“Buyer Be Smart” on Online Auctions

Microsoft investigation breaks up Auckland-based international software traders accused of selling counterfeit software via Internet auction sites

AUCKLAND, New Zealand — Dec. 5, 2008 — As part of its continued effort to protect its customers and partners from software piracy, Microsoft has announced two separate international investigations against individuals based in Auckland selling high-quality counterfeit software likely sourced from China.

The first was an Australasian investigation against dlive Limited, Xu Lei and Liao Yaopei, between July 2007 and October 2008 following appeals by local consumers who had purchased software using New Zealand Internet auction site TradeMe but who had been unable to get their software to work. The software analysed included high-quality copies of Microsoft Windows Vista Business, Microsoft Office Professional 2007, Microsoft Office Professional 2003 and Microsoft Windows XP Professional.

“I assumed I was buying the genuine thing,” says Tina Tweedie, a small business owner who purchased her software online from Lei. “But when I loaded the software I realised that I had been duped into buying counterfeit. This had real financial implications for me and my business.”

The second case followed a nine-month international investigation against Jun Li, Gong Qi and Jingtao Jin who were offering Microsoft software products over several Internet auction sites in the United States, Australia and New Zealand, including OZtion, iOffer and TradeMe.

Numerous consumer complaints were filed on iOffer and TradeMe against the reseller. Microsoft analysed and confirmed a sample of 27 items of software and found that it was all high-quality counterfeit software and the recommended retail value for that sample alone was over $22,000. As part of its follow-up investigation in this case, Microsoft learned that the Auckland-based auctioneers sold high-quality counterfeit Microsoft Windows and Office software to unsuspecting consumers in Australia, Canada, the Netherlands, New Zealand, the United Kingdom and the U.S. and shipped it directly from China.

Settled this week, Jun Li agreed to a High Court of New Zealand judgement for damages in the amount of $100,000 and requiring him to restrain from infringing Microsoft's copyright, engaging in misleading and deceptive conduct in the course of trade, and to deliver up to Microsoft all infringing product in his possession, and pay Microsoft's legal costs.

In both cases Microsoft obtained High Court orders freezing bank accounts and assets, and requiring both sets of traders to cease trading in counterfeit Microsoft products until the claims of copyright infringement are investigated.

According to Vanessa Hutley, senior corporate attorney and director, Intellectual Property at Microsoft Australia, software piracy is a problem estimated to cost $48 billion worldwide every year.

"Today, technology is a key factor for economic, social and technological progress, and for the sustainability of our economy," says Hutley. “It creates jobs and grows businesses. A 2007 IDC study found that for every dollar that Microsoft generated in New Zealand, businesses working with Microsoft generated more than $13.00.”

“Counterfeit software has far-reaching implications,” she says. “It frustrates unwitting consumers and bleeds revenue from local resellers and channel partners who are trying to make an honest living. Consumers should exercise great care in purchasing software from Internet auction sites, as some online traders are disreputable and there is usually no opportunity to inspect the product prior to purchase,” says Hutley.

Tips for buying software online

Consumers should consider the following tips, or consult Microsoft’s “How to Tell” Web site for information on authenticity: http://www.microsoft.com/resources/howtotell.

To ensure you are making informed decisions, consumers should ask:

• Am I buying from a reputable reseller?

• What is their return policy, and do I have contact details in case I have problems with this product?

• Are they giving a strange explanation for why the price is so low? If it is too good to be true it probably is.

• Is a Certificate of Authenticity included?

• Is a hologram CD, DVD, or recovery media included?

• Are the product packaging and documentation high quality?

• Is an End-user License Agreement included?

About Microsoft

Founded in 1975, Microsoft (Nasdaq “MSFT”) is the worldwide leader in software, services and solutions that help people and businesses realize their full potential.

ENDS

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