SPA Plans Crackdown on CD-ROM
"debundlers"
OEMs, Distributors, Retailers to be Targeted

July 20, 1994, (Washington, D.C.) -- The Software Publishers Association
(SPA) announced today that it would begin an aggressive campaign against
businesses that engage in "gray market" debundling activities. Debundling,
a violation of copyright laws and distribution agreements between software
publishers and Original Equipment Manufacturers (OEMs), occurs when
software intended to be sold with hardware, OEM-only versions, is
separately sold into other distribution channels.

SPA has retained investigators to purchase unbundled CD-ROM product and
track the source of the product. The SPA expects to file lawsuits against
any OEM, distributor, VAR or retailer that trades unlicensed CD-ROM
software in violation of the applicable distribution agreements or the
copyright law.

With the rapid growth of the CD-ROM market over the past year, many
publishers of CD-ROM titles provide "jewel case" product to OEMs to bundle
with sound cards, CPUs and other hardware for the purpose of highlighting
the hardware to its best advantage. The publishers generally provide this
software at a special price to derive marketing benefits under the
condition that the product is sold with hardware as provided in the
distribution agreement. However, over the past few months, large volumes
of "restricted" CD-ROM consumer software has been "gray-marketed" to
retailers, resulting in restricted software competing with software
publishers' normal retail distribution product. In some cases, OEM
licensees have subcontracted production to individuals or companies that
have produced product without payment of royalties or license fees.

Susan Lee-Merrow, Director of Marketing for Living Books, Inc. stated "We
are very pleased that aggressive action is being taken by the SPA on
behalf of those of us who bundle product. Living Books enjoys strong
strategic OEM relationships, but debundling can ruin this business for all
of us."

John O. Morisano, Director of Licensing for Activision, Inc., said "We
highly value our OEM relationships and will continue to build upon them.
However, we will not tolerate debundlers."

Jill Goldworn, Director of Contract Sales for Interplay Productions, said
"Interplay has been a pioneer in producing and bundling CD-ROM software.
We support the aggressive stance of the SPA in policing the debundling of
CD-ROM software. The success of programs offered by hardware and software
companies are undermined by this illegal business practice."

Harvey LoSasso, Vice President of Licensing and OEM for Spectrum Holobyte
commented, "Spectrum Holobyte expects to be diligent in its efforts to
police and prevent the incidents of unbundled and gray marketed software.
The company supports the SPA's efforts in spearheading a campaign."

The SPA's anti-piracy hotline, 1-800-388-7478, accepts calls reporting
software violations. Organizations may also request free anti-piracy
materials. The Software Publishers Association is the principal trade
association of the PC software industry. Its 1,100 members represent the
leading publishers in the business, consumer, and education markets. The
SPA has offices in Washington, DC, and Paris, France. SPA press releases
are available on-line through CompuServe. (GO: SPAFORUM)

Software Publishers Association
1730 M St, Northwest, Suite 700, Washington, D.C. 20036
202-452-1600,  Fax: 202-223-8756

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