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Novell Awarded Over $4 Million in First Trial Involving Fraudulent Upgrades PROVO, UTAH -- September 22, 1997 -- Novell, Inc. announced that it has been awarded over $4 million in the first-ever U.S. trial to involve a judgment against a company for buying and selling fraudulent software upgrades. Vandy Micro, a Southern California computer software reseller, also doing business as Micro Control Systems, was found guilty of illegally purchasing Novell software upgrades and then passing the upgrades along as new product to unsuspecting customers. The case was tried in the U.S. District Court for the Central District of California and Novell argued that Frank Vanderputt, president of Vandy, was guilty of defrauding Novell and its customers. The Court awarded Novell $4.3 million plus attorney's fees in the case. Vanderputt's scheme involved fraudulently obtaining upgraded Novell NetWare and IntranetWare and passing the upgrades along to unsuspecting customers as new product. Vanderputt also exported the illegal Novell upgrades into Europe. Matt Durrant, trial counsel for Novell, argued that Novell and its sales channel had been harmed by the practice of companies fraudulently obtaining and selling upgrade NetWare product. "We are very pleased with Matt Durrant and his team in this case," stated David Bradford, general counsel for Novell. "We will now enforce this judgement against the defendants and promote the message set forth in this judgement that upgrades are not full product and should not be sold as such." A former employee of Vandy Micro testified that the company had kept extensive track of which serial numbers had been previously upgraded. This was done to avoid sending a repeat serial number to the same distributor or original equipment manufacturer (OEM). The employee's testimony included specific details outlining the process of how Vandy Micro took phone orders and then filled out the upgrade forms without the customer's knowledge to fraudulently obtain the upgrades. More than $11 billion each year is lost to software piracy, according to the Business Software Alliance (BSA) and Software Publisher's Association (SPA). Novell investigates more than 500 cases worldwide every year. Novell is an active member of both the SPA and BSA. Novell has established an anti-piracy group and telephone hotline for reporting illegal use of Novell software or making related inquiries. Call 1-800 PIRATES (800-747-2837) or send e-mail pirates@novell.com. Founded in 1983, Novell (NASDAQ: NOVL) is the world's leading provider of network software. The company offers a wide range of network solutions for distributed network, Internet, intranet and small- business markets. Novell education and technical support programs are the most comprehensive in the network computing industry. Information about Novell's complete range of products and services can be accessed on the World Wide Web at http://www.novell.com. Novell, NetWare and IntranetWare are trademarks of Novell, Inc.
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