Microsoft Swats at Phony COAs

Certificates of authenticity (COAs) are affixed to software packaging to let buyers know it’s the real thing. But when the COA itself is counterfeit, resellers also feel the pain, Microsoft found.

On Tuesday, Microsoft said it filed eight lawsuits across the U.S. against defendants who allegedly distributed counterfeit Microsoft COA labels or distributed genuine COA labels that could be used on pirated software.

The computer system distributors are accused of selling standalone COA labels that are either counterfeit or stolen. The labels then are affixed or attached to non-genuine products, the Redmond, Wash.-based software vendor said.

The suits follow a six-month “mystery shopper” sting operation, in which Microsoft investigators browsed the Internet and purchased standalone COAs. It spent half a million dollars testing software and analyzing COA labels.

“We want to make sure there are no misunderstandings that this is a legitimate business model, because it isn’t,” said Bonnie MacNaughton, a Microsoft senior attorney.

MacNaughton said the operation was a response to the concerns of channel partners who told Microsoft that they couldn’t compete with some vendors’ low prices and suspected that they were selling counterfeit software.

Microsoft sent hundreds of cease-and-desist letters to offending resellers, MacNaughton said. The vendors also were offered the opportunity to clean up their acts and become legitimate partners. “We’re very keen on making sure people are not confused before we file a lawsuit against them,” she said.

The lawsuits, which allege copyright and trademark infringement, were filed against Monarch Technology of San Clemente, Calif.; Kenneth Xu of Union City, Calif.; Era Limited of Lake Zurich, Ill.; Micro Info Tech (USA) Corp. of Edison, N.J.; Affordable Computer Warehouse of Clinton, N.Y.; Warp Systems/Computers of Raleigh, N.C.; Master Computer of State College, Pa.; and Software Provisions of Vancouver, Wash. The companies were not immediately reachable for comment.

Redmond’s investigators followed up after the letters, monitoring advertising and attempting more purchases. MacNaughton said the lawsuits were the first of many to come.

“Microsoft is very committed to shutting down this particular business model,” she said. “If the hundreds of companies we sent letters to choose to persist, we will have no choice but to file suit.”

While Microsoft UK recently instituted a buyback program that lets consumers swap counterfeit copies of XP for legit ones, the U.S. has no such program. MacNaughton said customers who get stuck with phony software should contact the seller and demand a replacement or a refund.