Microsoft's Windows 98 has been the top selling software product since its release in late June, making it a hot target for software pirates.
Microsoft has been especially vigilant about protecting its copyrighted products lately, filing suit against seven resellers in Texas and San Francisco this month, some of whom were alleged to have distributed illegal copies of Windows 98.
Microsoft sells OEM versions (which go to PC makers) of Windows 98 for installation on new PCs. Allegedly, counterfeiters have been selling faked copies to certain system builders. The counterfeit installation CDs are slightly different in their packaging than the official Windows 98 version which goes to PC manufacturers.
"What we're seeing is CDs which are counterfeit but have been made to look like the OEM product. They came up with their own CDs, and their own covers, but the software that's on the CDs is copies of Microsoft software," said Sarah Alexander, international corporate issues manager for Microsoft.
The thieves did copy real Windows 98 code onto the CDs, but may include viruses or security flaws that Microsoft's testing procedures guard against.
"There's no guarantee that when a counterfeiter counterfeits the software that they go to the same quality assurance standards," Alexander said, adding that customers who end up with a pirated version of Windows 98 are not eligible for customer support.
Microsoft declined to say whether PCs with pirated versions of Windows 98 were distributed to resellers or consumers, what law enforcement agencies are involved, or what cities the pirated CDs were found in, because of the ongoing investigation.
No suspects have been identified yet, but software pirates may have ties to organized crime, Alexander said. "We have been seeing more and more connection to organized crime," she said.
Microsoft has been making more of a public effort to crack down on piracy as of late, Alexander said, to help drive awareness about the negative impact of piracy. "There's been a really wide range of illegal activity that other counterfeiters...have been involved with. It's a very shady business."