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$338M Patent Ruling Against Microsoft Overturned 238

Posted by Soulskill
from the courts-just-like-making-work-for-themselves dept.
some_guy_88 writes "The $338 million verdict against Microsoft for violating a patent held by Uniloc has now been overturned. 'Ric Richardson ... is the founder of Uniloc, which sued Microsoft in 2003 for violating its patent relating to technology designed to deter software piracy. The company alleged Microsoft earned billions of dollars by using the technology in its Windows XP and Office programs. In April, a Rhode Island jury found Microsoft had violated the patent and told Microsoft to pay the company $388 million, one of the largest patent jury awards in US history. But on Tuesday ... US District Judge William Smith "vacated" the jury's verdict and ruled in favor of Microsoft.' In his ruling, Smith said the jury 'lacked a grasp of the issues before it and reached a finding without a legally sufficient basis (PDF).'"
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$338M Patent Ruling Against Microsoft Overturned

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  • Patent (Score:5, Informative)

    by sopssa (1498795) * <sopssa@email.com> on Wednesday September 30, 2009 @08:51AM (#29592031) Journal

    "It was never about the money. It was about the ethics of it ... winning a court case is not winning the lottery."

    I bet the $388 million had nothing to do with it.

    This is the actual patent description:

    A registration system allows digital data or software to run in a use mode on a platform if and only if an appropriate licensing procedure has been followed. Preferably, the system detects when part of the platform on which the digital data has been loaded has changed in part or in entirety, as compared with the platform parameters, when the software or digital data to be protected was last booted or run. The system relies on a portion of digital data or code which is integral to the digital data to be protected by the system. This integral portion is termed the code portion and may include an algorithm that generates a registration number unique to an intending licensee of the digital data based on information supplied by the licensee which characterizes the licensee. The algorithm in the code portion is duplicated at a remote location on a platform under the control of the licensor or its agents, and communication between the intending licensee and the licensor or its agent is required so that a matching registration number can be generated at the remote location for subsequent communication to the intending licensee as a permit to licensed operation of the digital data in a use mode. The code portion can be identical for all copies of the digital data. The algorithm provides a registration number which can be "unique" if the details provided by the intending licenses upon which the algorithm relies when executed upon the platform are themselves "unique."

    Sounds like the usual serial key algorithm with an online check, used in many online games too.

    • Re: (Score:3, Informative)

      by gabebear (251933)
      Yep, exactly like games have been using http://findarticles.com/p/articles/mi_m0EIN/is_2000_Nov_10/ai_66803777/ [findarticles.com]

      And you quoted the abstract, which is always pretty boring. Read the claims to really figure out what was novel... http://news.google.com/patents/about?id=K7MoAAAAEBAJ [google.com]

      Suprisingly, this doesn't seem like a patent troll.
    • Re:Patent (Score:5, Informative)

      by Theaetetus (590071) <theaetetus,slashdot&gmail,com> on Wednesday September 30, 2009 @09:07AM (#29592189) Homepage Journal

      This is the actual patent description:

      No, it isn't. That's the abstract. The description is 20 pages long.

    • Re:Patent (Score:5, Informative)

      by commodore64_love (1445365) on Wednesday September 30, 2009 @09:17AM (#29592307) Journal

      You say "usual" but it's only usual TODAY.
      It was not usual back in the 80s when it was invented.
      Quoting the article:

      "Once users buy the software, they get a registration key that unlocks the full featured version of the software. Uniloc claimed Richardson showed a copy of his software to Microsoft in 1993 but Microsoft did not license it, instead developing its own almost identical version and incorporating it into its products from 1997 or 1998."

      • by sopssa (1498795) *

        I'm not talking just about Microsoft - there we're games and shareware programs that used the same kind of system back then too.

        • Re:Patent (Score:4, Insightful)

          by commodore64_love (1445365) on Wednesday September 30, 2009 @10:01AM (#29592867) Journal

          I grew-up in the 70s and played many many games throughout the 80s, and I'm not aware of any program that used this method. They all used a mechanical dongle, or other physical method, to verify a program's validity.

          Can you please provide us a list of the games/programs, pre-patent, that allowed for *online* registration using a key? (or else defaulted to a trialware mode)

          • Re: (Score:3, Interesting)

            by iamhigh (1252742)
            Does adding the "online" feature really make it novel? Can I file this same thing and put in "bit torrent" or "TOR" and have a novel idea? What about this but using the cellular network? I am just curious if simply adding the latest medium makes anything novel?
            • >>>Does adding the "online" feature really make it novel?

              I don't know but I do know neither my opinion nor your opinion matters - what matters is the opinion of the patent examiner who apparently decided "yes this is novel" and issued the patent for online key registration. What is in question here is not the patent itself, but whether or not Party A trampled-upon the 1993 patent and owes the Inventor some money.

              As far as I can tell the answer is "yes".

              Plus when you consider Party A's previous his

            • Re: (Score:3, Informative)

              P.S.

              Another reason I'm inclined to believe the Inventor's story is because that's what corporations do. In 1991 a man named J.Michael Straczynski tried to sell his show Babylon 5 to Paramount. They rejected it. Then in 1992 they miraculously created another show that was a virtual clone of Babylon 5 (including the same character names and a shapeshifter). Straczynski chose not to sue, even though he probably could have won. See below.

              Back in the 70s there was a similar case where Harlan Ellison tried t

          • by Spazmania (174582)

            IIRC, most of the 80's software used a specially misformatted disk (aka "bad sectors") as the main copy protection mechanism.

            Trialware was very common in the 80's though it wasn't called that. Folks referred to the "shareware" version of their product. You could send them money and they'd send a disk with the full version.

            Installation using a cryptographic key became popular starting with compact discs as an installation medium in the early '90s.

            The online purchase of full versus trial keys became widesprea

          • by jim_v2000 (818799)
            This wasn't "online" registration. It was done over a phone with a customer service rep.
        • by PhilHibbs (4537)

          Games and shareware programs that generated a local authentication key based on what hardware it was running on, and stopped working if you changed a major hardware component? I don't remember any of those.

      • Re: (Score:2, Interesting)

        by Magic5Ball (188725)

        The patent was filed in September 1993, by which time the popular shareware BBS software, door games and their extensions already used external (to the program) hardware (e.g. modem and hard disk characteristics) and software (host/controller versions and their registrations) information in the environment for licensing/serial number purposes. The elder FL/1911/DOD etc. could probably provide comprehensive lists of prior art...

      • I know I've heard this story before. Over and over. As though there was a company that did that exact thing to companies all the time. And a whole bunch of companies, too. Partnered, then broke the partnership and came out with a clone of the original software. And mostly in the late 80's and through the 90's. Ummm. Umm... who was that?

        Bill Gates and his sticky fingers.

        If I recall, the file on his arrest has disappeared. [mugshots.org]

  • Translation (Score:5, Insightful)

    by whisper_jeff (680366) on Wednesday September 30, 2009 @08:54AM (#29592063)
    Translation = it's cheaper to bribe one judge than 12 jurors.

    I joke! I joke!

    kinda...
    • Re: (Score:3, Insightful)

      by sopssa (1498795) *

      Of course when it's about Microsoft winning a patent troll, it's because they "bribed judge".

      This is why Microsoft and other big companies have to patent everything they can. Not to patent troll other companies with them, but to protect themself from said trolls. Actually I haven't still heard any case where MS has gone patent trolling - and before someone comes with the TomTom case, they actually made an aggressive movement against MS first and MS couldn't do anything else than sue them.

      • Re:Translation (Score:4, Insightful)

        by geminidomino (614729) * on Wednesday September 30, 2009 @09:03AM (#29592139) Journal

        Except Microsoft DIDN'T win. According to the jury, they lost. Then the judge said "The jury is made of dumbasses. It didn't count."

        Note how they never do that when the loser isn't big and rich...

        • Re: (Score:2, Interesting)

          by sopssa (1498795) *

          For me it seems like the judge was right and the jury didn't understand computer systems.

          The Patent Claims [patentstorm.us]

          It is basically a serial key registration system that uses online check aswell to validate the key, and that before registering the program runs in demo mode. Surely there we're games/shareware apps that did that before this patent too.

          • Re:Translation (Score:4, Insightful)

            by jedidiah (1196) on Wednesday September 30, 2009 @09:21AM (#29592343) Homepage

            While that is certainly likely, the jury is there for a reason. They
            aren't there just to be ingored later. There is supposed to be a
            process in place here and the judge seems to be just ignoring it in
            favor of his own personal biases.

            This sort of haphazard outcome should bother anyone who ever held a
            patent application or is likely to be sued by someone that does.

            • by ArsonSmith (13997)

              Then they appeal, get it his ruling over turned and it goes as a bad mark against this judge.

          • Re:Translation (Score:5, Interesting)

            by commodore64_love (1445365) on Wednesday September 30, 2009 @09:44AM (#29592643) Journal

            >>>Surely there we're games/shareware apps that did that before this patent too.

            Please name them. I'm not aware of any that predate 1993 (when the inventor originally tried to sell his idea to MS). Most of the software of that time used the following methods to enable trialware: Let you play a level and then type in a "code" from a book or wheel. -or- Allow software to be used but disabled if you did not have the mechanical dongle on the rear of the machine.

            This inventor's idea was different in that it allowed online registration via phoneline dialup or internet connection.

            • Re: (Score:3, Interesting)

              by gblues (90260)

              In 1993, dial-up PPP was still billed by the hour and most Internet use was among government researchers and schools. If anyone had it at home, they were dialing into a UNIX server and using a shell.

              Implementing a phone-home activation would have meant millions of dollars in phone lines, trunk hunting, modem banks, technical staff, just to avoid piracy that might've lost a couple hundred thousand sales at the most. It's no wonder Microsoft declined to use the technology.

              Did the patented technology involve c

          • by Plekto (1018050)

            It is basically a serial key registration system that uses online check as well to validate the key, and that before registering the program runs in demo mode. Surely there we're games/shareware apps that did that before this patent too.

            I'm not too sure, since the patent was filed in 1993. I think they actually might BE the first company to have thought of this.

            • by chdig (1050302)
              So what?

              A new technology invented by the sum of many people's efforts comes to town (the Internet), and thus the next 'obvious' step was to apply this technology to an older method for registering software. To me, this defines the worst of the patent trolls -- they take something that exists and use other's innovations to put 1+1 together and voila! a patent.

              Given that this same kind of patent trolling is/will be affecting many slashdotters, shouldn't we suck it up and congratulate MS on this one? I
          • Re: (Score:3, Insightful)

            by rbanffy (584143)

            "Surely there were games/shareware apps that did that before this patent too."

            Sure if it were any games/shareware apps that did that before this patent, Microsoft would be able to produce them as evidence in the case.

            Did they?

        • Re: (Score:3, Interesting)

          by nomadic (141991)
          Note how they never do that when the loser isn't big and rich...

          Where on earth did you get that idea? I never understand how slashdotters come up with these grand pronouncements. Judges vacate jury decisions plenty of times, and plenty of them are where the loser is small and poor (or even destitute).
      • Re: (Score:2, Troll)

        by andymadigan (792996)
        Patents won't protect you against a troll, they'll only protect you against people who actually make software. Stop astroturfing.
        • >>>Stop astroturfing.

          This isn't astroturfing. This is some guy making a point and expressing an opinion - a true grassroots person.

  • Jury problems (Score:4, Insightful)

    by gr8_phk (621180) on Wednesday September 30, 2009 @09:09AM (#29592207)
    He said the jury "lacked a grasp of the issues". But the traditional jury selection process rejects people with critical thinking skills - engineers in particular. So why didn't he say to start over with a qualified jury, rather than change the decision to his own? This suggests that ALL trials with highly technical issues will be decided by a judge alone - and we know they aren't always up on such things either.
    • Re:Jury problems (Score:4, Insightful)

      by nomadic (141991) <nomadicworld&gmail,com> on Wednesday September 30, 2009 @09:42AM (#29592609) Homepage
      But the traditional jury selection process rejects people with critical thinking skills - engineers in particular.

      Well, first of all when I think engineers I tend not to think "critical thinking skills"; I mean, I think "quantitative skills" and "analytical skills", but considering how many of the leading creationists are engineers, how many subscribe zealously to weird political views, and how many are so prone to adopt conspiracy theories (zomg the judge was bribed), "critical thinking skills" doesn't come to mind.

      Also do you have any data to back up the idea that engineers are excluded more than other professions?
    • He said the jury "lacked a grasp of the issues". But the traditional jury selection process rejects people with critical thinking skills - engineers in particular. So why didn't he say to start over with a qualified jury, rather than change the decision to his own? This suggests that ALL trials with highly technical issues will be decided by a judge alone - and we know they aren't always up on such things either.

      Because the issue the jury was lacking a grasp of was a legal one, not a highly technical one. Specifically, Uniloc argued on two theories - direct infringement, and indirect infringement... but when it came time for the closing statement and jury instructions, they dropped indirect infringement. As a matter of law, however, they failed to prove direct infringement. As a result, no jury, even one that completely understood all technical issues involved, could reasonably find Microsoft guilty of direct in

  • by AbbeyRoad (198852) <p@2038bug.com> on Wednesday September 30, 2009 @09:16AM (#29592291) Homepage

    From the judgment "...fair to describe Microsoftâ(TM)s evidence as more or less
    conclusory on this point." I.e. that the patent was an obvious modification to
    prior work.

    I am glad about this. It shows that the patent system is not so broke as some think.
    This patent basically is merely the means by which one can type in a license key
    after downloading some free-trial software. Much free-trial software has some kind
    of typing-in-of-a-license-key, and if Microsoft lost it would mean no one could do
    this in their own products without fear of a law suite - a ridiculous situation.

    This guy was just gold-digging. Well done to the judge.

    • >>>it would mean no one could do this in their own products without fear of a law suite

      Is a "law suite" where lawyers and hookers go to get their freak on? Sorry. I couldn't resist. ;-) No what it means is that every time somebody uses an online registration key, then they have to pay a royalty to the inventor, just the same as a royalty has to be paid to use MPEG2 or AAC or Dolby Surround. This is no big deal, and entirely fair for the smalltime inventor.

  • by erroneus (253617) on Wednesday September 30, 2009 @09:23AM (#29592363) Homepage

    When judges essentially nullify a jury decision, I find it worrisome as it appears to circumvent the system established by the constitution as I understand it. The whole concept of jury nullification then becomes endangered should a judge decide the jury's actions were inappropriate. There should have to be a much more difficult process involved to have a judge overturn a jury's decision.

    My feelings are mixed because it is indeed the case that juries are indeed quite stupid people. There was a new story recently describing a situation that has been ongoing for more than 3 years where a young female became pregnant and never informed the father until just prior to giving birth. (She was probably compelled or otherwise pressured to do so due to legal requirements.) The baby was planned to be offered for adoption by one of the girl's relatives. They asked him to sign the documents and he refused and stated he wanted to keep the baby. The adoption agency proceeded with the adoption process anyway which was a mistake for which they paid a rather large settlement to the father in this case. But the father continues his struggle against this illegal adoption. It was at one point decided by a jury that the child would be better off with the adoptive parents and that the needs of the child outweighed the rights of the father.

    This is a seriously questionable decision and one that, off hand, I tend to disagree with. A judge also disagreed with the jury and overturned some of the jury's decisions opening the door for the father of the child to claim him and bring him back home. The law, as it turns out, favors the rights of the natural parents and also favors the law and recognized that procedure and law was broken during the adoption process resulting in extreme injustice. The judge also ruled that there was no evidence that this single father was not capable of raising and supporting this child and that the jury's decision was wrong.

    I agree with the judge's actions in this case as it seems to match with my own understanding of justice in this case. However, the ability of a judge to overturn a decision by jury still bothers me.

    As to the case with Microsoft? I can't say as I agree one way or the other except on one point -- there should be no software patents. And while this is not a strike against software patents directly, it serves as another example of how they are used and abused and why they are simply bad.

    • Re: (Score:2, Informative)

      by nomadic (141991)
      The whole concept of jury nullification then becomes endangered should a judge decide the jury's actions were inappropriate. There should have to be a much more difficult process involved to have a judge overturn a jury's decision.

      Jury nullification is more of an issue in criminal cases. And in those cases a judge cannot vacate a jury decision of "not guilty," though they can vacate guilty verdicts (which I think is a good thing.)
    • The legal standard for a judge to overturn a jury verdict in a civil case is very high one. The record must demonstrate that, as a matter of law, no reasonable jury could arrive at that verdict given the evidence produced at trial. On appeal, great deference is usually given to the trial judge's findings of fact and discretionary rulings and reversible error will not be found unless the judge's actions are determined to be "clearly erroneous". That usual deference on appeal does not apply in cases where the
  • Excellent news! (Score:4, Insightful)

    by Just Some Guy (3352) <kirk+slashdot@strauser.com> on Wednesday September 30, 2009 @09:24AM (#29592373) Homepage Journal

    I'm no Microsoft fan, but I rather watch them beat a stupid patent than see anyone stuck with such a stupid verdict. At least this establishes recent precedent for judges overturning lunacy.

    Yeah, I know we all hoped it would be the straw that broke the camel's back and Microsoft would say, "wow, this is idiocy and we need to see the light!" This wouldn't have been that straw. This straw would've left them saying, "wow, I'm glad we can afford it! Too bad for our poorer competitors who can't!"

    • Re: (Score:2, Insightful)

      by Bonzoli (932939)
      This wasn't a stupid patent. I'd actually say it was one of the better ones ever created. Remember 1993 fast modems were not in around. Someone willing to do something like this was really thinking ahead for that time. The internet wasn't around. This latest judge process is suspect for reasons that do not appear logical.
      • This wasn't a stupid patent.

        It's a software patent, and by definition stupid.

        • by DrWho520 (655973)
          I am still on the fence about this and "by definition stupid" just does not do it for me. Patents were made to protect the effort and investment spent on innovation. If I build a new, novel system, I want to recoup my initial investment and make some profit without worrying about some other company copying my idea just for the cost of implementation. So is a software patent stupid because you cannot invent a new, novel system that is purely developed in software?

          Let there be a widget A that does novel
          • One is patentable because its build of components but the other is not because its a program that runs on a computer?

            Close. The other is not patentable because software is algorithms, and algorithms are math, and math is explicitly not patentable.

      • The Internet wasn't around? I had my first home Internet connection in 1993. Commercial entities had been allowed to connect to the Internet for two years at that point and the big online service providers (AOL, Compuserve and the like) had been providing bridges to the Internet for a little while.
      • by Rogerborg (306625)
        In 1993, the Internet was alive and kicking. It was already 90% porn, but 80% of that was in alt.sex.stories.moderated, plus that one picture of Anna Nicole Smith.
  • by nedlohs (1335013) on Wednesday September 30, 2009 @09:27AM (#29592407)

    The judge finds for Microsoft and then on appeal the higher court says "ah no this needed to go to a jury you idiot".

    So it goes to a jury, and the same judge then rules the opposite of the jury verdict and finds for Microsoft again.

    Surely that's going to make for an interesting appeal...

    • He should have recused himself... it should NEVER have gone to him for the appeal... this desperately needs to be appealed higher
  • by Grashnak (1003791) on Wednesday September 30, 2009 @09:27AM (#29592409)

    The jury system was great back when the most complicated thing they had to make judgements on was whether or not a stolen horse had an altered brand - and they all worked with horses.

    Today we are asking 12 average joes to make life and death decisions about evidence that even highly trained people would find difficult to follow. The Enron finances, DNA evidence, whether or not some highly technical piece of code is "obvious". This is why juries ignore mountains of technical evidence in favour of bullshit like "If the glove don't fit, you must acquit".

    I don't know what the solution is, but I do know I don't want Tom, Dick and Harry sitting in judgement on my patent lawsuit.

    • by TheRaven64 (641858) on Wednesday September 30, 2009 @10:30AM (#29593259) Journal
      Possibly the solution is to have 'a jury of your peers,' you know, the sort of people who will be familiar with the issues at hand. Of course, if you want competent people to actually do jury service rather than trying hard to get out of it, you need to compensate them accordingly.
    • The jury system wasn't born with the lower class, it was born from trials for people who had to and were aware of how pretty much everything in their country worked, since it was family matters anyway. It was not about average people, it was about being judged by peers, and the people who initially had that right were the aristocracy.

    • by chrb (1083577)

      There have been many calls for jury trials for complex cases to be dismissed. [independent.co.uk] The problem is that there is no perfect solution. You just end up put the finding of guilt in to the hands of one or more chosen people, rather than a random set of people. As to the complexity of modern trials, The Times had an interesting article about this recently - Does the jury system still work? [timesonline.co.uk] The comments by QCs and Judges there suggest that it is the job of the court to distill the argument into normal English and make

    • I largely agree with your comment, but I don't agree that the O.J. Simpson reference serves to illustrate your point. The jury in that case understood the evidence against the defendant, but they could not ignore additional evidence that those who were presenting it had manufactured it.
      In this Microsoft case, the jury likely did not understand the technical evidence, but it's interesting that they still found against Microsoft, and it's equally interesting that a judge, who likely also didn't understand the

  • by m0s3m8n (1335861) on Wednesday September 30, 2009 @09:32AM (#29592475)
    Kinda on topic ... I was once called to sit on a Jury in a civil case. When asked by the judge if I had any objections to being a juror I honestly told him "I believe there are too many lawsuits in this country." It was like I had the plague. They had me out of there within 30 seconds. What was funny is as I was being lead out of the room the defendants counsel objected to my dismissal. Of course the judge did not agree.
    • by chrb (1083577)

      Eric Slye [thesmokinggun.com]: Jury service is a complete waste of time. I would rather count the wrinkles on my dog's balls.

  • This guys particular tale of developing this software, patenting it, going to court against Microsoft over the (now overturned) infringement, and present day life was actually recently covered [abc.net.au] in an episode of Australian Story [abc.net.au]. I remember watching it and not coming away particularly impressed with Ric Richardson by the conclusion.

    I'll be honest and state I haven't read the patent in its entirety, and so I could be entirely wrong about this, but the impression I got throughout the entire show was that it's j

  • This case involved a patent that runs a cumulative series of tests and applies an either/or not rule.

    Either it is a Duck or/not...

    Microsoft semantically performs a cumulative series of test and applies an either/or rule

    Either it is a License or/not

    EULA/MD5 notwithstanding the test remains. That test is patented.

    The judge just refuses to accept the rule by peer reasoning in favor of the technical inuendi

    PIGS will fly shortly...

  • by weiserfireman (917228) on Wednesday September 30, 2009 @12:46PM (#29595521) Homepage
    Problem with software patents is they have never been specific enough. They try to patent a function of how something works. Mechanical patents don't work that way.

    If you patent a universal joint for a car using roller bearings, and I can patent one using ball bearings and a different joint style. Even though my universal joint provides the same function as yours, it does the function differently enough that I don't have to license your design.

    Uniloc patented a licensing system. Yes. Microsoft built their own licensing system that provides the same function, but there was no evidence that Microsoft used any part of Uniloc's software to do that function. Therefore, Microsoft didn't violate Uniloc's patent

    For many years the Patent courts have upheld business model and software function patents as valid, but the Supreme Court ruled that style invalid last year. The Judge in this case is just apply the time tested rules about mechanical patents in the method that the Supreme Court has instructed them to apply to software.

    • Problem with software patents is they have never been specific enough. They try to patent a function of how something works. Mechanical patents don't work that way.

      If you patent a universal joint for a car using roller bearings, and I can patent one using ball bearings and a different joint style.

      Depends on what that "different joint style" is. If I patent a universal joint using steel bearings, you'll fail to get a patent on the same joint style with tungsten carbide bearings, and will likely be found to infringe my patent if you make it that way. However, if your universal joint is wildly different - say, an offset universal joint and mine is axial - then it's different... But that's not what you're seeming to say up there, where the difference is roller bearings vs. ball bearings. If that's the only difference, you aren't going to get a patent on it.

      For many years the Patent courts have upheld business model and software function patents as valid, but the Supreme Court ruled that style invalid last year.

      I think you're confused. The court of appeals for the federal circuit ruled that some business model and software patents were invalid, unless they were tied to a "specific machine" or performed a "transformation", in a case called In Re Bilski. The Supreme Court has yet to rule on Bilski's appeal, but they'll be doing that next spring. Meanwhile, the appeals court has recently affirmed medical diagnosis patents in Prometheus v. Mayo. It's highly unlikely - in fact, I'll go out on a limb and say absolutely not going to happen - that the Supreme Court will overturn all software patents. All they're going to do is [hopefully] provide a clearer test of what the hell a "specific machine" is and what makes it different from a "general purpose computing device".

  • by StikyPad (445176) on Wednesday September 30, 2009 @03:54PM (#29598015) Homepage

    From TFOpinion: Printed on each jewel box of a retail software product is a 25-character alphanumeric string called a Product Key (e.g., MQ9WT-3D8PY-6VF76-GMHVX-DCXFM).

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