Recently Passed Federal Anti-Counterfeiting Law Helps Microsoft Close Loophole
REDMOND, Wash., April 11 /PRNewswire-FirstCall/ -- Microsoft Corp.
(Nasdaq: MSFT) today announced the filing of eight lawsuits against computer
system builders and resellers for alleged distribution of counterfeit, illicit
and unlicensed software and software components.
(Logo: http://www.newscom.com/cgi-bin/prnh/20000822/MSFTLOGO )
The distribution of counterfeit software hurts the honest businesses that
distribute legitimate software and the communities where they operate.
According the Business Software Alliance, 22 percent of the software being
used on computers in the U.S. today is unlicensed, including counterfeit and
pirated software.
"Our partners are coming to us and asking for our help," said Bonnie
MacNaughton, senior attorney at Microsoft. "They are being undercut and forced
out of business by having to compete with dishonest PC manufacturers and
resellers who continue to sell illegitimate software. That isn't fair to our
partners or to the customers who depend on them."
The lawsuits are the result of Microsoft's ongoing test purchase program,
started in 1997, to ensure that software being distributed is legitimate.
Under the program, Microsoft acquires software, software components or
computer systems from dealers and tests the software and components for
authenticity. If it is not legitimate, the dealer is generally sent a
cease-and-desist letter and told how it can obtain legal, genuine software.
Microsoft filed today's eight lawsuits in California, Florida, Texas, New
Jersey, Alabama, Maryland and Rhode Island. This action follows similar action
in November 2004 against eight other dealers.
"Resellers who sell counterfeit software and components at a supposed
'discount' are certainly undercutting honest businesses and creating a
competitive disadvantage in the marketplace," said Sean Dion, education sales
director for TKO EDucation in Westlake Village, Calif. "The really sad thing
is they are putting consumers and businesses at risk because, ultimately, the
buyer is buying illegitimate product. The lure of cheap software is real, but
the risk is far too great not to be 100 percent legal. TKO EDucation fully
supports Microsoft's continued action to level the playing field for honest
businesses."
The federal Anti-Counterfeiting Amendments Act of 2003 was signed into law
by President Bush on Dec. 23, 2004. It provides for criminal and civil
penalties for the distribution of genuine standalone Certificate of
Authenticity (COA) labels or authentic COA labels that are separated from the
software they were intended to certify.
In addition to sending cease-and-desist letters to targets of the test
purchase program -- thousands of system builders and resellers -- Microsoft
sent an additional round of letters in January alerting them to the passage of
the new legislation and warning them of the illegality of distributing
standalone or separated COA labels.
"There is only one purpose for distributing standalone COA labels: to
falsely make infringing software appear legitimate. The federal law makes this
deceptive practice now clearly illegal," MacNaughton said. "It closes a
perceived legal loophole and allows us to more effectively protect the channel
and consumers who deserve to receive the genuine product they believe they are
acquiring."
The lawsuits, which allege copyright and trademark infringement and in one
of the cases, violation of the new legislation, were filed against Abacus
Computer Corp., of Anaheim, Calif.; Avantek Inc., of Orlando, Fla.; First
E-Commerce (dba Discount Electronics and/or DiscountElectronics.com), of
Austin, Texas; M&S Computer Products Inc., of Boonton, N.J.; Micro Excell
Inc., of Gadsden, Ala.; Odyssey Computers, of Pasadena, Md.; Signature PC, aka
Signature Computers, of Warwick, R.I.; and Technology One, of Los Angeles.
Defendants in each case allegedly continued their distribution of
counterfeit software or software components, separated COA labels, or
unlicensed software even after they were contacted by Microsoft requesting
that they halt their illegal activities.
"The IT industry is a vital contributor to a vibrant U.S. economy, and
small businesses are the economy's backbone. To ensure continued viability of
our industry, we must preserve the incentives to innovate that fuel
productivity increases and economic growth," said Jonathan Zuck, president of
the Association for Competitive Technology (ACT). "ACT commends Microsoft's
efforts to take legal action against purveyors of pirated and counterfeit
software, along with its efforts to work together with channel partners to
promote healthy industry competition and innovation."
In addition to the test purchase program, Microsoft has established an
aggressive and ongoing education campaign to communicate to its channel
partners specifically how it is taking aim at the dishonest system builders
and resellers who unfairly undercut them in the marketplace. Through a series
of targeted print advertising campaigns and direct mail marketing, the company
provides them with information on how to work only with reputable dealers and
communicates the results of its ongoing test purchase program, including
enforcement actions.
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. More information on COA labels can
be found on Microsoft's How to Tell Web site at
http://www.microsoft.com/howtotell .
Founded in 1975, Microsoft is the worldwide leader in software, services
and solutions that help people and businesses realize their full potential.
NOTE: Microsoft, Windows and Windows Server are either registered
trademarks or trademarks of Microsoft Corp. in the United States and/or other
countries.
The names of actual products and services mentioned herein may be the
trademarks of their respective owners.
Case Summary
Filed in the U.S. District Court for the Central District of California
Microsoft Corporation v. Abacus Computer Corp., of Anaheim, Calif.,
alleging distribution of infringing Microsoft Office 2000 Premium, Office
XP Professional, Windows Millennium Edition (Windows Me) and Windows 2000
Professional
(Case No. CV 05 2569 RGK (PLAx)
Filed in the U.S. District Court for the Middle District of Florida
Microsoft Corporation v. Avantek Inc., of Orlando, Fla., alleging
distribution of infringing Microsoft Windows XP, Office 2000 Premium and
Office XP
(Case No. 6:05-CV-519-ORL-18-KRS)
Filed in the U.S. District Court for the Western District of Texas
Microsoft Corporation v. First E-Commerce dba Discount Electronics and/or
DiscountElectronics.com, of Austin, Texas, alleging distribution of
infringing Windows 95, Office 97 Professional Edition and Windows 2000
Server(TM) and/or related components
(Case No. A05CA251 SS)
Filed in the U.S. District Court for the District of New Jersey
Microsoft Corporation v. M&S Computer Products Inc., of Boonton, N.J.,
alleging distribution of infringing Microsoft Windows 2000 Professional
and Office 2000 Professional
Filed in the U.S. District Court for the Northern District of Alabama
Microsoft Corporation v. Micro Excell Inc., of Gadsden, Ala., alleging
distribution of counterfeit and infringing Windows XP and/or related
components
(Case No. CV-05-PT-0730-M)
Filed in the U.S. District Court for the District of Maryland
Microsoft Corporation v. Odyssey Computers of Pasadena, Md., alleging
distribution of illicit Certificate of Authenticity labels for Microsoft
Windows 98 and Windows 2000 Professional
(Case No. WMN05-964)
Filed in the U.S. District Court for the District of Rhode Island
Microsoft Corporation v. Signature PC aka Signature Computers of Warwick,
R.I., alleging distribution of infringing Microsoft Windows 2000
Professional, Windows 98 and Windows XP Professional
(Case No. CA 05 144 S)
Filed in the U.S. District Court for the Central District of California
Microsoft Corporation v. Technology One of Los Angeles, alleging
distribution of counterfeit and infringing SQL Server(TM) 2000 software
components, counterfeit Windows 98 software, a counterfeit Windows XP
Professional End User License Agreement and counterfeit Windows 2000
Professional Certificates of Authenticity
(Case No. CV 05 02572 TJH (Mcx))
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