US Customs officials searched the premises Compunet Systems and Tierra Computer Inc. and uncovered large quantities of counterfeit Microsoft software with a total value of nearly $1 million.
Both companies are subject to criminal penalties for trafficking in counterfeit goods. Under federal trademark law, criminal penalties include fines of up to $2 million and 10 years in jail per infringement; federal copyright laws include fines of up to $250,000 and five years in jail per violation.
The investigation and raid of the companies was the culmination of investigative efforts by the US Customs Service and Microsoft in response to reports received about the illegal activities of the two companies. Based on these reports, investigators conducted a series of sample test purchases from the companies, the results of which confirmed they were distributing illegal software.
The US Customs Service has seen a steady increase in the seizure of counterfeit or pirated goods. In 1999 alone, Customs seized more than $98 million in counterfeit merchandise.