Originally created 07/13/01

Microsoft sues local retailer



Microsoft Corp. filed a federal lawsuit Thursday against Augusta computer dealer Computer Exchange Inc., accusing it of distributing counterfeit versions of its software.

The civil suit filed in U.S. District Court says Computer Exchange sold counterfeit components of Office Professional 2000 to an undercover Microsoft investigator June 6.

The complaint also states a 1999 raid on the business by U.S. Customs officials turned up other fake Microsoft products, including Office Professional 97 and Windows 95.

Computer Exchange owners Charles L. Kelly and John F. Luther are named individually as defendants. The partners' two retail stores, located on Washington and Peach Orchard roads, sell new, used and custom-built computers.

Phone messages left at both stores and at the co-owner's homes were not returned Thursday.

A lawsuit represents one side of a dispute.

Microsoft attorney Mary Jo Schrade said her company simultaneously filed a suit against Tampa, Fla.-based computer dealer United Factory Computers, accusing it of distributing knock-off versions of Microsoft products.

On Thursday, Microsoft also sent cease-and-desist letters to 12 Atlanta-area companies it accuses of installing counterfeit and unlicensed versions of its programs.

Ms. Schrade said the company decided to take action against Computer Exchange because it continued to participate in software piracy despite the U.S. Customs raid two years earlier.

"You would think Customs would have scared them straight," said Ms. Schrade, who is based in Atlanta.

The Microsoft suit alleges Computer Exchange violated several statues, including copyright infringement law, federal trademark infringement law and deceptive trade practices law.

If the suit is successful, Ms. Schrade said, Microsoft could be entitled to a maximum of $1 million for each trademark violation and $150,000 for each copyright infringement.

Software piracy can occur in several ways, the most common being the sharing of software applications among a group of users.

When this is done at the commercial level, it is known as "hard disk loading." Dealers use a single disk to load the system into multiple machines that are sold to unsuspecting customers without the customary backup disks.

Another type of piracy occurs when counterfeiters, domestic and overseas, produce near-identical versions of the original application and distribute them to resellers who market the goods as excess inventory to justify the discount price.

"If the price is too good to be true, it's probably counterfeit," Ms. Schrade said. "It's like someone selling you a Rolex watch for $100."

Nearly one in four Georgia computers is run with pirated software, according to International Planning and Research Corp., an information technology industry analyst in West Chester, Pa.

Reach Damon Cline at (706) 823-3486 or bized@augustachronicle.com.

Spotting fakes

Cost is much lower than the suggested retail price.

Software is absent of a certificate of authenticity or other anti-counterfeiting markings and security features.

The dealer asks the buyer to purchase the manuals from an outside source.

Manuals, if included, are photocopied or of poor quality.

A registration card and licensing agreement are not included.

Packaging is not representative of the company's other products.

Source: Staff research