of counterfeit Office 2003 Professional software.

(Case No. 06 CV 6695)

13. Filed in the U.S. District Court for the District of Northern California

Microsoft Corp. v. Leonard G. Sofsky aka Lenny Sofsky d/b/a Skybuxs and SkybuxsUnlimited, alleging distribution of counterfeit Office 2003 Professional, Windows XP Professional SP2, Windows XP Professional and Windows Server 2003 Standard Edition software and software components

(Case No. 06 CV 6710)

14. Filed in the U.S. District Court for the District of Northern California

Microsoft Corp. v. Denise H. Ricketts d/b/a mydencom, alleging distribution of counterfeit Office 2003 Professional software

(Case No. 06 CV 6712)

15. Filed in the U.S. District Court for the District of Northern California

Microsoft Corp. v. George Mazek d/b/a chris4pl, guro-1, jurmaz and mauzer-1, alleging distribution of counterfeit Office 2003 Professional, Windows XP Professional SP2 and Windows XP Professional software and software components

(Case No. 06 CV 6700)

Argentina

16. Criminal complaint against offender for the distribution of counterfeit Microsoft Windows XP Professional and Microsoft Office on mercadolibre.com.ar

Australia

17. Microsoft Corp, Microsoft Licensing GP and Microsoft Pty Ltd v. Zhiyang XU trading as TopTeq Computer, alleging copyright infringement and various breaches of the Trade Practices Act and New South Wales fair trading legislation by supplying counterfeit copies of Visual Studio® .NET 2002

18. Microsoft Corp, Microsoft Licensing GP and Microsoft Pty Ltd v. Safar Safar trading as CompuBits, alleging distribution of counterfeit Windows XP Home and infringing Microsoft Office Professional 2003

19. Microsoft Corp, Microsoft Licensing GP and Microsoft PTty Ltd v. RP Distribution Pty Ltd. trading as LGA Logistics, alleging distribution of counterfeit Windows XP Professional and Windows Server 2003

Belgium

20. Civil raid and settlement with seller for the alleged distribution on computers equipped with old beta versions of Windows Vista™ and the 2007 Office system

21. Civil raid and settlement with seller for the alleged distribution of infringing Microsoft Windows XP Professional

France

22. Civil lawsuit for the alleged high-volume distribution of stand-alone Certificate of Authenticity (COA) labels for Microsoft Windows 98 and Windows XP Home (up to hundreds of items)

23. Judicial Information (i.e., criminal investigation under the control of a judge) against seller on priceminister.com for the alleged high-volume distribution of infringing software and software components

24. John Doe lawsuit (Ordonnance sur requête) against seller for the alleged distribution of infringing software components (stand-alone COAs)

25. Civil lawsuit for the alleged distribution of infringing software components (stand-alone COAs)

26. Civil lawsuit for the alleged distribution of infringing software components (stand-alone COAs)

Germany

27. Civil injunction to halt the alleged sale of infringing Microsoft software components by a dealer near Dortmund (hundreds of COAs of Windows; COAs are of no use to the buyer)

28. Civil injunction to halt the alleged distribution of counterfeit Microsoft Office Professional Edition 2003 by dealer near Leipzig

29. Civil injunction to halt the alleged distribution of counterfeit Microsoft software by dealer near Stuttgart

30. Civil injunction to halt the alleged distribution of counterfeit Microsoft software by high-volume dealer near Hamburg (having sold more than 2,000 products on eBay)

31. Civil injunction to halt the alleged distribution of infringing Microsoft software by dealer near Osnabrück

32. Civil injunction to halt the alleged distribution of counterfeit and infringing Microsoft software and software components by dealer near Dessau

33. Civil injunction to halt the alleged distribution of counterfeit and infringing Microsoft software and software components by dealer near Hannover

34. Civil injunction to halt the alleged distribution of counterfeit Microsoft software by dealer near Würzburg

35. Civil injunction to halt the alleged distribution of counterfeit Microsoft software by dealer near Cologne

36. Civil injunction to halt the alleged distribution of counterfeit Microsoft software by dealer near Frankfurt

Korea

37. Microsoft Corp v. Mr. M.W. Kang for the allged distribution of infringing software components

38. Microsoft Corp v. Mr. B. H. Shin for the alleged distribution of infringing and pirated copies of Windows XP

Mexico

39. Criminal complaint against offender for the alleged distribution of counterfeit Microsoft Windows XP Professional and Microsoft Office on mercadolibre.com.mx

Netherlands

40. Criminal complaint against repeat offender for alleged high-volume distribution of counterfeit Microsoft Office 2003 Professional, Microsoft Windows XP Professional on markplaats.nl

41. Application for civil raid and settlement with seller for alleged high-volume distribution of counterfeit Microsoft Office 2003 Professional, Microsoft Windows XP Professional, Microsoft Windows Vista, Microsoft Windows Server® 2003, the 2007 Microsoft Office release on markplaats.nl and speurders.nl

42. Application for civil raid and settlement with seller for the alleged distribution of counterfeit and infringing Microsoft Windows 95, Microsoft Windows 98, Microsoft Windows ME, Microsoft Windows XP Home Edition, Microsoft Windows XP Professional, Microsoft Office 97, Microsoft Office XP, Microsoft Office 2003, Microsoft Windows Vista on markplaats.nl

43. Application for civil raid and settlement with seller for the alleged distribution of counterfeit Microsoft Office Professional on markplaats.nl

44. Application for civil raid and settlement with seller for distribution of counterfeit Microsoft Windows XP Professional, Microsoft Office 2003 Professional, Microsoft Windows ME, Microsoft Windows XP Home Edition on markplaats.nl

45. Application for civil raid and settlement with seller for alleged distribution of counterfeit Microsoft Office 2003 Professional, Microsoft Windows XP Professional on markplaats.nl and speurders.nl

46. Application for civil raid and settlement with seller for alleged distribution of counterfeit Microsoft Windows XP Professional on markplaats.nl

47. Application for civil raid and settlement with seller for the alleged distribution of counterfeit Microsoft Office 2003 Professional on markplaats.nl

48. Application for civil raid and settlement with seller for the alleged distribution of counterfeit Microsoft Office 2003, Microsoft Office 2004 on markplaats.nl

49. Application for civil raid and settlement with seller for the alleged distribution of counterfeit Microsoft Windows XP Professional, Microsoft Office 2003 on markplaats.nl

Poland

50. Police raid and court decision resulting in two years’ suspended sentence and payment of damages for the distribution of counterfeit Microsoft Windows XP Professional and Microsoft Office 2003. The seller has also allegedly been engaged in selling other counterfeit products, which are not from Microsoft. He allegedly was very active in importing products from Hong Kong.

United Kingdom

51. Civil case against seller for the alleged distribution of Windows XP Professional

52. Civil case against seller for the alleged distribution of Windows XP Professional, Windows XP Home, Office 2003 Professional

53. Civil case against seller for the alleged distribution of counterfeit Microsoft Office 2003 Professional, Office Visio® Professional 2003

54. Civil case against seller for the alleged distribution of counterfeit Microsoft Windows XP Professional, Windows XP Home, Microsoft Office 2003 Professional

55. Civil case against seller for the alleged distribution of counterfeit Windows 98, Microsoft Windows XP Professional software and software components

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