Microsoft Sting Nabs Alleged Software Pirates

Microsoft filed eight lawsuits against companies in Arizona, California, Illinois, Minnesota and New York alleging copyright infringement and trademark violations for selling pirated Microsoft software, including Windows XP, Windows NT Server Version 4.0, Office 2000 Premium and counterfeit certificates of authenticity.

Damages are likely to be in the millions of dollars as each count of trademark infringement allows up to $1 million in penalties and each copyright infringement up to $150,000. Microsoft will not know how many counts to accuse each defendant of until it reviews the companies' sales, but it is likely each company committed dozens of acts, said Mary Jo Schrade, senior attorney at Microsoft.

The Redmond, Wash.-based software giant coupled consumer tips and a clandestine program, "secret shoppers," to catch the alleged software pirates in the act, the company said. Once the defendants were identified, either through calls to Microsoft's anti-piracy hotline or via Windows Genuine Advantage, an online software verification tool, Microsoft sent letters asking them to stop, then allowed operatives, posing as customers, to purchase software and components that they later determined to be counterfeit. The process was repeated, ensuring the action was "willful," before legal action was taken, Schrade said.

"Honest software resellers and consumers are hurt by illegitimate resellers," said John Ball, general manager for the U.S. System Builders partner group at Microsoft, which oversees small and medium-sized computer manufacturers. "Counterfeiters offer flawed and illegal products at the fraction of the cost of genuine software. That unfairly and unjustly causes honest businesses to suffer financially."

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The companies named in the lawsuits are BWT Industry Technology Service Inc. (doing business as Computer Max Co.), of Sierra Vista, Ariz.; Data Day USA Inc., of Vallejo, Calif.; MicroCity4Less.com, of Torrance Calif.; Winvtech Solutions Inc., of South el Monte, Calif.; Global Computing Inc., of Addison, Ill.; Ion Technologies Corp., of Minneapolis; Compustar Co., of Brooklyn; and Chips & Techs, of New York. Microsoft settled similar suits with BWT Industry Technology Service and Ion Technologies last year, Schrade said.

U.S. software makers lost an estimated $6.6 billion to piracy last year, according to the Business Software Alliance, an industry association lobbying for anti-piracy laws and standards. The organization estimates that for every dollar spent on software in the United States, 21 cents goes to bogus goods.