Microsoft Files Lawsuits, Helps Protect Consumers and Honest Resellers From Allegedly Pirated Software

16 June 2005

Microsoft Corp. (Nasdaq: MSFT) today announced the filing of four lawsuits against companies in Virginia and California for alleged distribution of counterfeit and/or illicit software and software components.

Allegedly illegal or questionable actions of four companies were brought to Microsoft's attention through consumer complaints to 1-800-RU-LEGIT (785-3448) and through Microsoft's test purchase program -- a company
initiative designed to help monitor the legitimacy of software distributed around the country through random purchases of software and software components from resellers.

"We have an obligation to protect consumers and legitimate resellers," said Mary Jo Schrade, senior attorney at Microsoft. "In filing these lawsuits, we hope to curb the amount of pirated and counterfeit software on the market
and keep illegal software from finding its way into the hands of unknowing consumers and businesses."

Microsoft relies on consumer input to help compile complaints and help curb counterfeit software on the market. This was especially true for the cases filed today. Many of the complaints came from consumers through
Microsoft's 1-800-RU-LEGIT phone line, a valuable tool the company uses to monitor abuses across an increasingly vast software sales landscape.

An Internet presence gives a company the ability to extend the reach of alleged illegal or questionable actions well beyond a local customer base. A sample of complaints received through Microsoft's 1-800-RU-LEGIT phone line make this clear: #9 Software, Inc. had 112 complaints from consumers and businesses in 35 states and Canada; CEO Microsystems, Inc. had 66 complaints coming from 20 different states; and Super Supplier LLC had 18 complaints from people in 13 states.

Legitimate resellers nationwide said they appreciate Microsoft's efforts.

Robert Russell, president of III Open Technologies in Virginia, said he is glad to see Microsoft file the suits. "Legitimate resellers of genuine Microsoft(R) software take hard financial hits when competitors sell pirated
and counterfeit software -- illegal software -- for a fraction of our cost. Consumers benefit tremendously from using genuine software and shouldn't be duped into believing that pirated technology is the same as the real thing.
Piracy and counterfeiting are unfair to our customers and us. Microsoft is doing the right thing."

On the other side of the country, from his office in Tustin, Calif., Bob Whiton echoes this sentiment. His company, Net Solutions Inc., a Microsoft Certified Partner, manages and maintains computer networks for small and
medium-sized businesses. "We all have an obligation to operate legitimately and to educate consumers about the dangers of buying and using pirated and counterfeit software. It's unfortunate that some in our industry believe it's
wiser to support illegal activities than to distribute the real, genuine thing. We all bear the unnecessary financial burden from this illegal activity. And the industry's reputation suffers too."

The Anti-Counterfeiting Amendments Act, signed by President Bush in December 2004, strengthened the software industry's ability to protect itself from those abusing certificate of authenticity (COA) labels -- the
"authentication" labels that are paired with legitimate software. Previously, legal action was taken against those selling or possessing counterfeit COA labels. The law created specific criminal and civil penalties for the
distribution of genuine COA labels without the software the COA labels were intended to authenticate.

Microsoft's Schrade said the companies named today were given the opportunity to comply with current laws, including the Anti-Counterfeiting Amendments Act. "In these cases, we sent cease-and-desist letters to help them
understand our concerns. We allege that these companies chose to violate the law and continued to do so even after we discovered their activity and provided information on how to operate legally. Disregard for the laws that
honest resellers follow is troubling."

"Microsoft has a covenant with our legitimate resellers and to our customers," Schrade said. "We'll continue to do what we can to educate our channel partners and consumers about the risk associated with selling, buying
or using pirated and counterfeit items. As a last resort, we'll take legal action to help ensure that software identified as Microsoft software actually is genuine, legitimate software."

Microsoft has established an aggressive and ongoing education campaign to communicate to its channel partners how it is engaging system builders and resellers who undercut them in the marketplace by selling counterfeit and
illicit software and software components. Targeted print advertising and direct-mail marketing provide resellers with information on how to work with reputable dealers. The advertising and marketing campaigns also communicate enforcement actions.

All of today's lawsuits are directed at companies that have allegedly violated copyright and trademark laws: CEO Microsystems, Inc. of Irvine, Calif.; Wiston Group, Inc. of Walnut, Calif.; #9 Software, Inc. of Hampton,
Va.; and East Outlet, LLC and Super Supplier LLC both based in Newport News, Va., and named in the same suit. The lawsuit against #9 Software, Inc. also alleges the violation of the Anti-Counterfeiting Amendments Act governing the distribution of COA labels.

A COA label helps identify genuine Microsoft software. For authorized preinstalled Microsoft Windows(R) 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 label is affixed to the top of the box. The COA label includes sophisticated anti-counterfeiting features to help verify the software's authenticity. The COA label also includes a product key code, used in the event that the operating system needs to be reinstalled.