Microsoft Files Lawsuits Against Online Sellers to Help Protect Consumers From Illegal Software

Eight cases target eBay sellers for alleged distribution of counterfeit products.

REDMOND, Wash. — March 15, 2006 — Thanks to the popularity of online auction sites, it has never been easier to find great deals. But great deals do not always represent fair or legal sales. Consumers should beware: When it comes to software purchases, you may be getting less than what you bargained for with that supposed “steal.”

Cheap, pirated and counterfeit software abounds in the online marketplace. To help address the problem, Microsoft Corp. today announced it has filed eight lawsuits against sellers who Microsoft alleges sold counterfeit Microsoft® software using eBay auctions. These eight cases reflect the company’s ongoing efforts to protect its legitimate business partners and customers from dishonest business practices and the risks associated with pirated and counterfeit software.

“Online auction sites are an excellent way for people from around the world to buy and sell goods,” said Matt Lundy, attorney at Microsoft. “We strongly believe in the convenience and global reach of the virtual marketplace. Unfortunately, a number of online sellers are undermining trust in the system by using the Internet to hawk illegal products to unsuspecting consumers. Microsoft is committed to protecting our customers and technology partners from unscrupulous sellers through customer education and enforcement in appropriate cases. By filing these lawsuits, we hope that auction purchasers will understand that software offers are not always what they appear to be.”

The eight defendants are located in Arizona, Connecticut, Florida, Hawaii, Massachusetts, Nebraska, New York and Washington.

Microsoft identified seven of the defendants through customer submissions to the company’s Windows® Genuine Advantage (WGA) program. WGA is an online validation tool for customers to determine whether their software is genuine and gives them the option of submitting counterfeit reports on their suppliers if they did not receive genuine software. Complaints were also made about some of the defendants to the company’s anti-piracy hotline, 1-800-RU-LEGIT (785-3448).

Microsoft routinely monitors auction sites to identify counterfeit software offerings to protect consumers from buying illegal software. Microsoft asks auction sites such as eBay to shut down offerings of counterfeit software. In 2005, the company requested takedowns of almost 50,000 auctions sites offering pirated software.

Michael Schwab, vice president of purchasing for D&H, a wholesale distributor of computer and peripheral products, said he has seen firsthand how legitimate resellers are harmed by illegal online auction sales. He applauded Microsoft’s legal actions supporting fair competition in the virtual marketplace.

“Honest resellers are losing business because of illegal sales on online auction sites,” Schwab said. “Customers are eager to find the best deal, which often happens to be associated with an inferior, illegal product. This sets the price standard and makes it impossible for those of us operating within the law to compete.”

“We are committed to leveling the playing field for our partners,” said John Ball, general manager for the U.S. System Builders Partner Group at Microsoft, which works with businesses that manufacture computers. “The lawsuits announced today allege these sellers have willfully violated the law. We hope these legal actions send a strong message to people thinking of selling counterfeit software on online auction sites that it is not worth the risk.”

According to the Business Software Alliance, 21 percent of all software in the United States is pirated. When consumers unintentionally purchase counterfeit or pirated software, they are not entitled to receive the benefits offered to genuine software users. These important benefits include technical support and free product updates and software offerings through the WGA program. In addition, customers using illegal software may unwittingly introduce viruses, malicious code or spyware into their computers and put their personal and business security and information at risk.

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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The names of actual companies and products mentioned herein may be the trademarks of their respective owners.

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Legal Case Summary

Filed in the U.S. District Court for the District of Arizona

Microsoft Corp. v. Igor Goldshteyn, alleging distribution of counterfeit Windows XP Professional and Office 2003 Professional software components.

(Case No. 4:06-cv-119 RCC)

Filed in the U.S. District Court for the District of Connecticut

Microsoft Corp. v. John Hilaire, alleging distribution of counterfeit Windows XP Professional and Office 2003 Professional software components.

(Case No. 3:06CV361 (AVC)

Filed in the U.S. District Court for the Southern District of Florida

Microsoft Corp. v. Jaike Hornreich, alleging distribution of counterfeit Windows XP Professional software components.

(Case No. 06-20603)

Filed in the U.S. District Court for the District of Hawaii

Microsoft Corp. v. Billy Williams, alleging distribution of counterfeit Windows XP, Office 2003 and Office 2000 software components.

(Case No. 06 00142 SOM-LEK)

Filed in the U.S. District Court for the District of Massachusetts

Microsoft Corp. v. Edward Shklovsky, alleging distribution of counterfeit Windows XP Professional and Office 2003 Professional software components.

(Case No. 06-10439 GAO)

Filed in the U.S. District Court for the District of Nebraska

Microsoft Corp. v. Jay D. Smith, alleging distribution of counterfeit Windows XP Professional software components.

(Case No. 8:06cv263)

Filed in the U.S. District Court for the Western District of New York

Microsoft Corp. v. Great Product Deals, Inc., alleging distribution of counterfeit Windows XP Professional software components.

(Case No. 06 CV 6144)

Filed in the U.S. District Court for the Western District of Washington

Microsoft Corp. v. Agus Chandra, alleging distribution of counterfeit Office 2003 Student and Teacher Edition software.

(Case No. CV6-336 C)

Contact Information

Rapid Response Team

Waggener Edstrom Worldwide

Contact via E-mail