“Buyer Be Smart” on Online Auctions

REDMOND, Wash. — Dec. 4, 2008 — Microsoft Corp. today announced legal actions around the world against online auctioneers who allegedly orchestrated international marketing schemes and sold counterfeit software to unsuspecting customers. Legal actions were announced against auctioneers involved in numerous schemes, including the alleged fraudulent sale of so-called “Blue Edition,” counterfeit Windows XP software and illicit software components on online auction sites. In one case that demonstrates how global the trade-in fake software has become, counterfeiters in New Zealand allegedly sold counterfeit they obtained in China to customers in six countries.

The 63 legal actions are taking place in 12 countries, including 16 in the United States, 12 in Germany, 12 in France and 7 in the United Kingdom, as well as proceedings in Argentina, Brazil, Canada, Colombia, the Dominican Republic, Japan, Mexico and New Zealand. These cases are a timely reminder to consumers to be vigilant during this holiday season to avoid falling prey to fakes when shopping online for good deals on software.

The majority of the cases announced today involve counterfeit Windows XP software or components. Windows XP is coming to the end of its sales cycle, and although genuine Windows XP products are still available through some channels, customers should be vigilant to avoid counterfeit software. To help, Microsoft provides resources such as http://www.howtotell.com and other tools to help consumers buy smart.

“Dishonest auctioneers are too often using these online auction sites to sell counterfeit and illegal copies of Microsoft software, taking advantage of unsuspecting customers around the world,” said David Finn, associate general counsel for Worldwide Anti-Piracy and Anti-Counterfeiting at Microsoft. “These dealers are peddling bogus products that can put customers and their personal information at serious risk.”

In recent months, Microsoft received complaints from victims of a new online auction scheme by auctioneers selling discounted software from a fabricated marketing program dubbed “Blue Edition”. The entirely fictional “Blue Edition” scheme fools unsuspecting consumers into purchasing counterfeit software burned onto a CD.

“By taking legal action against these and other alleged counterfeiters, Microsoft is helping ensure that consumers around the world are protected from those who sell counterfeit software over the Internet,” Finn said. We are also continuing to arm our customers with the information they need to keep from falling victim to counterfeit software. Consumers should be aware that the so-called ‘Blue Edition’ software is nothing more than lowquality counterfeit software burned onto a CD.”

The growth of Internet auction sites has also made it possible for people to purchase software online from anywhere in the world. One of the cases announced today spans four continents and is a reminder of the global nature of the online counterfeit software problem. In this particular case, Microsoft New Zealand and Microsoft Australia received complaints from customers who had allegedly purchased the counterfeit software in question. Numerous consumer complaints were also filed on iOffer.com and Trademe.co.nz against the reseller. Microsoft is committed to following up with each complaint it receives as part of its ongoing effort to protect customers and partners from software piracy, and this case reflects that commitment.

As part of its follow-up investigation in this case, Microsoft learned that auctioneers in New Zealand sold highquality counterfeit Microsoft Windows and Office software to unsuspecting consumers in Australia, Canada, the Netherlands, New Zealand, the United Kingdom and 15 U.S. states. As further evidence of the global scope of online piracy schemes, the defendants in this case sold the counterfeit software from their base in New Zealand and had it shipped to unknowing customers in the U.S. directly from China, according to the complaint.

“The International Trademark Association applauds Microsoft’s actions to help make online auctions safer for consumers and less hospitable to counterfeiters who are violating trademark laws,” said Alan C. Drewsen, executive director, INTA. “Unsuspecting customers seeking good deals on the Internet are a prime target for counterfeiters, and we encourage customers to be smart shoppers to avoid fakes. Legal actions like these send an important message around the world that intellectual property infringement, wherever it occurs, is a global crime that endangers consumers as well as brand owners.”

Risks of Counterfeit Software

Counterfeit software presents real risks to consumers and businesses by opening their computers to security breaches that can result in the loss, damage or misuse of important data or personal information. Even the most experienced online shoppers searching online marketplaces for the best deal can be tricked by counterfeit resellers. A June 2006 forensic analysis of counterfeit Windows XP disks conducted by Microsoft found that 34 percent of the disks could not be installed correctly and 43 percent contained tampered code that could leave a victim open to data loss, identity theft or other malicious attacks. Businesses as well as consumers can be caught off guard by this risky software. More information on how consumers can make safe software purchasing decisions appears at http://www.howtotell.com.

Certain internet auction platforms, like eBay, proactively cooperate with Microsoft in the fight against counterfeiters. None of these actions we have filed today have been brought against eBay or other auction sites. In many cases, sites like eBay can and do play a role in fighting the problem.

Genuine Microsoft Software

These lawsuits are part of Microsoft’s Genuine Software Initiative, which is aimed at advancing education within the software ecosystem as part of Microsoft’s long-term efforts to increase awareness about the consequences of software piracy; advance engineering technologies to protect its intellectual property; and support enforcement of anti-piracy policies and laws. More information about Microsoft’s Genuine Software Initiative is available at http://www.microsoft.com/genuine.

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

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