Microsoft is suing a Salt Lake company for allegedly engaging in the illegal copying and distribution of thousands of Microsoft software CDs.

The lawsuit, filed this week in U.S. District Court, names MBC Enterprises LC.; it's owner, James D. Craghead; and Steve Blackburn, an MBC employee, and seeks, among other things, unspecified actual, statutory and punitive damages to be proven at trial.Blackburn, who was employed as a Microsoft anti-piracy hotline operator in Utah between May and September 1999, is also being sued for breaking a non-disclosure agreement and misappropriation of Microsoft trade secrets which he allegedly revealed while employed at MBC.

Neither MBC, which according to the lawsuit operates its business at 3899 Parkview Drive, nor the two named defendants have listed phone numbers.

According to the lawsuit, police and FBI agents served a search warrant on Feb. 28 at a business known as Bantech in Pflugerville, Texas. During the search, "large quantities of counterfeit Microsoft Windows 98 and Office 2000 software CDs were found at the Bantech facility, along with business records indicating a large-scale counterfeit distribution operation."

Law enforcement officials also found "documents which showed that Bantech provided large shipments of purported Microsoft software CDs to MBC," the lawsuit states. "They also discovered a shipping box addressed to MBC which contained approximately 300 (counterfeit) Windows 98 software CDs on spindles."

Spindles are vertical metal rods that hold at least 200 CDs and are used during CD replication and assembling.

"Any spindles of Microsoft software that are outside of an authorized replicator's facility are highly suspicious and can only be the result of theft, fraud or some other wrongdoing," the lawsuit states. Neither Bantech nor MBC are authorized Microsoft replicators.

Bantech's records indicated that Bantech had provided MBC with nearly 9,000 units of purported Microsoft software CDs between December through the day of the search, the lawsuit states. Based on that information, FBI agents obtained a search warrant for MBC.

"During the search, defendant Craghead identified himself as the owner/operator of MBC and indicated that defendant Blackburn . . . was employed by MBC to provide information concerning Microsoft security features and the common attributes of counterfeit products," the lawsuit state. "Spindles of thousands of CDs" with Microsoft software were found at the facility.

Microsoft spokeswoman Laurie Rieger would not comment on whether other companies were involved in the case because sometimes such investigations could lead to "other criminal rings."

"Because this case is in the early stages of litigation, it is not appropriate for us to discuss it," she said.