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Microsoft Businesses The Almighty Buck

Microsoft Attempts To Spin Its Role in Counterfeiting Case (techcrunch.com) 170

Eric Lundgren, who has spent his life working on e-waste recycling programs, was arrested and charged with "counterfeiting" Microsoft restore discs earlier this week, part of a controversial, years-long legal fight that ended when an appeals court declined to overturn a lower court's decision. Lundgren argued that what he was offering is only recovery CDs loaded with data anyone can download for free. In an interview with The Verge, he said, "Look, these are restore CDs, there's no licenses, you can download them for free online, they're given to you for free with your computer. The only way that you can use them is [if] you have a license, and Microsoft has to validate it.?" Lundgren was going to sell them to repair shops for a quarter each so they could hand them out to people who needed them. Shortly after the Lundgren's was arrested, Microsoft published a blog post which stridently disagrees with Lundgren's characterization of the case. From a report: "We are sharing this information now and responding publicly because we believe both Microsoft's role in the case and the facts themselves are being misrepresented," the company wrote. But it carefully avoids the deliberate misconception about software that it promulgated in court. That misconception, which vastly overstated Lundgren's crime and led to the sentence he received, is simply to conflate software with a license to operate that software. [...] Hardly anyone even makes these discs any more, certainly not Microsoft, and they're pretty much worthless without a licensed copy of the OS in the first place. But Microsoft convinced the judges that a piece of software with no license or product key -- meaning it won't work properly, if at all -- is worth the same as one with a license.

[...] Anyway, the company isn't happy with the look it has of sending a guy to prison for stealing something with no value to anyone but someone with a bum computer and no backup. It summarizes what it thinks are the most important points as follows, with my commentary following the bullets. Microsoft did not bring this case: U.S. Customs referred the case to federal prosecutors after intercepting shipments of counterfeit software imported from China by Mr. Lundgren. This is perfectly true, however Microsoft has continually misrepresented the nature and value of the discs, falsely claiming that they led to lost sales. That's not possible, of course, since Microsoft gives the contents of these discs away for free. It sells licenses to operate Windows, something you'd have to have already if you wanted to use the discs in the first place.

Lundgren went to great lengths to mislead people: His own emails submitted as evidence in the case show the lengths to which Mr. Lundgren went in an attempt to make his counterfeit software look like genuine software. They also show him directing his co-defendant to find less discerning customers who would be more easily deceived if people objected to the counterfeits. Printing an accurate copy of a label for a disc isn't exactly "great lengths." Early on the company in China printed "Made in USA" on the disc and "Made in Canada" on the sleeve, and had a yellow background when it should have been green -- that's the kind of thing he was fixing.

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Microsoft Attempts To Spin Its Role in Counterfeiting Case

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  • by Type44Q ( 1233630 ) on Sunday April 29, 2018 @10:14AM (#56523529)

    Microsoft is slime and no amount of PR spin is going to change that.

    • Hardly matters as they laugh their way to the bank. Being slimy has proven to be quite rewarding. When doing your Pavlovian/Skinner experiments, do you punish the dog for hitting the correct button?

    • Microsoft is slime and no amount of PR spin is going to change that.

      I'm sorry, but I must strongly disagree with that characterization of Microsoft!

      You slander all decent slime with your insult, Sir!

      Strat

    • by Gadget_Guy ( 627405 ) on Sunday April 29, 2018 @01:14PM (#56524383)

      Of course Microsoft is slime, but that doesn't change the fact that they have the right to decide how they want their software to be distributed. In their Terms of service [microsoft.com] for downloading a Windows ISO it says:

      Unless otherwise specified, the Services are for your personal and non-commercial use. You may not modify, copy, distribute, transmit, display, perform, reproduce, publish, license, create derivative works from, transfer, or sell any information, software, products or services obtained from the Services.

      If we don't allow them to limit how their OS is distributed then surely we can't insist that the source code needs to be made available when distributing GPL software.

      And it seems dangerous to turn a blind eye to making indistinguishable knock-offs of operating system DVDs that could easily be modified to pre-install malware. Microsoft and Dell would not want their logos put on something that wasn't made by them.

  • by Anonymous Coward on Sunday April 29, 2018 @10:15AM (#56523537)
    Sometimes it seems that companies are more involved with abuse than doing healthy business.

    Windows 10 is possibly the worst spyware ever made. [networkworld.com]

    7 ways Windows 10 pushes ads at you... [pcworld.com]
    • by LVSlushdat ( 854194 ) on Sunday April 29, 2018 @01:25PM (#56524437)

      This little tidbit from their Windows 10 EULA *should* make ANY intelligent computer user run SCREAMING away from ANYTHING Microsoft..

      We will access, disclose and preserve personal data, including your content (such as the content of your emails, other private communications or files in private folders), when we have a good faith belief that doing so is necessary to.

      If you're recycling computers and putting an MS OS back on it, you're nuts and deserve this kind of abuse. Most of the computer recyclers I've run into put a lightweight Linux distro on their recycled machines..

  • Microsoft?

    If it's their disks and they're used for recovery, couldn't they ask the user to upgrade (for a fee, of course) to:
    - Windows 10
    - Office 360 (or other flavours)
    - Visual Studio
    - Online support

    Thereby locking in the Microsoft experience and making it easier for customers to use the computers rather than considering putting Mint on them because Microsoft products are too much hassle.

    At worst, this would be Microsoft being seeing as exploiting a market rather than beating up somebody who is trying to make their OS available to everyone.

    • by Darinbob ( 1142669 ) on Sunday April 29, 2018 @11:42AM (#56523913)

      There is a snag if you've got an old computer with a broken OS and no way to connect to the internet. The recovery disk helps with that. Upgrading to Windows 10 is impossible on most of the computers, and even if it weren't you have no OS to download the files to attempt to upgrade. So a recovery disk is the logical and seemingly legal way to do so.

      However, Microsoft says these are "lost sales". The only logic where this makes sense is if they consider a user staying with an older product instead of throwing away the computer and getting a new one with a new OS pre-installed. Ie, being able to repair the computer.

      Microsoft wants people to upgrade and is desperate enough for this that they're willing to let someone go to jail rather than allow broken computers to be fixed.

      • by mikael ( 484 )

        That's what the smartphone companies do as well. I was in Silicon Valley where the CEO's complained about the "mend and make do" World War II mentality of their customers IT departments. To them, having to support old hardware was holding back software and hardware development as well as sales of new hardware.

      • Any computer that's old enough to have shipped with Windows 7 or older is likely using a processor older than Sandy Bridge (released 2011, vs Windows 8's 2012 release date). Sandy Bridge was the first time Intel took reducing power consumption seriously - a typical Sandy Bridge processor idles at around 35 Watts, with a peak power draw of around 90 Watts. Previous processors like Core 2 Duo would idle around 70 Watts, peaking at 100 Watts.

        By a remarkable coincidence, if you pay the U.S. average electri
        • Well, sure, if you leave it on all day. I think people on a budget who just don't run out and buy a new replacement aren't leaving the computers on all day. I think my mom has her laptop on maybe 1 hour a day or so.

        • $65?
          Yes it does?
          One could argue it wouldn't even pay for itself in the time it took to become obsolete...
    • According to legend, when Bill Gates when told China always pirates software, he said "How do we make sure they are pirating Windows [over some other OS]"

  • by Anonymous Coward

    He didn't go to jail for burning the OS onto discs and distributing them.

    He went to jail because he was committing trademark infringement by printing Microsoft and Dell logos on the discs and using trademarked names on his pirated discs.

    If the discs would have been a plain label with only the logo of his company and something like "Operating System Restore Disk version 7" or "Operating System restore disk version XP" printed on them, he'd still be a free man.

    Or if he wouldn't have been charging for the disc

    • It is true he misused trademarks, and it is true that it would have been fair to punish him for that. It is not true that Microsoft had a bug up their ass about those trademarks. Their lawyers and witnesses were specifically going on about the "value" of the software. The software had no value without a licence. It is not true that the discs were pirated in any sane sense of the term.

      • The software had no value without a licence.

        While I'm totally sympathetic to the defendant...
        Who are you to say that? They hold the copyright of that software. Maybe it can't be used without a license, but you don't get to say whether the value is in the license, or the copyrighted material he breached copyright on.
        What if that was your software?

    • by Junta ( 36770 ) on Sunday April 29, 2018 @10:46AM (#56523645)

      I think that's a misinterpretation as well.

      The software has copyright on it. Whether it is free or paid for, making a copy is a matter of law. Sure the law may be flawed and sure this may defy common sense, but no matter the label used, he made copies of MS software and distributed them to third parties without any agreement allowing him to do so. The trademark violation and efforts to deceive about country of origin and 'genuine' microsoft software are problems, but not required for him to be in trouble.

      Even if the software is no-cost, there are terms and conditions relevant to entitlement to copy (you can make copies for personal backup reasons because the law permits it, but not for redistribution). Otherwise, GPL and BSD licenses would not have any means to enforce it.

      For MS, this is going to be a tricky thing to spin in a good light. In their defense, if someone did this and they or the company that actually made the media put in a rootkit, not just a straight download of MS software, then MS could have a different PR problem, not doing enough to prevent malicious software and people assuming MS did it. Of course getting this story big and explaining this angle would work better than talking about "lost sales" (which clearly was not the case here) and perhaps asking for leniency for this case would have made for better PR moves.

      Of course he was *charging* for it to get profit, so sympathy for the person isn't *that* well placed, even if under the guise of recycling.

    • by hey! ( 33014 )

      He went to jail because he was committing trademark infringement by printing Microsoft and Dell logos on the discs and using trademarked names on his pirated discs.

      But the software *was* genuine Dell and Microsoft. It's like putting a Ford badge on a Ford car.

      In a way it's natural to have a confusion between the intellectual property itself and the carrier. For years that was the way copyright was enforced. And in fact the guy was in the business, partly, of selling these discs. But he wasn't selling

      • by DRJlaw ( 946416 )

        But the software *was* genuine Dell and Microsoft. It's like putting a Ford badge on a Ford car.

        Hate to say it, but it's not remotely like putting a Ford badge on a Ford car.

        Ford puts Ford badges on Ford cars. If you were to put a Ford bade on a copy of a Ford card, no matter how good, it would still be counterfeiting and trademark infringment precisely because Ford did not make that car.

        But he wasn't selling the IP itself, he was selling access to the IP.

        He was manufacturing physical CDs with the physical

    • by Anonymous Coward

      He didn't go to jail for burning the OS onto discs and distributing them.

      He went to jail because he was committing trademark infringement by printing Microsoft and Dell logos on the discs and using trademarked names on his pirated discs.

      The discs are incapable of being pirated. There was and is no charge for the software on them.

      If the discs would have been a plain label with only the logo of his company and something like "Operating System Restore Disk version 7" or "Operating System restore disk version XP" printed on them, he'd still be a free man.

      Or if he wouldn't have been charging for the discs, he would still be a free man. But we are a nation of laws, and the law says that if you're making money off of someone else's trademark you're guilty of a crime.

      But was he really making money, at 0.25 USD a disc?

      I think this case is bullshit, and you should think it's bullshit too. But if a company doesn't defend their trademark they lose the protection under the law, so they had no choice but to let this case proceed whether they liked it or not.

      Not saying MS or Dell are "good guys" or anything, but this is not a case of "going to jail for giving away Windows discs without a license", and anyone who frames it that way is intentionally being obtuse.

      From the article summary, Microsoft didn't bring the case. They just piled on to help/goad the prosecutors.

    • Re: (Score:2, Informative)

      by Anonymous Coward

      Wow AC, you're a complete bullshit artist. A good one, but a bullshit artist nonetheless. This case has nothing to do with trademark or copyright infringement. I especially like how you sympathize with the reader ("I think this is bullshit and you should too. BUT...") before leading them to the false conclusion. Craftsman's work sir.

      Anyway, the core of the case is this: "But while software licenses transfer when computers change hands among individuals, commercial sellers like refurbishers must buy new lice [washingtonpost.com]

      • by Anonymous Coward

        Okay, apology due to original AC. Here's a link to the opinion issued by the 11th Circuit Court: http://media.ca11.uscourts.gov/opinions/unpub/files/201712466.pdf [uscourts.gov]

        From the PDF: "Lundgren entered into a plea agreement in which he pled guilty to conspiracy to traffic in counterfeit goods and criminal copyright infringement. The government dropped the remaining charges."

        So, while I went and spouted off before reading the opinion, the point remains - while they got him on "counterfeiting", the economic cost to

    • by Darinbob ( 1142669 ) on Sunday April 29, 2018 @11:46AM (#56523939)

      The trademarks however are not worth $25 per disk with the trademark. Also trademark violations are a civil offense, they don't result in criminal trial that can lead to jail time but instead are resolved through a normal lawsuit process.

  • Wow. That Slashdot summary was almost English. But it least it showed a fundamental lack of understanding of how the legal system works. /s /.'s offshored "editors" strike again.

  • by rsilvergun ( 571051 ) on Sunday April 29, 2018 @10:38AM (#56523623)
    instead of a copyright case, so point to Microsoft.
    • by PPH ( 736903 )

      Looks like Microsoft was pushing the definition of counterfeit. And they got what they wanted, a precedent set.

      Now, IANAL, but I suspect that there are advantages to winning a case of counterfeit vs copyright. There may be an entirely different federal law enforcement squad that handles each type of case. And the counterfeit cops have more automatic weapons and armored vehicles at their disposal.

  • by Anonymous Coward

    They want to be thought of as so ruthless that if one even commits the thoughtcrime of copying software, they will be prosecuted by the full power of Microsoft. This guy is a feather away from that ($0.25 cents a disc for free software? Is he even covering his DVD cost?) and is serving jail time. But they also want to be thought of as good guys making the world a better place. Kind of like the Goldman Sachs CEO saying he was doing "God's work" [businessinsider.com] prior to the malfeasance uncovered when the 2008 Financial Crisi

  • Scenario 1) : There is more to this than appears. This could be corroborated by the harsh sentence he received as well as not a single disagreement by any court. Two courts upholding a verdict that making a copy of a free disk which can't be used without a license doesn't sound like we know everything about this case.

    Scenario 2) : The legal system of the courts is fundamentally broken for letting it get this far. If it is as first appeared then this case should have been kicked to the kerb without ever havi

    • Scenario 2 is correct -- the US "justice" system is fundamentally broken. It's designed to punish people who don't kowtow to prostitutors' and judges' whims, refuse a plea bargain, and exercise their right to a trial.

      Any country that jails almost 1% of its population at a given time is fundamentally broken and deserves to collapse.

      What's the appropriate sentence here? Maybe some community service. Say teaching kids how to fix things. He didn't provide anything that M$ didn't provide for free, for downlo

      • Any country that jails almost 1% of its population

        Well hang-on, that's not the justice system. The judiciary here only upholds the laws as they are passed. That is the problem of the executive branch of the government that made these laws in the first place.

        What's the appropriate sentence here?

        You've jumped into sentence implying that the legal system was working as intended. If the legal system is broken as per scenario 2, there would not be talk of a sentence.

        • Legislative generally makes the laws.

          The problem is on multiple levels, actually. Unjust laws would essentially be void without people willing to work to convict people of violating them (judges, juries, DAs). They'd also be void if no one was willing to enforce them (cops, jailers). Thus, virtually everyone working for the court or enforcement system is part of the problem, whether they use the "just following orders" excuse or not.

      • by Anonymous Coward

        The crime was attempting to pass off his own disks as Genuine, which they were not, selling them, and importing them.

        The sentence was harsh because he demonstrated no remorse for violating customs laws, and refused to acknowledge that there IS a difference between risks burned in some random Chinese factory vs. ones supplied by Dell or MS. The difference is a matter of provenance, it's the guarantee that the contents are legitimate unaltered copies of the software.

        • WAS he actually putting altered software on the disks? If not, then there is no functional difference between the MS/Dell disks and what he was producing.

          Nah, fuck everyone who's involved in this railroading. Do you really want to pay taxes to jail someone who didn't harm anyone? Ironically, his actions actually saved MS some bandwidth.

        • The crime was attempting to pass off his own disks as Genuine

          Was it a disk? Did it contain the software stated? Don't butcher the English language any more than Microsoft's "Genuine advantage" team already has. Those disks were 100% genuine unless you can tell me that they either contained some nasty viruses instead of the promised software, or maybe they weren't discs at all but 45rpm singles cut down to fit in a CD case.

    • The courts have a ignorance factor. They are not experts and instead rely upon expert witnesses. The problem here is with them granting extra credibility to the Microsoft witnesses.

      • The courts have a ignorance factor.

        For technical arguments I would agree, but this wasn't decided on anything technical, but rather contractual. It's literally the core business of the courts to rule on cases of licenses and contracts all written in their own very nasty form of legalese.

        If the courts are to blame I'm more inclined to think that the Microsoft legal team stacked the deck in the license agreement somehow, rather than pure ignorance.

  • He could have put his own label on them and then sold them as recovery disks. Given he was running a business already he could have asked his attorney how to label them to avoid any problems. A disclaimer they were recovery disks and not provided by MS or Dell? OTOH, 15 months is an over reactions well. He admitted to copyright violation by copying Dell's trademarks, a fine would be more appropriate for importing fake goods than jail. It sounds like there is more to this story than the blog post presents.
    • The problem was with importing the disks. Sure, he did this to save money so that they could be sold for only $0.25. Seems like a good idea at the time. The snag though is if there were trademarks being imported from China then it's a crime (thanks to the vast armies of lobbyists). If he had these disks made in the US then it would have been only a civil matter and not a criminal one.

      • The problem was with importing the disks. Sure, he did this to save money so that they could be sold for only $0.25. Seems like a good idea at the time. The snag though is if there were trademarks being imported from China then it's a crime (thanks to the vast armies of lobbyists). If he had these disks made in the US then it would have been only a civil matter and not a criminal one.

        Yes, that was stupid on his part but had he not made them look like genuine Dell recovery disks he wouldn't have had a problem. I don't understand why he didn't use his own branding, the disks would have worked the same and the whole counterfeit trademark issue goes away.

        • I don't understand why he didn't use his own branding

          You don't? To defraud the people receiving the discs... He literally admits to it in the emails.

          • I don't understand why he didn't use his own branding

            You don't? To defraud the people receiving the discs... He literally admits to it in the emails.

            I get that; I was wondering because anyone with pulse should realize that is a bad idea. He could have one that an avoided all the trouble and still sell them for 25 cents; that's why I have little sympathy for him.

            • Same. I'd have a lot more sympathy if he was just a dude producing copies of freely available content (even though technically in violation of the law) than someone who was trying to make perfect replicas of a good that carries an assumption of authenticity with it.
  • The real lesson (Score:4, Insightful)

    by Anonymous Coward on Sunday April 29, 2018 @11:06AM (#56523733)

    You use windows, go to jail. If he used linux he wouldn't be going to jail.

    • Very true. But the copyleft license provided with Linux, and your (licensed) right to redistribute it, is enforced by the laws in play here.
  • by Hognoxious ( 631665 ) on Sunday April 29, 2018 @01:11PM (#56524359) Homepage Journal

    Shortly after the Lundgren's was arrested

    You appear to have left out the thing, owned by one Lundgren, that was arrested.

  • Right of first sale / forced to rebuy keys is also part of this.

    At first they where saying each disk costed about $299 the full retail price of windows and then later MS said we just make refurbishers pay $25 an system for a new key.

    But lost in all of that is the MS clams that the paid for key is voided at or before it get's the to refurbishers. But in some cases systems going there may have an OEM key + an CORP site key on them.

    • First sale doctrine only comes into play if the 80,000 disks he sold were purchased by him with a legitimate license to have that copyrighted material.
      The right of first sale does not give you the right to make 80,000 copies of something you had a license to use.
  • Say you were to sell a product, X. It's your product. It's good*, and you have an established client base. You distribute that product with a label, X. You have to control the distribution channels, so other actors do not take your product and modify it, potentially instaling backdoors. You do provide an image to download off your servers, complete with signatures, for free, to improve support for your customers. Someone takes your image, burns it to a disk, labels it as coming from you, and distributes it
  • The correct thing to do was put Linux on the computers and provide them as is. If people want Windows they can pay for it. It's people hiding the true cost of Microsoft's products that are helping keep their monopoly in place. Maybe instead of trying to cover up Microsoft's crappy business model they should have exposed it for the fraud it is. Want to run that 3 year old PC? That'll be $150 for a boxed copy of Windows. Want XP/7 on it? Sorry, Microsoft has decided you can't get it anymore. Guess you should
  • How nice of you to come out and state these things are pretty much worthless AFTER he got sentenced. How very bloody convenient for you and your fucking profit margin you lying stinking sacks of SHIT.

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