Microsoft Increases Anti-Piracy Efforts in Kentucky

Company Working to Curb Piracy in State With One of the Country's Highest Piracy Rates

REDMOND, Wash., April 6 /PRNewswire/ -- Microsoft Corp. (Nasdaq: MSFT - news) today announced that it has uncovered four Kentucky businesses that have allegedly distributed counterfeit and infringing Microsoft® software. Microsoft is taking action to stop these companies from distributing illegal software in order to help prevent unsuspecting consumers, the honest distribution channel and the value of intellectual property from being negatively impacted by software piracy.

The recent surge in worker productivity reported by the U.S. Labor Department -- an increase of 6.1 percent in the last quarter of 1999, the largest increase in the past seven years -- is widely attributed to ongoing advances in the computing and technology industries. In Kentucky alone, the high-tech industry employed more than 31,000 people and distributed more than $1.1 billion in wages, according to a 1997 study by the American Electronics Association.

Unfortunately, software piracy threatens the software industry, thereby hampering productivity and economic growth in Kentucky and the U.S. A study of software piracy across the United States by International Planning & Research Corp. revealed that the piracy rate in Kentucky has increased, up more than 4 percent in 1998, to 40.2 percent -- significantly higher than the national average of 25 percent. Software piracy not only depresses the U.S. economy as a whole but also has a dramatic impact on state and local economies. According to the study, this illegal activity potentially cost Kentucky 1,785 jobs in 1998, equating to more than $46 million in lost wages and salaries. Software piracy in the state also was responsible for the loss of more than $10 million in taxes that same year -- money that otherwise could have contributed to local and state improvement projects.

``The exceedingly high piracy rate in Kentucky should serve as a indication to consumers that they need to learn the warning signs of counterfeit software and exercise caution when obtaining software,'' said Janice Block, corporate attorney at Microsoft. ``Illegal software is being distributed more widely than ever before, and consumers need to become savvy shoppers in order to ensure that they are acquiring genuine software.''

``If the distribution of pirated software in Kentucky continues at its present scale, the effect on my business -- as well as the business of many other honest resellers -- will be considerable,'' said Dan Pratte, director of Business Solutions Development at Panurgy. ``We have potentially lost a considerable amount of revenue to businesses that distribute counterfeit software, and we applaud Microsoft for taking legal actions against these resellers.''

Microsoft receives thousands of tips to its anti-piracy hot line each month. These tips are typically phoned in from honest resellers or from consumers who acquire software that either looks suspicious or is not working correctly. According to allegations in the complaints, each of the defendants continued to distribute unauthorized Microsoft software even after receiving a written request from Microsoft to stop the unlawful activities.

All of Microsoft's lawsuits allege that the defendants distributed counterfeit and/or infringing copies of Microsoft software or software components to investigators and/or customers. The complaints are as follows:

Filed in the United States District Court for the Western District of Kentucky:

    -- CompuExpo, Laptops, Etc., located in Louisville, allegedly distributed
       counterfeit Microsoft Windows® 98 and hard disk loaded Office 97
       Professional Edition (Case No. 3:00CV-180-H).
    -- Compu-Nation Computers Inc., located in Franklin, allegedly distributed
       counterfeit Windows 95, Windows 98 and counterfeit components of Office
       Pro 97 (Case No. 1:00CV-57-R).
    -- Premium Computer Solutions of Louisville allegedly distributed
       counterfeit Office Pro 97 (Case No. 3:00CV-181-S).

Filed in the United States District Court for the Eastern District of Kentucky:

    -- R&R Systems Inc. of Corbin allegedly distributed counterfeit components
       of Windows 95, Windows 98 and Office Pro 97 (Case No. 00-151).

``As a computer reseller and solution provider, it is extremely frustrating to compete for business against companies who are profiting from the distribution of illegal products, often to customers who believe that what they are getting is genuine,'' said Craig S. Matthews, district manager of Micro Computer Solutions. ``Microsoft is doing a great service by not only helping to level the playing field for honest businesses, but assisting both resellers and customers in making informed decisions about acquiring and managing legal software.''

With the launch of the Windows 2000 operating system, Microsoft announced the implementation of new anti-counterfeiting features - including an edge-to- edge CD-ROM hologram to make it easier for customers to identify genuine copies of Windows 2000 and the upcoming service release of Office 2000. In addition, a new Certificate of Authenticity (COA) label that has more security features than any currency in the world will be included on the tower of all new PCs sold with Windows 2000. Other signs that can help consumers and resellers identify counterfeit or illegal software include:

• Prices that are ``too good to be true''
• Suspicious methods of delivery and/or payment
• Retail software distributed in jewel cases only, rather than in

full-color retail boxes Software marked with a phrase, such as ``For distribution with a new PC only'' or ``Special CD for licensed customers only,'' that does not describe the transaction

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. In addition, a list of authorized distributors and details regarding the OEM System Builder program are available at http://www.microsoft.com/oem/. Consumers can obtain more information about software piracy by calling the Business Software

Alliance anti-piracy hot line at 888-NO-PIRACY (667-4722) or by sending e-mail to software@bsa.org.