Powerpacks PC, in Seaside, is one of just 10 stores across the country which were threatened with legal action.

The store admitted to involvement in unlawful software activity including the sale of unlicensed software and hard disk loading.

The matter was settled out of court and unspecified damages were awarded to Microsoft.

Kenneth Kelly from Powerpacks PC said, "We recognise that we were dealing with Microsoft software incorrectly and have since worked co-operatively with Microsoft to ensure this does not happen again.

"It's good to see Microsoft working with small, local businesses like ourselves to ensure that we are fully educated about the rules of software usage and remain compliant at all times."

The positive outcome of this case is that the Eastbourne business is now committed to working more closely with Microsoft to ensure it remains compliant and stop selling illegal software, said a Microsoft spokesperson.

Michala Wardell, head of anti-piracy at Microsoft UK, said, "The announcement indicates that illegal software is not just a top level, national problem but very much a local issue.

"Microsoft is determined to protect customers from the pitfalls of unlawful software and is committed to working with local businesses to convey the importance of selling genuine computer programs.

"This latest success in clamping down on the sale of illegal software underlines just how important it is for Microsoft to work on a local level — it is our job to ensure customers are not being ripped off when they buy Microsoft computer programs.

"We have a duty to ensure that customers are given a good deal and are not unwittingly purchasing illegal software that puts them at risk from dangers such as computer viruses and identity theft.

"By educating and informing local firms to ensure they are fully aware of the rights and wrongs when trading in Microsoft software, we can ensure that customers are not left out of pocket by illegal software trading.

"We want to help local computer firms operate in a legal and safe way and we believe that selling reliable, genuine software is the best way for them to keep their customers happy and their businesses profitable.

"What most people don't realise is that they could have unwittingly bought counterfeit computer programs which they purchased with their PC, that are likely to be infected or harmful.

"In Britain, we've found that one in three computer programs installed on computers are counterfeit, which puts consumers at great risk as using these programs can lead to a loss of bank details, for example, or even a loss of items such as family photo albums and music collections saved on their computer.

"Because of this, it's important that we minimise the dangers consumers face from fake software by educating local computer shops and clamping down on the dishonest PC dealers who are also putting genuine computer firms out of business."

Microsoft's regional approach to educate local computer businesses about the dangers of selling illegal software and the consequences this has for their customers is also supported by Sussex Enterprise.

Mark Froud, chief executive at Sussex Enterprise, added, "Counterfeit products, software piracy and Intellectual Property theft cause substantial financial loss to computer retailers of Sussex.

"It's great to see that software companies such as Microsoft understand these dangers, are committed to educating and informing local PC retailers on the do's and don'ts of software trading and are doing something effective about it."