Microsoft targets Israeli reseller in $1.3m 'fake Windows stickers' case

Microsoft targets Israeli reseller in $1.3m 'fake Windows stickers' case

Summary: Microsoft is suing an Israeli reseller for allegedly faking Windows authentication stickers on computers it sold - but the target of the lawsuit is baffled by the legal action.

TOPICS: Microsoft

Did one Israeli reseller sell PCs with dodgy copies of Windows and fake authentication stickers, or is the company being mistakenly swept up in an effort by Microsoft to keep the issue of piracy in the international headlines?

Depends on who you ask, of course – and regardless of what either side says, an Israeli court is likely to be the one to decide if a local hardware vendor called One Systems Integration really did distribute PCs running illegal copies of Windows and carrying fake authenticity labels.

Typical Microsoft authentication stickers. Image: Microsoft

The accusations by Microsoft against One Systems Integration and its parent company One1 Software Technologies are the subject of a five million shekel ($1.28m) lawsuit now making its way through the Israeli court system.

In its complaint, Microsoft said that it had "concrete information indicating that the respondent was seriously violating the rights of the claimant" on an "ongoing basis and systematic manner", by selling computers with forged Windows authenticity labels, "on computers on which pirated versions of the claimant's products are installed without a licence". The computers in question, according to the lawsuit, came from HP, and were shipped to One Systems without Windows.

One Software is among Israel's largest hardware and enterprise software vendors, furnishing IT, BI, ERP, CRM, and other software to some of Israel's largest companies, and has won numerous awards – including awards from Microsoft.

A victim of piracy?

But the honeymoon appears to be over between the two. Dale Waterman, Microsoft's corporate attorney for anti-piracy for the Middle East and Africa, said that illegal Windows sales hurt not just Microsoft, but also vendors who follow the rules, and that Microsoft is one of the biggest victims of piracy in the world.

"People all over the world are making quick money from pirated and counterfeit software and their actions are adversely affecting local and global economies," he said at a recent conference on software piracy. "When companies use pirated software, it hinders job opportunities and stifles innovation. It is also just wrong to associate self with counterfeiting."

In a statement, Microsoft said that it had a network of investigators whose job it is to track down pirates who illegally duplicate Windows products, and that the investigators were the ones who had discovered the problems with One Systems, after buying several computers supplied by the company with phony authentication stickers.

"We are conducting our own investigation on this matter, but really no one here has any idea of what they are talking about" -- Adi Shein, One Systems

Sounds serious – but it isn't true, said Adi Shein, CEO of One Systems. "We really taken aback by this," he said. "We sell at least 10,000 units a year, mostly supplied by HP and Lenovo. From my understanding, Microsoft found four or five computers installed with Windows of questionable pedigree, and they claimed that we attached a phony authentication sticker to the machines. We are conducting our own investigation on this matter, but really no one here has any idea of what they are talking about."

Shein points to the company's long record of working with Microsoft. "We have spoken to our partners here in Microsoft Israel, and they have no idea what is going on either. They did not initiate this, and apparently the legal action is being initiated by a Microsoft unit abroad."

 As to why Microsoft would want to make a mountain of a very small molehill, as Shein claims, the CEO said that it was either a case of bored lawyers looking to keep themselves busy, or an attempt by Microsoft to keep the issue of piracy in the headlines, possibly to discourage the real data thieves who make a living from fake Windows, Office, and other Microsoft products.

"Once every while, they come up with a lawsuit like this, which gets a lot of fanfare in the media, but very quickly dies out, with the case going nowhere. I am sure that will be the case here," Shein said.

Microsoft Israel, which distributed Microsoft's comments on the case to Israeli journalists, said it could not comment further on the matter.

Topic: Microsoft

David Shamah

About David Shamah

David Shamah has been writing about Israeli technology news for over a decade, both in print and on the web, and knows the Israeli tech scene and its start-ups inside out.

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  • If these guys worked with the bully for so long

    They should have known that bullies throw punches when they don't get all the attention.
    • Ubuntu or something

      Hi :)
      It would be great to see the Isreali company moving to Ubuntu or another Gnu&Linux as a result of this. Not entirely sure why the Isreali company is so dedicated to increasing market-share and keeping people dependant on the US company. Perhaps time to follow other countries in gaining independance!
      Regards from
      Tom :)
  • Could be Arab games

    No offense, but if there were five PCs of questionnable valid Windows OS (and don't forget, sometimes Windows reports a valid OS copy as invalid) -- then maybe some Arabs got hold of the machines and tried to install fake Windows. That's not farfetched, in order to impugn a successful Israeli company.

    MS paranoia is ruining the company. It's the driving force behind successively-more-inane Windows versions, and I as a valid Windows user with maybe 18+ valid Windows licenses, am getting sick of the hoops I have to go through, just to run my machines. So multiply my frustration by the millions, and it's not too hard to understand why Linux will triumph in the next 10 years. Lawsuits like this only hasten the decline in MS.

    There's a reason why MS stock declines. But MS isn't paying attention. Pirates are always few and short-lived. But the customer base remains; and when you alienate it, then you have lost. MS has finally alienated me and many like me enough to migrate to Linux. Reluctantly, we move; for MS insane paranoia creates dysfunctionalities in maintaining its OS on our machines, which we can no longer tolerate.

    Same reason as the world migrated away from Detroit for autos, it now will migrate away from MS and Apple, the two most litigious sofware companies in the world. BASTA: your software isn't that good, anymore.
    • Would not be surprised if Muslims (or Leftists) were involved...

      Economic sabotage does happen and Israel has enemies including Muslims and Leftists who have no problem attempting to destroy an Israeli company since they both live by the motto "The ends justifies the means".
    • Then again, consider 'Occam's razor'

      In a nutshell the theory goes that far fetched solutions are just that; like your suggestion. In the real world simple problems have simple solutions. Just for a moment ask yourself WHY MS would do this unless they had strong grounds, as opposed to 4 or 5 from 10,000. The chances of finding those 5 would be 5/10000 and that speaks for itself.

      In other words... Get Real !
  • Sounds fishy if the local MS office has no knowledge of this!

    Rogue lawyer?
  • He who protests too loudly.

    Could very well be a case of uncontrolled greed by the dealer.
    If they bought 10 computers and 5 had phony IDs then that's not making a mountain out of a molehill, quite the contrary Microsoft might have stumbled on a major rip off.
  • But Those Stickers Don't Mean Anything Anyway

    When the BSA comes an-auditing, they don't care about any steenkeeng stickers. They want to see invoices specifically itemizing all the software, and specifically mentioning your company as the buyer. Any copy of any software without a corresponding invoice item gets billed at full, unbundled retail price.