Microsoft Files Eight More COA Lawsuits

Microsoft today announced it has filed eight lawsuits against computer system builders and resellers for alleged distribution of counterfeit, illicit and unlicensed software and software components. This action follows similar action in November 2004 against eight other dealers.

The lawsuits were filed against Abacus Computer Corp., of Anaheim, Calif.; Avantek Inc., of Orlando, Fla.; First E-Commerce 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.

Did Not Cease

Defendants in each case allegedly continued to distribute counterfeit software or software components, separated Certificate of Authenticity (COA) labels, or unlicensed software even after they were contacted by Microsoft requesting that they halt their illegal activities.

“We are still very keen on trying to help our honest channel partners compete fairly in the marketplace,” Bonnie MacNaughton, senior attorney at Microsoft, told TechNewsWorld. “We are also very concerned about Microsoft customers being deceived into buying pirated software and not getting the value of genuine they think they are getting when they buy their personal computers.”

The Breadth of the Problem

Microsoft is also concerned about lost revenues. According the Business Software Alliance (BSA), 22 percent of the software being used on computers in the U.S. today is unlicensed, including counterfeit and pirated software. BSA estimates that piracy represents a loss of nearly US$29 billion to the software industry worldwide.

“The IT industry is a vital contributor to a vibrant U.S. economy, and small businesses are the economy’s backbone,” said Jonathan Zuck, president of the Association for Competitive Technology. “To ensure continued viability of our industry, we must preserve the incentives to innovate that fuel productivity increases and economic growth.”

Legal Wrangling

The federal Anti-Counterfeiting Amendments Act of 2003 was signed into law by President Bush on Dec. 23, 2004 to help software publishers combat the problem. It provides for criminal and civil penalties for the distribution of genuine standalone COA labels or authentic COA labels that are separated from the software they were intended to certify.

“This particular set of lawsuits is very significant to us because it includes the first lawsuit under the Anti-Counterfeiting Amendment that was passed in late December,” MacNaughton said. “This is one of the most significant things that has happened for Microsoft’s piracy efforts in years.”

Making Headway

MacNaughton said Microsoft attempted to educate the masses before filing suits.

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.

MacNaughton said most people who received the warning and cease-and-desist letters stopped selling the COAs, proving that Microsoft’s initiatives — and the new legislation — are working. The subjects of today’s lawsuits, she said, ignored the letters.

“We feel this legislation has enormously advanced our opportunity to protect our customers from being deceived by fake COA label and to protect our legitimate partners from having to compete with other businesses that are engaging in piracy,” she said.

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