When Microsoft's UK head of antipiracy visited several computer stores in Glasgow earlier this week inquiring about piracy issues, some weren't especially glad to see her.

"Everybody is very, very surprised – Microsoft on their doorstep," said Michala Alexander at a press conference in London today. She said the visits are part of a new program called Keep IT Real, a Microsoft programme announced today that aims to cut pirate software by five percent over the next three years in the UK.

The house calls are an initial friendly approach that could lead to more severe legal measures against retailers – also known as system builders – that may be loading unlicensed copies of the Windows OS (operating system) onto newly built computers. Microsoft estimates it loses up to £285,000 annually within the UK to piracy.

That cost may be small beans to a software giant flush with billions in cash. However, the piracy undercuts legitimate retailers that put licensed software on machines, Microsoft officials said.

Those businesses have asked the software giant to do more, said Alistair Baker, managing director of Microsoft and vice-president of Microsoft Europe, Middle East and Africa.

The campaign also calls for close ties with the Patent Office, the Trading Standards Institute and the Chamber of Commerce. The Patent Office is strengthening its ties with law enforcement to combat an increasing problem with counterfeit goods and intrusion on intellectual property rights by sophisticated criminals, said Phil Lewis, head of enforcement for the Patent Office Enforcement Team.

Lewis described a recent crackdown, 'Operation Dawn', in London's Wembley Market. During the four-day operation, officials arrested the same man four times for possessing counterfeit software. "Every time, he had a new batch of stock," Lewis said.

Producing bogus software is an easy, entry-level step into counterfeiting since the startup costs are low. However, pirated software – which can yield profits as lucrative as selling illegal drugs – can provide the funds for making other counterfeit goods that can cause physical harm to people, such as fake medicine, according to Alexander, who cited law enforcement figures.

Microsoft is taking a street-side approach, and has two teams that will attempt 800 visits to computers sellers by June, according to Alexander. As a result of three years of similar work in Glasgow – labelled a 'hot' area for piracy – 12 companies were investigated and resulted in payments of up to £75,000 each to Microsoft, the company said.

By working with eBay over the past six months, about 35,000 sales considered suspicious have been taken down, with more than 60 percent of those auctions being low-quality CDs, Alexander said.

Microsoft is also going to consumers and educating them in how to spot fake software. At the Thursday conference, Alexander passed around two CDs of Microsoft software – one fake, one real, and nearly indistinguishable. She then pointed out fine differences in the labels, with the true product having an embedded strand noticeable by touch.

The Microsoft website www.howtotell.com instructs users on how to detect fraudulent software.

Of the 7.1 million UK users who have checked their software, some 16.7 percent – 1.1 million – found their copy to be illegal. Microsoft wants to reduce that figure to 11.7 percent by 2009.

Microsoft has offered some sweeteners to get those users to buy a licensed copy, such as offering Windows Defender, formerly known as Windows AntiSpyware, for free to those with legitimate copies. Within the UK, Microsoft is offering an antivirus program for small businesses from Computer Associates.

Those users can also buy an OS at a reduced price, Alexander said.