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First Indictments Come Down Under Stronger Software Piracy Laws

July 8, 1993

SAN FRANCISCO (AP) _ Federal prosecutors on Wednesday announced the nation’s first indictments for software piracy under a new federal copyright law making commercial counterfeiting a felony.

In two separate cases, defendants allegedly made thousands of copies of Microsoft Corp. computer software, Assistant U.S. Attorney Kent Walker said.

Meanwhile, Microsoft said more than $9 million in pirated software has been seized over the past four months by U.S. marshals working with the company.

Microsoft said it has filed three federal lawsuits in connection with those raids, part of a campaign to remove illegal copies of its MS-DOS and Windows operating systems from the market.

In San Francisco, a federal grand jury issued indictments against two Silicon Valley companies and several individuals on Wednesday, after charges were filed by Acting U.S. Attorney Michael Yamaguchi.

In one case, Abba Systemations, Inc., operating as ProSys Inc., of Fremont, Calif., allegedly counterfeited and sold more than 20,000 copies of MS-DOS and Windows along with manuals and packaging.

The defendants then laundered approximately $500,000 from the sale of the software through a front corporation, Avenue Systems Group, Walker said.

Named in the indictment were ProSys, Avenue Systems Group, Joseph Wu, 36, and Henry Siu Kwan, 32, both of Fremont. Each was charged with one count of conspiracy, two counts of criminal copyright infringement, two counts of trafficking in counterfeit trademarked goods and two counts of money laundering, the Justice Department said.

Wu, Prosys and Avenue Systems Group also each were charged with one count of money laundering using foreign accounts. William Alvin Hay, 62, of Mountain View, Calif., was charged with one count of criminal copyright infringement.

The copyright and conspiracy counts carry maximum penalties of five years imprisonment and $250,000 fines for the individuals, and $500,000 for the corporations, Walker said.

In a separate case, Ever Supply, Inc. of Milpitas, Calif., Roland Tsai and Tony Shen allegedly tried to sell thousands of copies of MS-DOS and Windows to an FBI informant earlier this year.

Each defendant was charged with two counts of criminal copyright infringement and two counts of trafficking in counterfeit trademarked goods.

President Bush signed the bill raising commercial software piracy from a misdemeanor to a felony in November of 1992.

Bootlegging costs U.S. software publishers an estimated $1.2 billion each year out of total sales of $6 billion to $7 billion, according to the Washington D.C.-based Software Publishers Association.

Microsoft said the defendants in its three lawsuits are current or former licensees: Unitron Computer Inc., of City of Industry, Calif.; CMOS Technologies Inc. of Piscataway, N.J.; and Micro Innovation Inc. of Houston. Some of the defendants’ assets have been frozen, Microsoft said.

Microsoft said more than 125,000 illegal copies of software worth $7 million were seized in a California raid against Unitron, which had been licensed to distribute the programs with its computers. Unitron illegally sold the software separately, Microsoft alleged.

About 35,000 software units valued at $2 million were seized from seven Micro Innovation locations in Houston. Microsoft accused the company of producing unlicensed Microsoft software and selling it through PC Innovations stores and other resellers.

In the CMOS suit, Microsoft contends the company continued to produce and distribute Windows 3.1 under its trade name after Microsoft terminated a licensing agreement in 1992.

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