Residents of New York State Lost Nearly $400 Million in Tax and Wage Losses
BUFFALO, N.Y. - March 15, 2000 - Microsoft Corp. today announced that it has filed software piracy lawsuits against three companies in upstate New York. The lawsuits, alleging copyright violations and trademark infringements, were filed against businesses for the alleged distribution of counterfeit and/or infringing Microsoft® software and/or end user license agreements. The lawsuits aim to protect customers and legitimate distributors from the harmful impact of software piracy.
"Consumers who are spending good money on bad software are being taken advantage of," said Jack Boyczuk, president of Great Lakes Electronic Distributing. "We applaud those who are working to educate consumers and the channel about software piracy -- and appreciate Microsoft's steps to curb software piracy and level the playing field so honest companies like mine can compete fairly in the channel."
The average piracy rate in the United States is 25 percent, which means that one in four computers are running pirated software. New York has a piracy rate below the national average at 18.5 percent, but New York's consumers, distribution channel and economy are seriously impacted by software piracy. In 1998, software piracy cost the state an estimated 7,570 jobs -- ranking third in the nation in job losses next to California and Texas. According to a study conducted by International Planning & Research Corp. in 1998, these unrealized jobs equate to more than $337 million in lost wages and salaries in New York. Furthermore, the drain on tax revenues from piracy amounted to over $49 million -- money that otherwise could have contributed to local and state improvement projects.
Software piracy has a significant impact on state and local economies across the country and throughout the world. According to a study by Nathan Associates Inc. commissioned by the Business Software Alliance (BSA), software piracy cost the national economy 109,000 jobs, $4.5 billion in wages and nearly $1 billion in lost taxes during 1998.
Some of the businesses named in Microsoft's complaints were investigated as a result of tips to Microsoft's anti-piracy hot line. These tips are by and large phoned in from resellers or consumers who acquire suspicious software. According to allegations, each of the defendants continued to distribute unauthorized Microsoft software even after receiving a written request from Microsoft to stop unlawful activities.
As a result of a three-year investigation against defendant Black Cat Computer Wholesaler, Microsoft's investigation revealed that test purchases have resulted in the acquisition of over 25 counterfeit samples of Microsoft software -- despite the issuance of two cease-and-desist letters. These test purchases were made, in part, as a follow-up to tips received through Microsoft's anti-piracy hot line regarding this company.
All of Microsoft's lawsuits allege that the defendants distributed counterfeit and/or infringing copies of Microsoft software, software components or end user license agreements (EULAs) to investigators and/or customers. The complaints are as follows:
Filed in the United States District Court for the Northern and Western Districts of New York:
"Consumers deserve to acquire legitimate working Microsoft software - just as the honest distribution channel deserves to compete in a fair marketplace," said Nick Psyhogeos, corporate attorney at Microsoft. "As a result, Microsoft is committed to combating software piracy through education programs and enhanced security features, and by taking legal action against those who distribute counterfeit software."
"We receive calls to Microsoft's anti-piracy hot line from consumers and resellers reporting suspicious business practices -- including the suspected distribution of counterfeit software via the Internet," Psyhogeos said. "Consumers need to take precautions when purchasing any software products, but particularly online."
The explosive growth, ease of use and anonymity of the Internet have made it easier for pirates to sell and distribute counterfeit and otherwise illegal software. Online shopping tips include the following:
Through the implementation of new anti-counterfeiting features, Microsoft is taking steps to make counterfeit software easier to spot and to assist honest resellers and OEM system builders in distributing genuine software.
Microsoft has recently announced new anti-counterfeiting features for the Windows 2000 operating system, including an edge-to-edge CD-ROM hologram and a new Certificate of Authenticity (COA) label. These features will make it more difficult for counterfeiters to pass off counterfeit software as genuine to unsuspecting customers.
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 firstname.lastname@example.org. 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 email@example.com.
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