April 30th, 2007

How to get sued by Microsoft

Posted by Ed Bott @ 6:03 am

Categories: Licensing, Microsoft

Tags: Software, Volume-license, Microsoft Windows XP, Microsoft Office, Microsoft Windows XP Professional, Microsoft Windows, Microsoft Corp., Ed Bott

Shopping at SurplusComputers.com is like poking around an especially geeky Goodwill store, Most of the goods are surplus for a reason, but occasionally you’ll find a particularly useful bit of hardware or software whose market has crested, making it a great bargain.

I’ve been receiving the company’s Deals of the Week e-mails for years, and I’ve always been puzzled by one category of offers. Back on February 4, for instance, the weekly e-mail included offers for Microsoft Windows XP Pro x64 Edition (NFR) for a mere $39.99, and Microsoft Office 2003 Pro (NFR) for $99.99. Clicking through to the website where the products themselves were sold led to an assurance that the products themselves were perfectly legal [their words, not mine] and “guaranteed to activate.” Here’s a snippet from that newsletter:

Now, if you’ve priced Windows or Office lately, you know that those prices are literally too good to be true. Yet Surplus Computers advertised those two packages in its weekly e-mails (and apparently sold lots of copies) for more than a year before suddenly stopping last month.

So, what happened? Hmmm:

Filed in the United States District Court for the Northern District of California

Microsoft Corp. v. Intrax Group, Inc., d/b/a Surplus Computers, Michael Mak, and John Does 1-5 (Santa Clara and San Jose, California), alleging importation and distribution of infringing Windows XP Professional, Windows XP Professional x64 Edition, Office 2003 Professional Enterprise Edition, and Office 2003 Standard software. Case No. 3:07-cv-01840.

The NFR in the listing should have been a dead giveaway. It means Not for Resale, and it indicates that the original disks and keys were produced for use by schools and other qualified institutions to give to employees and faculty members for installation under the terms of an academic volume license agreement. Selling them to the public was a clear violation of Microsoft’s licensing agreement, and as the press release for the lawsuit notes, “The defendants were warned by Microsoft about infringing activities prior to filing of the lawsuit.” And they had lots of company, as this list of lawsuits makes clear.

But, like a game of Whack-A-Mole, a new offender pops up for every one that gets smacked down. In last week’s Windows Secrets newsletter, Scott Dunn passed along this money-saving tip:

OEM and academic discounts are not the only way to trim your software budget. For example, cheaper even than an OEM version is a “work at home” package of Windows XP Pro SP2 available in the U.S. for $105 from Von1. According to Christina Philpot, manager of operations at Von1, the lower price represents a promotion to home and student users — the product is not to be used for businesses.

$105 for Windows XP Pro? I checked the website and they’re selling “Work at Home” XP Pro x64 edition for $64 a copy. Sounds too good to be true, right? And indeed it is, as even a quick perusal of the Microsoft terms and conditions for this program makes clear:

Work at Home licenses for academic volume licensing customers

Education institutions that have acquired licenses through Microsoft academic volume licensing programs may grant to their faculty and staff the right to use a second copy of a limited selection of products on either a home or portable computer for work-related purposes. [emphasis in original]

You’ll find more details about distribution of this software here:

If you decide to take advantage of the Campus and School Agreement Student Option or the faculty/staff Work at Home licenses available through Microsoft Academic Volume Licensing, access to media by your users must be restricted and regulated. All media for software distributed for Work at Home or Student Option use must be acquired from a Microsoft-approved fulfillment source.

Ms. Philpot’s assertion that this program is “a promotion to home and student users” is just plain wrong. The software her company is selling was diverted from its intended market and is almost certainly being sold illegally in violation of the license agreement that governs its sale and use. And it’s terribly sloppy reporting from Windows Secrets not to check out that assertion before sending its readers off to buy software they’re not authorized to use.

I would imagine that Von1 has already received its first warning letter from Microsoft.

Now, an individual who bought a copy of Windows from one of these unauthorized sources is unlikely to appear on the radar screen of Microsoft’s legal staff. But there’s no guarantee that those product IDs will continue to work. So the question becomes, do you feel lucky?

Oh, and this week’s mailing for Surplus Computers just arrived. They’re selling what appear to be perfectly legal properly licensed OEM (System Builder) copies of Windows Vista at the same prices that all their online competitors are offering. Isn’t it amazing how a little time in a courtroom can get one’s attention?