Microsoft Defends Putting A Computer Recycler In Jail With Misleading Statement

from the that's-not-what-happened dept

Last week, we wrote a post on the appeals court ruling upholding the 15 month prison sentence for Eric Lundgren. Lundgren gave an interesting interview with the Verge explaining his position on all of this, while Microsoft — feeling the heat from multiple stories criticizing its role in the prosecution — put out a somewhat scathing blog post from VP Frank Shaw insisting everyone has this wrong, and presenting an argument that Lundgren was a low down dirty pirate who is pulling the wool over everyone’s eyes.

It does appear that Lundgren is overstating things in the interview he gives, especially this part:

It wasn?t a money-making venture. I didn?t make any money doing it. I actually lost money doing it. The goal was to get these [to] refurbishers so they could put them in the boxes and then consumers down the road could repair the problem.

From the details in the case, it clearly was intended to be a money-making venture. Indeed, that’s what Microsoft focuses on heavily in its version of the story. It highlights email evidence in the case of Lundgren emailing with his partner/co-defendant in the case where, multiple times, he talks about how they’re in business together to make money (and getting frustrated when they weren’t actually making money). Here’s one example:

Microsoft (and some of its… rather vocal supporters…) argue that this is all proof that Lundgren is full of shit and just a common criminal pirate. But, again, this is confusing things. In our original post, we talked about the difference between the copyright, the software, the license, and the disc. And the distinctions matter a lot. A few years ago, we noted that copyright system supporters have spent decades blurring the lines between “the copyright” and “the content.” This plays out in all sorts of funny ways, including whether or not selling a piece of content is considered a sale or a license. As we’ve pointed out in the past, copyright proponents use a sort of Schrodinger’s Download setup, whereby they call it a sale or a license (and deny it’s the other) depending on which benefits them more.

In this case, the situation is fairly similar. The fact that Lundgren was hoping to profit from selling convenience to refurbishing/repair shops does not, automatically, mean he broke the law. But many people seem to think that the profit motive alone proves the copyright infringement. But… used book stores are for-profit entities selling copyright-protected materials all the time (without a license from copyright holder), and no one is locking them up as criminals. That’s not to say that Lundgren did the same thing as a used bookstore dealer, but merely to point out that the profit-motive alone does not prove infringement.

Here, again, part of the issue is in how stupid copyright makes everything. Lundgren was looking to make money by “competing” against Microsoft, but was doing so by providing a convenient and cheaper solution for recovery discs. But not by infringing on the copyright, but by providing a more convenient way to get the recovery discs (which still required a valid license from Microsoft). So, again, we hit up against the differences between the license, the copyright, the software, and the disc. Microsoft, like many copyright system supporters, wants to blur all four of those issues together, insist they’re the same thing, and point to the profit motive and cry “pirate!”

But taking a step back and separating out the components suggests how silly this is. If Lundgren is profiting off of the convenience, but the discs are worthless without a license, then what copyright-related harm has he really done? He may have harmed Microsoft in other ways, but are those harms ones that are protected by copyright, or are they ones that society encourages in the form of competition and innovation? Microsoft claims it’s the former, while Lundgren supporters argue its the latter (Lundgren now pretending he never intended to profit muddies the waters for his own argument).

Part of this, of course, is the nature of copyright. It is a monopoly. It makes those who rely on it allergic to any form of competition. So here, where you have competition in the form of convenience, but which does not lead to a “pirated” use of the software, but just a “counterfeit” physical disc that still requires a valid license, there are legitimate questions about why this type of competition is criminal?

In the end, Microsoft and its supporters insist that Lundgren’s profit motive ends all discussion. He was making money off of Microsoft software — case closed. But that’s not how copyright policy is designed to work. It is, however, how Microsoft and others such as the RIAA and MPAA, have pushed everyone to believe that copyright is supposed to work. They want you to believe that the copyright and the underlying content are one and the same, and you do anything whatsoever with the underlying content is infringing — and doing anything with the underlying content that makes money, must automatically be criminal.

It’s a sad statement on the state of copyright law that people — including multiple judges — seem to accept that interpretation.

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Companies: microsoft

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Comments on “Microsoft Defends Putting A Computer Recycler In Jail With Misleading Statement”

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Anthony Cooper says:

Re: Re:

Depending on the manufacturer, they license key is embedded into the BIOS and Windows installation routine can query the BIOS for that key and will not ask you for it in the event that you need to reinstall Windows. When it works, it’s actually a rather elegant solution. However, Microsoft jumped the gun in distributing the hologram stickers without the keys because I’ve run into several with missing license keys that were built before the key could be embedded into the BIOS. In that case, the only choice I see is to use an activator, which technically violates the license. But does it really if the manufacturer REFUSES to provide a valid license key with the computer?

Will B. says:

Re: Re: Re:

So, wait… does that mean people are no longer buying Win 10? If thqt computer burns out and I buy a new one, I have to buy a whole new copy of Win 10 too? If it’s built into thre BIOS and you don’t have a copy of the license key…


If I already bought your product once, I’ll just pirate the next copy, thanks.

Anonymous Coward says:

Re: Re:

Silly Pirates. Isn’t is obvious that you must download and burn the recovery cd from the computer you plan to later use the recovery cd on?

If you have not done that and the computer crashes, your only option is to buy a full retail copy of windows. If you have two identical computers purchased at the same time, you are breaking faith with microsoft if you use the same recovery disc on both.

And don’t forget if you sell the computer, the new owner must make a new recovery cd. If they use the one that you made the day you unpacked the brand new computer, you BOTH become filthy pirates.

Ehud Gavron (profile) says:

Re: Re: Sarcasm?

I hope you’re being sarcastic, because nothing you said* is true as per US law.


* Technically your sentence start “…don’t forget…” can be true because you’re just telling someone to remember something… but the thing you tell them to remember is, again, not in accordance with US law.

Note: I am not a lawyer, but I have been investigated for UPL. I’m not an idiot, but nobody’s investigated me for that. The FBI wanted to know about my techdirt posts, so now I have to watch what I saw. All this is true, unlike the comments in the above post.

RonKaminsky (profile) says:

Double standard

The vast majority of people will probably just choose one or the other side and apply a double standard: "Lundgren was making/wanted to make a profit so he must be a criminal", or "Microsoft is gouging society to make a profit rather than encouraging the beneficial reuse of old computers".

I don’t think I really know all of the details, but one thing is clear to me: even if both Lundgren and Microsoft were being greedy and selfish, the evidence indicates that the behavior of only one of them was clearly to the detriment of society. The one who has billions of dollars but isn’t encouraging refurbishing old computers for poor people.

Doug Wheeler (profile) says:

No sales = no loss

Another point that keeps getting glossed over is that Eric Lundgren never sold any discs. He had them made at the request of Bob Wolff who, after receiving them, didn’t want them and stored them in his garage. There they sat until, in a sting operation, an undercover government agent purchased discs from Wolff.

OA (profile) says:

Re: Re: Often it seems to be heading that way.

Probably the reason they don’t attack libraries, books stores and the like, NOW, is because of the fear of backlash for attacking established rights. However, as a generation passes, technology progresses, attitudes/culture change and physical book exchange becomes less important this kind of attack will become doable and you can bet the farm that it will be done.

Anonymous Coward says:

Where is the crime?

So its perfectly legal for me to go buy some blank DVD media, visit Microsoft’s site to download the windows installer for free, burn a disk and use it with my valid license thats already been paid for.

But if I pay some guy to download the free to download installer, burn it onto a disk and ship it to me so I can use it with my valid license a crime has been committed?

Anonymous Anonymous Coward (profile) says:

Re: Where is the crime?

Something that has not been mentioned yet is ISP related usage caps. If one person needs those files but has run up against some spurious usage cap, having a DVD available to them that does not consume usage, a small charge for the disc might be OK for them. What was Lundgren charging for the discs? I have heard several numbers. $25 for the Microsoft licensed disc and $.25 for the Lundgren disc. What was Lundgren actually going to charge for his discs? And, wasn’t his intent to sell them to other refurbishers, rather than end users? Does this make some difference? Well, not to Microsoft, and the court is clueless about those ramifications.

OA (profile) says:


It’s a sad statement on the state of copyright law that people — including multiple judges — seem to accept that interpretation.

What saddens me most is how often I see bad ideas take on a plague like quality. A sort of idea poisoning. Corporations are especially well positioned to take advantage of such a widespread weakness (they’re "beginning" to rival governments). One could ask, can this copyright problem be solved without addressing the more fundamental issue? It might depend on what one thinks "solved" means….

Anonymous Coward says:

protection racket

The guy was stupid if he thought he could avoid paying “The Microsoft Tax” and not get punished. The Microsoft Tax was why many ‘smart’ strip-mall type computer builders (back in the days when they were abundant) refused to sell computers without a [Windows] operating system, because they didn’t ever want to be in the position where they might be suspected of “piracy” due to the assumption that PCs sold without a valid Windows license were almost certainly pirating Windows (or were soon going to be after the buyers took them home). It’s kind of the first rule of survival, to avoid doing anything that will in effect paint a giant bullseye on your back in the mind of the authorities (and even if they see you’re innocent of their original suspicions, they’re then under pressure to find something else to save face)

Yes, it was basically a sort of classic protection racket, in which a small business could either pay the ‘tax’ or risk getting burned to the ground.

Roger Strong (profile) says:

Re: protection racket


I was working for “strip-mall type computer builders back in the days.” While DOS and then Windows were usually included in pricing, we had no problem selling PCs without it. There was no shortage of valid reasons why a customer would want a PC without an OS, and it never caused problems.

Sure, larger companies could get OEM pricing in exchange for jumping through hoops, but no-one forced them to. It was no different from other industries.

The biggest pile of BS came from IBM. We lost PC sales because the IBM reps would tell them that ONLY a PS/2 would run OS/2, and that was the future of computers. The customer would walk away with a PS/2 Model 25 – which would never run OS/2 – with PC-DOS installed.

When I walked in to buy IBM PC-DOS 4.0 – just to try out – they made me sign a note promising that I wouldn’t try to return it. Because everyone knew that ONLY a PS/2 could run DOS 4. (I opened the box, booted up their non-PS/2 display machine with it, and walked out.)

People tend to greatly exaggerate Microsoft’s BS, while forgetting similar or worse BS from IBM, Apple and everyone else in the industry.

Uriel-238 (profile) says:

Re: Re: Microsoft's BS

Only in the last few years have I lived in a house with Apple iProducts, which my partner uses religiously so now I’ve been exposed to the cultish number of hoops she has to go through to set her stuff up to work the way she likes (rather than the way Apple wants).

My pet peeve with Microsoft is very long standing, having been using Windows since 3.0, and DOS since long before that. Windows features a lot of hostile architecture (Uriel learned a new word) to discourage developers from coding for Windows without an authorized development kit, or to discourage end users from tweaking their system in ways that made Microsoft uncomfortable.

Even recently Windows continues to unhide updates that include spyware or other malicious elements that it really wants me to install. Some of the patch ID numbers have become familiar enough that I recognize them on sight.

(I’m looking at you kb2952664)

NeghVar (profile) says:

Copyright rebuilt

The entire screwed up copyright system needs to be scrapped and rebuilt based on the copyright and patent clause of the Constitution.
“Article I Section 8. Clause 8 – Patent and Copyright Clause of the Constitution. [The Congress shall have power] “To promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries.”

Keywords being “author” and “inventor”. Not holder or owner.

In the case of Microsoft, this rebuild would have no effect because Microsoft, as a company, is the author and inventor of the Windows operating systems.

This would effect authors of books and music. No passing of the copyright to one’s children’s, children’s, children’s, children. Or selling to a major studio. Elvis, Micheal Jackson, Prince, etc. would all be under public domain if we followed the rules based on the Constitution. The patent troll would have never existed if we built our copyright system the right way

You killed yourself, shill MoreToTheStory! says:

Re: Read the details INDEED!

You shoot Microsoft (and yourself) in the foot by directing us to their blog post on this. In Microsoft’s own words, from that page:

Out of one orifice, Microsoft says:
“Part of Mr. Lundgren’s defense also involved claims that he was trying to provide the community with something that was freely available anyway. This claim was rejected by the district court and the Court of Appeals. This is because Microsoft itself sells genuine versions of these CDs to refurbishers (hence the market for selling counterfeit copies).”

But out of another orifice, Microsoft says:
“When a refurbisher installs a fresh version of Windows on a refurbished PC, we charge a discounted rate of $25 for the software and a new license – it is not free. “

The first quote shows Microsoft LYING. This is a LIE: “Microsoft itself sells genuine versions of these CDs to refurbishers”. It does NOT do this. What is sells is stated truthfully in the second quote.

THANK YOU for confirming the key points in this case for me. Microsoft LIED, and because of that, this guy is in jail. Having caught Microsoft LYING in this case, about this case, I choose to give the rest of Microsoft’s claims the disrespect they have earned.

Kal Zekdor (profile) says:

Clear Violation

TechDirt keeps trotting out the fact that MS offers downloads of the recovery disks.

Here’s an excerpt from the terms such downloads are provided under:

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.

There’s definitely infringement going on in this case. MS grants a limited license to the recovery software to individuals with those provisions, which this guy clearly violated.

Coupled with the fact that Lundgren was selling these discs, and Microsoft was selling discs+licenses, damages are not unfounded. However you feel about MS’s stance on not offering standalone recovery disks is irrelevant here. Clearly there was a demand, I’d imagine because the final purchaser had volume licenses already and the bundled license in the $25 disc was just unnecessary cost. So while it’s hard to say that every disc Lundgren sold resulted in a lost sale, there were undoubtedly some number of lost sales resultant from Lundgren’s infringement.

I still don’t think that this rises to the bar of criminal infringement, though… This is a clear cut civil case, but given everything involved jail time is a bit much.

Ehud Gavron (profile) says:

"Steady income"

His illiterate letter talks about a “steady income”, something I’m sure anyone who spent $84,000 to stamp some CDs would love to have.

It doesn’t say “profit”, “massive profit”, “arrrr ya maties” or anything of that nature.

Lots of people choose to convert a fixed asset into an income. In the business world we call it “moving from the balance sheet to the P&L.” You might think of it as “buying a house and renting it out.”

He bought an $84,000 house and hoped to collect rent for a long long time. Perhaps in time there would be profit, but certainly at this point not so.

Microsoft is dissembling and prevaricating when they “suggest” that they lost any revenue, as they give the contents of these CDs for free. All he did was go from .ISO file to stamped CDs. His “crime” appears to be that he duplicated labels on the CDs that were not honest.

For that he will spend over a year in jail.

I sure am glad the last time I put a family portrait on the DVD label of the family reunion pics the guy who took the pics didn’t Naruto me for copyright infringement. I’d be in prison now.

Justice. The wheels grind. They grind slowly. Sometimes they turn good people into ground beef. (h/t KW for the original comment, although I broke it up.)


Matthew E says:

Fuck the M$ cartel. If I go postal, here's one reason.

Abstract: Fuck the M$ cartel.
Details: I recently had a situation with a high end acer PC with Windows 10 on it (my Mom’s) that we were unable to login to or reinstall the OS to; she had lost the password and there seemed to be no way to reinstall the OS from the HD; the LCD had cracked and it was thus very hard to get through the BIOS screens, but it worked fine once booted, with an external monitor. The manufacturer’s tech support insisted that I pay them about $50 for what they called advanced support, which consisted mainly of a recovery DVD ordering ability so that I could get the recovery DVD that would allow me to reinstall the OS and thereby be able to use the computer again. I almost paid it. I was about to pay it when I found a video of the reinstallation process that enabled me to do so despite the cracked screen. (I couldn’t install Linux either, due to the LCD issue – couldn’t get it to boot a USB stick, CD or DVD – so come to think of it, the official recovery DVD might not have helped – though perhaps they would have been willing and able to walk me through booting off it.)

guest says:

Issue may be counterfeiting the disc label, not its content

It’s hard to make an argument that selling blank discs that you just downloaded free content onto causes financial loss to Microsoft.

In this case, it seems that the issue may boil down to whether the discs were printed with a Dell or Microsoft label, which might qualify as counterfeiting since they could easily be confused with a “genuine” item printed by the original manufacturer.

If Microsoft et al. sell “genuine” discs for $25, then “counterfeits” that look the same might even be valued at “retail” value rather than as a simple burn of a free download.

Free software also still has to abide by copyright law, which may restrict its distribution. This is used by the GPL, for example, which forbids binary distribution without including the license terms as well as the ability to download the source code.

Ehud Gavron (profile) says:

Re: Re:

Not at all. We’re not discussing the EULA because no licenses were sold, transferred, etc.

Simply put, if you can download an ISO and burn it to a CD that in and of itself is not a violation of US copyright law (yet!). If, however, you attempt to use it you require a license, and THAT is where an EULA would possibly come into effect given a lot of other (not relevant to this discussion) factors.

1. Download an ISO available to anyone without an EULA or an “I agree”.
2. Burn said ISO to hard media.
3. You’re not a pirate. Have a Coke and a smile.


That Anonymous Coward (profile) says:

Making them look like Dell or M$ offical discs is where it went sideways. (Mind you I think the whole M$ we didn’t ask for this is BS)

If he had mocked up a professional looking label that said System Recovery Disc people would have been less cranky. A small disclaimer of we downloaded the offical ISO for you to save you time & effort… enjoy…

99.5% of the people probably never would have looked at the disc in the first place (why is there a market for replacement discs when the disc shipped with the machine). One does wonder if the Dell branded discs contained Dell drivers slipstreamed in (cause Dell has some odd drivers).

Using names & logos…. dumb… not sure it is jail term dumb considering they never made it into the wild.

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