How the new Windows 8 license terms affect you

Summary:What's changed in Microsoft's radical new license agreements for Windows 8? I've got full details about how you can transfer Windows to a new PC, downgrade rights, and who qualifies for upgrades.

I’ve had a chance to inspect the new, radically revised Microsoft license terms in advance of their October release. Earlier this week, I noted the two big surprises: All of the agreements are written in plain language that’s surprisingly easy to understand, and Windows 8 will, for the first time ever, include a new Personal Use License that explicitly permits retail customers to install and run OEM System Builder software. The overpriced full package products will not exist for Windows 8.

The new language in these agreements really is simpler than in previous editions. But there are still areas where confusion can arise. To forestall that confusion, I decided to put together a more comprehensive look at the new license agreements.

I have spent two full days going through these documents line by line, comparing them to each other and to the corresponding Windows 7 versions. I’ve also been listening to your questions, several of which are incorporated here.

If you are interested in details of how to transfer a Windows 8 license between PCs, see page 2 of this post. Page 2 also contains details about the rules for installing Windows 8 in a virtual machine and about downgrade rights.

This post is based on the contents of three new documents with the following headings:

  • MICROSOFT SOFTWARE LICENSE AGREEMENT (aka Personal Use License for System Builder, referred to in this post as “PUL”)

I looked at Windows 8 and Windows 8 Pro versions of each license agreement.

Two additional documents are related, but not included in this analysis. I have not yet determined whether there are changes to the terms that System Builders must follow when assembling a PC for resale. Nor have I been able to examine final versions of the product use rights that apply to Volume License editions of Windows 8.

The information in this post covers the vast majority of circumstances that consumers and small businesses will encounter when buying and deploying Windows 8.

Just what is a Windows license?

In the broadest terms, a license agreement is a contract between you and Microsoft Corporation (if you purchased the software and installed it yourself) or between you and the computer manufacturer or software installer that purchased Windows 8 from Microsoft and then installed it on a computer you purchased. The agreement describes your rights to use the Windows 8 software and any Windows apps that are included with Windows 8.

Your proof of license for a PC you purchase with Windows already installed consists of all of the following elements:

  • A genuine product key;
  • Successful activation of the software;
  • An authentic Windows label such as a Certificate of Authenticity (COA), which must be affixed to the computer or appear on the manufacturer’s or installer’s packaging or peripherals when purchased; and
  • Proof of purchase from a supplier of genuine Microsoft software.

For software you purchase in a physical package, the proof of license is “the genuine Microsoft certificate of authenticity label with the accompanying genuine product key, and your proof of purchase.”

For downloads from Microsoft or an authorized reseller, the proof of license is “the genuine Microsoft product key … you received with your purchase, and your proof of purchase from an authorized electronic supplier of genuine Microsoft software.”

What are the differences in the license agreement between Windows 8 and Windows 8 Pro?

The basic terms of the license agreement are identical between Windows 8 (the base version) and Windows 8 Pro. I found only three substantive differences: Restrictions for Client Hyper-V (a Pro-only feature) are in the Pro agreement and not in the base version. You can run Windows 8 Pro on a PC with two physical processors; Windows 8 is limited to a single CPU (although the number of cores is unlimited). And Windows 8 Pro supports Remote Desktop as a client and server, whereas Windows 8 is a Remote Desktop client only.

In the case of PCs purchased with Windows 8 Pro preinstalled by the OEM, downgrade rights are available. See page 2 of this post for details.

What PCs are eligible for a Windows 8 upgrade?

Upgrade software typically costs less than the fully licensed System Builder versions, reflecting the fact that you have already paid, directly or indirectly, for a previous Windows license. Although Microsoft has not announced final Windows 8 pricing, it's reasonable to assume this will continue to be true.

Your PC qualifies for an upgrade if it has a valid license for Windows XP, Vista, or 7. If the PC came with any edition of Windows XP or Windows Vista or Windows 7 and has a certificate of authenticity sticker affixed to it, it’s eligible for a discounted upgrade. (From October 26, 2012, through January 31, 2013, the upgrade price for Windows 8 Pro, purchased directly as a download from Microsoft, is $40. That price includes a separate download of the Media Center Pack, which will subsequently be a separate purchase.)

Microsoft has not announced pricing for System Builder editions, nor has it hinted at what the cost of upgrades will be after the initial promotion ends on January 31, 2013.

Note that upgrade eligibility has nothing to do with the operating system currently installed on the system when you go to perform an upgrade. If you have a previous Windows 8 preview version installed, that doesn’t confer any upgrade rights. That sticker on the side of the PC (or the CoA, if you installed a retail version) is the most important factor in defining the underlying license.

After I upgrade, can I use my old Windows version on a separate partition or on another PC? Can I give it away or sell it?

No. The upgrade replaces the old license completely. The terms are written in very clear language:

The software covered by this agreement is an upgrade to your existing operating system software, so the upgrade replaces the original software that you are upgrading. You do not retain any rights to the original software after you have upgraded and you may not continue to use it or transfer it in any way. 

Can I transfer my copy of Windows 8 to another PC?

That depends.

Continued on next page—>

Topics: Windows, Legal, Microsoft, PCs


Ed Bott is an award-winning technology writer with more than two decades' experience writing for mainstream media outlets and online publications. He has served as editor of the U.S. edition of PC Computing and managing editor of PC World; both publications had monthly paid circulation in excess of 1 million during his tenure. He is the a... Full Bio

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