How to get sued by Microsoft

How to get sued by Microsoft

Summary: Everyone knows that if a deal sounds too good to be true, it probably is. But that doesn't stop shady resellers from offering Windows XP at eye-popping prices with a plausible sounding story that even suckered one leading Windows newsletter. It's a great deal, until you end up in court.

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Shopping at SurplusComputers.com is like poking around an especially geeky Goodwill store, Most of the goods are surplus for a reason, but occasionally you'll find a particularly useful bit of hardware or software whose market has crested, making it a great bargain.

I've been receiving the company's Deals of the Week e-mails for years, and I've always been puzzled by one category of offers. Back on February 4, for instance, the weekly e-mail included offers for Microsoft Windows XP Pro x64 Edition (NFR) for a mere $39.99, and Microsoft Office 2003 Pro (NFR) for $99.99. Clicking through to the website where the products themselves were sold led to an assurance that the products themselves were perfectly legal [their words, not mine] and "guaranteed to activate." Here's a snippet from that newsletter:

An offer for Windows XP that's too good to be true

Now, if you've priced Windows or Office lately, you know that those prices are literally too good to be true. Yet Surplus Computers advertised those two packages in its weekly e-mails (and apparently sold lots of copies) for more than a year before suddenly stopping last month.

So, what happened? Hmmm:

Filed in the United States District Court for the Northern District of California

Microsoft Corp. v. Intrax Group, Inc., d/b/a Surplus Computers, Michael Mak, and John Does 1-5 (Santa Clara and San Jose, California), alleging importation and distribution of infringing Windows XP Professional, Windows XP Professional x64 Edition, Office 2003 Professional Enterprise Edition, and Office 2003 Standard software. Case No. 3:07-cv-01840.

The NFR in the listing should have been a dead giveaway. It means Not for Resale, and it indicates that the original disks and keys were produced for use by schools and other qualified institutions to give to employees and faculty members for installation under the terms of an academic volume license agreement. Selling them to the public was a clear violation of Microsoft's licensing agreement, and as the press release for the lawsuit notes, "The defendants were warned by Microsoft about infringing activities prior to filing of the lawsuit." And they had lots of company, as this list of lawsuits makes clear.

But, like a game of Whack-A-Mole, a new offender pops up for every one that gets smacked down. In last week's Windows Secrets newsletter, Scott Dunn passed along this money-saving tip:

OEM and academic discounts are not the only way to trim your software budget. For example, cheaper even than an OEM version is a "work at home" package of Windows XP Pro SP2 available in the U.S. for $105 from Von1. According to Christina Philpot, manager of operations at Von1, the lower price represents a promotion to home and student users — the product is not to be used for businesses.

$105 for Windows XP Pro? I checked the website and they're selling "Work at Home" XP Pro x64 edition for $64 a copy. Sounds too good to be true, right? And indeed it is, as even a quick perusal of the Microsoft terms and conditions for this program makes clear:

Work at Home licenses for academic volume licensing customers

Education institutions that have acquired licenses through Microsoft academic volume licensing programs may grant to their faculty and staff the right to use a second copy of a limited selection of products on either a home or portable computer for work-related purposes. [emphasis in original]

You'll find more details about distribution of this software here:

If you decide to take advantage of the Campus and School Agreement Student Option or the faculty/staff Work at Home licenses available through Microsoft Academic Volume Licensing, access to media by your users must be restricted and regulated. All media for software distributed for Work at Home or Student Option use must be acquired from a Microsoft-approved fulfillment source.

Ms. Philpot's assertion that this program is "a promotion to home and student users" is just plain wrong. The software her company is selling was diverted from its intended market and is almost certainly being sold illegally in violation of the license agreement that governs its sale and use. And it's terribly sloppy reporting from Windows Secrets not to check out that assertion before sending its readers off to buy software they're not authorized to use.

I would imagine that Von1 has already received its first warning letter from Microsoft.

Now, an individual who bought a copy of Windows from one of these unauthorized sources is unlikely to appear on the radar screen of Microsoft's legal staff. But there's no guarantee that those product IDs will continue to work. So the question becomes, do you feel lucky?

Oh, and this week's mailing for Surplus Computers just arrived. They're selling what appear to be perfectly legal properly licensed OEM (System Builder) copies of Windows Vista at the same prices that all their online competitors are offering. Isn't it amazing how a little time in a courtroom can get one's attention?

Topics: Windows, Microsoft, Software

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326 comments
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  • Wow

    Sounds like a very messy situation.
    cyngaines
  • The price of price discrimination

    It's guaranteed that a lot of people are going to cheat.
    John L. Ries
    • Just wait until we get

      $3 windows and office bundles into the third world. Talk about price discrimination, aka price fixing, stimulating a lot cheating...
      jacarter3
      • Correct

        I have no objections to MS making stupid business decisions (just illegal or immoral ones), but they should take full responsibility (financial and otherwise) for the consequences of such decisions.

        Part of this is they should not expect taxpayers to foot the bill for the increased copyright enforcement costs.
        John L. Ries
        • Who says takpayers are footing the bill?

          "Part of this is they should not expect taxpayers to foot the bill for the increased copyright enforcement costs. "

          These are civil lawsuits filed by Microsoft. They pay the costs (until the defendant loses and has to pay the court cosrts and attorney fees as part of a judgment or settlement). So what's your point?
          Ed Bott
          • The point is your misuse of the concept of illegality

            If you didn't do that, you wouldn't muddy the waters.
            Mchapman29
          • Good point

            I have made the same point myself. I was very careful to talk about license agreements throughout and used the word "illegally" only once. I've edited the post to fix this usage. Thanks for pointing it out.
            Ed Bott
          • so...

            Microsoft makes something to sell, someone else illegally resells it under a falsified license, and that's legal? So, it's legal because the people bought it under the pretense that it was for a school, and then sold it to people cheaper? Are you serious?
            evilkillerwhale
          • No objection to civil suits

            Only to efforts to criminalize copyright infringement less blatant than industrial counterfeiting operations. In the vast majority of cases, copyright enforcement should be a civil matter, not a criminal one, thus forcing copyright holders to be prudent in their licensing practices, since they're the ones who have to pay for enforcement.

            As long as MS is paying their own lawyers to bring these sorts of actions, instead of trying to get US Attorneys or other public prosecutors to do it for them, and as long as such actions don't constitute harassment (and I don't think they do), then MS is within their rights and will get no criticism from me on that front.
            John L. Ries
          • Tax payers can pay in others ways

            When laws are enacted quickly with little thought to fight piracy it's the tax payer that pays the price in terms of dealing with stupid laws. That's a payment I'd rather not pay.
            voska
          • But you don't mind paying

            the *nix tax? If you work in the United States, every paycheck you earn has federal income tax taken out. Part of that goes toward paying off the multi billion dollar Unix programs of the 70s, 80s, 90s and even now. That's better? Do you realize how much of the Linux design come directly out of Unix? w/o unix there would not have been a Linux. The Federal goverment funded companies like SUN and allowed them to privatize from Universiy research with no fear of antitrust action. SUN, given risc processor technology and the entire Unix operating system designed at Berkeley, Stanford and other research centers like where Vint Cerf worked for the government, being paid with tax dollars, and they blew it. SUN moved very slowly with technology in terms of PCs and business server solutions the average business could afford. I've never heard anyone on here complain about how SUN got it's start from billions in tax dollars out of our pockets and then charged through the roof for their proprietary software. Microsoft simply has much smarter management than SUN even though SUN had a full decade headstart on them along with all the free funding and technology. <br>
            Dont' even start with the tax costs of Microsoft. It's a drop in the bucket compared to what *nix has cost this planet and now it's getting dumped into the economy and that's totally unethical and illegal. It's not what Linus Torvalds envisioned. It was to be another choice, not THE choice. <br>
            the irony is almost funny, if it weren't actually tragic. <br>
            Microsoft users have never been the ones to complain about their rights being violated. they always could have bought Apple or Sun or whatever and they know that, but they are happy with Windows and buy it by choice. then along comes a group of radicals that linus torvalds never imagined that he'd created, driven like the radical rage of Stallman. They are bound to help these poor stupid MS users whether they want them to or not. Meanwhile, 95% of the population would rather buy a product they can trust, and in capitalism that's how it works, rather than download some free geekware. In a market economy companies have products and people buy them and there are more jobs and ultimately people have more income. But the radicals are trying to skew that real world view with smear campaigns and propoganda.
            xuniL_z
          • So what's your point?

            I merely stated that copyright holders should be responsible for enforcing their own franchises instead of relying on public prosecutors to do it for them. Ed has already noted that this is exactly what MS' is doing and I have no objections to it.

            Do you disagree? If so, to what extent should copyright infringement be a criminal offense and why?
            John L. Ries
          • Revisionist history?

            Funny, I don't think the information about all those multi-billion dollar Unix programs was in any of the history books I've read. I was always taught that Unix was developed by a small group of guys at Bell Labs (not a government installation, as far as I know) and distributed free to universities for several years thereafter to facilitate the advancement of computer technology. True, it did eventually become a commercial product, but I don't know where the billions of government dollars come into play. Enlighten me with specifics, please?
            jkm2a1
          • ...

            And if whales weren't fat they wouldn't eat as much.

            There is no stupid law in the fact that Microsoft sells things cheaper to students to promote education, then these people took advantage of that illegally. Kthx.
            evilkillerwhale
          • Who pays, it's the consumers, the taxpayers

            Regardless of who sues who for how much, it's the taxpayers or consumers of both parties products who pay the whole shot plus a little more to keep them in the black at the end of the year. No company out there that has been sued stands to lose as they simply increase the price of their next edition. Anyone know of any, I repeat any OS, that has ever cost $ 499 ..........NO way ever, so at this inflated cost for an OS, MS has a lot of money to cover any
            legal costs. MS generally tries to make an out of court settlement when they know their hand was too deep in somebody's cookie jar.
            intrepi
          • UNIX licenses used to cost $1000s

            Then competition set in.

            People resent paying a lot of money only when they don't think have a choice.
            John L. Ries
          • RE: UNIX licenses used to cost $1000s

            HA!!! That's because you had to pay for the 30 - 50 floppies Unix used to come on. Sheesh, it used to take hours and hours to load it on a mini-computer. The X86 version was even worse.
            BernieLyons
          • Expensive OS

            Yeah, I think my first copy of OS/2 1.2 cost about $1,000. Also paid about that much for an extra meg of RAM and an external 5 1/4" floppy for that PS/2.
            boomchuck1
        • Please tell me how

          Free is somehow not "dumping"? <br>
          xuniL_z
          • Not relevant to the discussion

            We can argue another day about whether or not it's ethical to make software (source code and all) available to the public free of charge.
            John L. Ries