Published On: Sun, May 6th, 2018

How Microsoft helped incarcerate a male for ‘counterfeiting’ program it gives divided for free

In a offensive benefaction to bad copyright law and Microsoft’s bottom line over simple technical truths and common sense, Eric Lundgren will spend 15 months in jail for offered discs that let people reinstall Windows on protected machines. A sovereign appeals justice this week inspected a visualisation handed down in stupidity by a Florida district judge, for a crime a male never committed.

Now, to be clear, Lundgren did dedicate a crime, and certified as many — though not a crime he was convicted for, a crime Microsoft alleges he did, a crime that carries a year-plus jail term. Here’s what happened.

In 2012 feds seized a conveyance of discs, that they dynamic were tawdry copies of Windows, streamer to a U.S., where they were to be sole to retailers by Lundgren. U.S. Prosecutors, corroborated by Microsoft’s experts, put him on a offshoot for about $8.3 million — a sell cost of Windows double by a series of discs seized.

The customarily problem with that was that these weren’t tawdry copies of Windows, and they were value roughly nothing. The difficulty is distinct — here’s why.

When we buy a computer, baked into a cost of that mechanism is customarily a permit for a module on it — for instance, Windows. And enclosed with that mechanism is mostly a front that, should we have to reinstall that OS for whatever reason (virus infection, ubiquitous slowdown), allows we to do so. This designation customarily works, of course, if we feed it your permit key, that you’ll almost find on a plaque trustworthy to your computer, a “Certificate of Authenticity.”

But what if we mislay that disc? Fortunately, all those years Microsoft itself supposing front images, files that we could use to bake a new duplicate of a front during no cost. Look, we can still do it, and we used to be means to get one though a permit key. In fact that’s how many Windows installs were combined — buy a permit pivotal directly from Microsoft or some reseller, afterwards download and bake a implement front yourself.

Of course, if we don’t have a DVD burner (remember, this was a while behind — these days you’d use a USB drive), you’d have to get one from a crony who has one, a protected refurbisher, or your manufacturer (for instance, Dell or Lenovo) for a fee.

This choice is still available, and unequivocally accessible — I’ve used it many times.

What Lundgren did was have thousands of these liberation discs printed so that correct and refurbishing shops could sell them for inexpensive to anyone who can’t make their own. No need to go call Alienware patron service, usually go to a mechanism store and squeeze a front for a integrate bucks.

Lundgren, by a way, is not some scammer looking to fleece a few people and make a discerning buck. He has been a vital figure on a e-waste scene, operative to minimize a poisonous salary of designed obsolescence and regulating a association of 100 to responsibly remodel or recycle aged computers and other devices.

His tangible crime, that he pleaded guilty to, was counterfeiting a packaging to make a discs pass for Dell-branded ones.

But a elemental thought that this was tawdry software, with all that implies, is simply wrong.

Software vs. license

The whole thing revolves around a fact that Microsoft — and any other module builder — doesn’t usually plain sell software; they sell licenses to that software. Because module can simply be copied from mechanism to computer, robbery is easy if we make a module that anyone can usually install. It’s some-more effective to discharge a module itself freely, though customarily transparent it for use with a special one-off formula sole to a customer: a license, or product key.

When we buy a “copy” of Windows, you’re unequivocally shopping a license to use Windows, not a pieces and bytes that make adult a OS. The association literally supposing adult to date front images of Windows on a website! You could simply implement it regulating those. But though a permit key, a OS won’t work properly; it’ll harass you, mislay functionality and competence close down entirely. No one would upset this with a protected duplicate of a OS.

This eminence between module and permit is a excellent one, though important. Not usually for overarching discussions of copyright law and where it fails us as record moves over a exceedingly antiquated DMCA. Because in this box it’s a disproportion between a box of Windows liberation discs being value millions of dollars, as prosecutors creatively pronounced they were, and being value radically nothing, that is what an consultant declare and advocates countered.

More importantly, it’s a disproportion between someone removing 15 months in jail for a pacifist crime harming no one and causing no tangible financial loss, and removing a suitable punishment for counterfeiting labels.

A Microsoft deputy told me, pretty enough, that they wish business to be means to trust their software. So going after counterfeiters is a high priority. After all, if we buy a cheap, feign DVD of Windows on eBay and it turns out a front has been pre-loaded with malware, that’s bad news for a consumer and hurts a Microsoft brand. Makes sense.

It pronounced in an central matter (then supposing an updated one later, that is during a finish of a article):

We attend in cases like these given tawdry module exposes a business to malware and other forms of cybercrime. There are obliged ways to remodel computers and save waste, though Mr. Lundgren intentionally cheated people about a module they were shopping and put their confidence during risk.

(Update: Microsoft has also published a full blog post going into serve fact on some of these issues, though they are mostly already addressed in this article.)

First, it is value mentioning that a justice record is full with tests display these discs were ideally normal copies of module that Microsoft provides for free. Prosecutors went by a whole implement routine several times and encountered 0 surprising — in fact, their arguments rest on a fact that these were ideal copies, not a compromised one. This competence not impact Microsoft’s logic for posterior a case, though it certain has a temperament on this one.

Lundgren cheated people that this was an central front from Dell, certainly. That’s a crime and he certified to it right off a bat. But from what we can tell, a discs were uncelebrated from Dell discs solely for inconsistencies in a packaging. There’s 0 in a record to consider otherwise. we was told Microsoft declined to demeanour into either a discs competence have had malware given it would have no temperament on a case, that strikes me as ridiculous. It would be pardonable to check a firmness and essence of a front Microsoft itself provides a information for, and malware or a like would yield justification of rapist vigilant by Lundgren or his supplier.

If on a other palm a discs were matching to those they are meant to imitate, we would design to hear tiny about their calm solely that they are functional, that is what we see in a record.

From a justice records, a discs seized constructed typical Windows installs when tested by mixed parties.

Furthermore: People weren’t shopping software, let alone “counterfeit software.” The discs in doubt are during best “unauthorized” copies of module supposing for giveaway by Microsoft, not unequivocally a tenure that carries a lot of authorised or even controversial weight. we could make a liberation disc, afterwards make another for my crony who doesn’t have a DVD burner. Is that duplicate certified or not? And how could it be unapproved if it’s an picture finished accessible to users privately for a purpose of blazing liberation discs? How can it be tawdry if it’s usually a duplicate of that image? Furthermore, how can it be “pirated” if a business indication requires a finish user to squeeze a permit pivotal to activate a product?

If the information on a disc is value anything during all, given does Microsoft yield it for free? There was in fact no robbery given no permit to use a software, that amounts to a whole value of a software, was ever sold.

What damage?

But how, then, could this openly accessible module furnish repairs in a millions, as initial alleged, and after in a hundreds of thousands?

What Microsoft alleged, when it became transparent that a information on a discs was value precisely 0 though a permit key, as evidenced by a possess giveaway placement thereof, was that a discs Lundgren was offered were dictated to short-circuit a central refurbishment program.

That’s a central purebred refurbisher module where a association competence buy aged laptops, clean them and hit Microsoft observant “Hey, give us 12 Windows 7 Home licenses,” that are afterwards supposing for a low bonus — $20-40 each, down from a full sell cost of hundreds. It encourages reuse of ideally good hardware and keeps costs down, both of that are plain goals.

Every front Lundgren sole to refurbishers, Microsoft argued, caused $20-40 (times .75, a eminence ratio) of mislaid OS sales given it would be used in place of a central chartering process. A simplified chronicle of this ($25 times 28,000 units) was a basement for a $700,000 figure used in partial to establish a astringency of his crime and sentence.

There are several things wrong with this assertion:

  • Lundgren was not indispensably offered these discs to refurbishers for use in refurbishing computers — a discs would be ideally useful to any Dell owners who walked in and wanted a liberation front for their possess purposes. The supervision box rests on an arrogance that was not demonstrated by any testimony or evidence.
  • The discs are not what Microsoft charges for. As already established, a front and a information on it are supposing for free. Anyone could download a duplicate and make their own, including refurbishers. Microsoft charges for a permit to activate a module on a disc. The discs themselves are usually an easy approach to pierce information around. There’s no reason given refurbishers would not buy discs from Lundgren and sequence licenses from Microsoft.
  • Dell computers (and many computers from dealers) come with a Certificate of Authenticity with a analogous Windows product key. So if intentions are to be considered, essentially these discs were dictated for sale to and use by authorized, protected users of a OS.
  • Furthermore, given many computers come with COAs, if a refurbishers confirm to skip removing a new permit use a given computer’s COA, that is not a error of Lundgren, and could simply be achieved with a giveaway module Microsoft itself provides.
  • That routine — regulating a COA instead of shopping a new permit — is not accessible by Microsoft and is ghastly copyright-wise. But in this box a defendants contend it was certified by U.S. prosecutors that a COA “belongs” to a hardware, not a initial buyer. The choice is that, for example, if we sole a mechanism to a crony with Windows installed, he would be compulsory to buy a new duplicate of Windows to implement over a first, that is absurd.
  • Naturally no tangible repairs was indeed done. The repairs is wholly fanciful and improper during that. A duplicate of Windows can't be sold given it is openly provided; customarily a permit pivotal can be sold, and those sales are what Microsoft alleges were influenced — though Lundgren conjunction had nor sole any permit keys.

In fact an consultant witness, Glenn Weadock, who had formerly been concerned in a 2001 supervision antitrust box opposite Microsoft, seemed in justice to disagree these unequivocally points.

Weadock was asked what a value of a discs is though a permit or COA. “Zero or nearby zero,” he said. The value is a “convenience factor,” he said, in that someone can use a pre-made front instead of blazing their possess or carrying a manufacturer yield it.

Real damage

This fact, a disproportion between offered a permit that activates a square of module and provides a genuine value, and a placement of a module itself — again, supposing for giveaway to any asker — was totally abandoned by a courts:

The government’s consultant testified that a lowest volume Microsoft charges buyers in a applicable market—the tiny purebred mechanism refurbisher market—was $25 per disc. Although a invulnerability consultant testified that discs containing a applicable Microsoft OS module had tiny or no value when unparalleled by a product pivotal or license, a district justice categorically settled that it did not find that testimony to be credible.

As I’ve already established, discs are free; $25 is a cost of a permit concomitant a disc. Again, a excellent though unequivocally critical distinction.

Weadock’s testimony and all arguments along these lines were overlooked by a judges, who motionless that a “infringing item” “is or appears to be a pretty sensitive client to be, matching or almost homogeneous to a infringed item.”

This is fundamentally wrong.

The “infringing” object is a disc. The “infringed” object is a license. The ones treacherous a dual aren’t purchasers though a judges in this case, with Microsoft’s help.

“[Defendants] can't explain that Microsoft suffered minimal financial injury,” wrote a judges in a statute affirming a prior court’s sentencing. “Microsoft mislaid a sale of a module as a approach effect of a defendants’ actions.”

Microsoft does not sell discs. It sells licenses.

Lundgren did not sell licenses. He sole discs.

These are dual opposite things with opposite values and opposite circumstances.

I don’t know how we can make this any some-more clear. Right now a male is going to jail for 15 months given these judges didn’t know simple concepts of a complicated module ecosystem. Fifteen months! In prison!

What would a reasonable punishment be for counterfeiting labels to put on module anyone can download for free? we couldn’t say. That would be for a justice to decide. Possibly, formed on Lundgren’s thought that if indemnification had to be calculated, that $4 per front was some-more realistic, he would still face time. But instead a justice has finished an ignorant preference formed on corporate misinformation that will dispossess someone of some-more than a year of his life — not to discuss all a time and income that has been spent explaining these things to deaf ears for a final few years.

Microsoft can't explain that it was merely a plant or bystander here. It has worked with a FBI and prosecutors a whole time posterior rapist charges for that a suspect could face years in prison. And as we can see, those charges are extravagantly farfetched and constructed a visualisation distant some-more critical than Lundgren’s tangible crime warranted.

The association could during any indicate have altered a testimony to simulate a contribution of a matter. It could have corrected a judges that a infringing and infringed equipment are particularly vocalization totally opposite things, a fact it knows and understands, given it sells one for hundreds and gives a other away. It could have cautioned a charge that copyright law in this box produces a punishment totally out of suit with a crime, or followed a polite box on apart lines.

This box has been ongoing for years and Microsoft has upheld it from start to finish; it has as many condemned Lundgren to jail for a crime he didn’t dedicate as a fools of judges it assured of a good “pecuniary loss.” we design a association to pull behind opposite this idea, observant that it customarily had consumers’ best interests in mind, though a bad-faith arguments we have seen above, and that we have listened directly from Microsoft, seem to advise it was in fact looking for a clever visualisation during any cost to deter others.

If it was probable that Microsoft was not wakeful how bad a optics on this box are, they’ve been warned over and over as a box has ragged on. Now that Lundgren is going to jail it seems reasonable to contend that his seizure is as many a Microsoft product as a OS it indicted him poorly of pirating.


Update: Microsoft after supposing an second statement:

Microsoft actively supports efforts to residence e-waste and has worked with obliged e-recyclers to recycle some-more than 11 million kilograms of e-waste given 2006. Unlike many e-recyclers, Mr. Lundgren sought out tawdry module that he sheltered as legitimate and sole to other refurbishers. This tawdry module exposes people who squeeze recycled PCs to malware and other forms of cybercrime, that puts their confidence during risk and eventually hurts a marketplace for recycled products.

Lundgren supposing some explanation on this shortly afterward:

Microsoft claims that a disks we had “expose people who squeeze recycled PCs to malware, Security Risks and other forms of cybercrime.” Two apart Forensic Experts in justice annals uncover that these Restore Disks disks are counterpart picture duplicates accurately a same module Microsoft creates accessible for giveaway download. So unless Microsoft’s module is also compromised, we don’t know how they could make this claim. Microsoft also claimed this module was “sold to other refurbishers,” that again is reliable to be fake by justice papers as all product was seized and nothing was sold. Finally, a License is value $25 from Microsoft, Not a Restore CD. The Restore CD is purchased for pennies and giveaway to download. Microsoft does not sell software, they sell a License of that ONLY Microsoft can supply.

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