News release

Compaq and U.S. Marshals Seize Counterfeit Computer Products

Compaq Computer Corporation (NYSE: CPQ) and U.S. Marshals recently seized a large number of counterfeit Compaq computer components from the premises of Hardware 4 Less—a computer parts wholesaler located in Bow, New Hampshire. Compaq had learned that Hardware 4 Less supplied counterfeit computer memory products to other wholesalers who were seeking to fulfill customer orders.

Compaq obtained a search and seizure order from the United States District Court in New Hampshire. During the seizure, large quantities of counterfeit memory boards and hard drives were seized, as well as counterfeit Compaq labels, packing materials, warranty booklets, and software licenses. Compaq will seek damages of several million dollars from Hardware 4 Less as a penalty for illegally manufacturing and distributing counterfeit Compaq products. All seized goods are now in the possession of the Federal Court in New Hampshire, where proceedings against Hardware 4 Less will continue.

"This action demonstrates Compaq's determination to stop counterfeiting of its products and to punish those who seek to profit from breaking the law," said Compaq senior vice president and general counsel Thomas C. Siekman. "We will continue to protect our customers, our authorized sales channel partners, and the Compaq brand from the damage done by sales of counterfeit products.

"Compaq is committed to maintaining the integrity of its products and the high levels of product quality and service that our customers have come to expect," said Siekman. "Companies or individuals who would attempt to counterfeit Compaq products—or illegally divert Compaq products through gray market activities—will be held accountable."

Compaq has implemented the use of security labels on products such as hard drives, memory and processors, enabling Compaq and customers to verify product authenticity and minimize the chances of duplication by counterfeiters. Features within the security labels provide covert and overt security, including a Compaq logo printed with Optically Variable ink and tamper-evident labels. More information on verification of authenticity of Compaq products can be found on the Compaq Web site at http://www.compaq.com/newsroom/advisory/memory.html and http://www.compaq.com/newsroom/advisory/harddrives.html.

The action against Hardware 4 Less follows a similar search and seizure operation carried out by Compaq—in cooperation with U.S. Marshals, the FBI and the U.S. Attorney's office—in Orange County, California last year. In that case, Dynasty Memory Inc. was the target of a search and seizure operation that resulted in the seizure of several million dollars worth of counterfeit Compaq parts, which Dynasty had manufactured and was planning to sell to the public. Dynasty paid a substantial penalty to Compaq, and its owners are under investigation by both local and federal law enforcement agencies.

Also, Compaq is pursuing—and has obtained court injunctions against—several other companies who were found to be buying and selling counterfeit Compaq products.

About Compaq

Founded in 1982, Compaq Computer Corporation is a leading global provider of information technology products, services and solutions for enterprise customers. Compaq designs, develops, manufactures and markets information technology equipment, software, services and solutions, including industry-leading enterprise storage and computing solutions, fault-tolerant business-critical solutions, communication products, personal desktop and notebook computers, and personal entertainment and Internet access devices that are sold in more than 200 countries directly and through a network of authorized Compaq marketing partners. Information on Compaq and its products and services is available at http://www.compaq.com.