Microsoft's attempts to clarify Office licensing policies fall short

Microsoft's attempts to clarify Office licensing policies fall short

Summary: Microsoft's new "no transfer" policy for Office 2013 has left some customers asking what happens if the original PC fails and needs replacement. A corporate blog post tries to "add clarity" to the issue, but what the company really needs to do is change the license terms themselves. UPDATED: Microsoft reverses policy, will allow transfers after all.


Update March 6, 2013: Microsoft has reversed course completely on this issue, revising the terms for Office 2013 retail copies to allow transfers between PCs. See "Microsoft restores transfer rights for retail Office 2013 copies." 

Lawyers usually write software license agreements in stark, no-nonsense language. It’s the way they’re wired.

But those agreements are contracts, and you violate them at your peril. Even if you do so inadvertently or without bad faith.

Ask Andrews International, a Los Angeles based company that paid the Business Software Alliance $137,500 last year “to settle claims that it had copies of Microsoft software installed on its computers for which it could not locate licenses. Andrews denied any liability but agreed to resolve the dispute to avoid the cost of litigation.”

That’s in addition to what the company had to pay to purchase new licenses, and the no-doubt-substantial fees it had to pay its lawyers. All because the company couldn't provide the proper receipts for software it claims to have purchased legitimately. 

In short, you flout license agreements at your own peril. Which is why I am infuriated at Microsoft’s attempt this week to "offer some clarity" on Office 2013 licensing.

Here’s a recap of the underlying problem: In the agreement for “perpetual license” versions of the new Office, Microsoft has specifically prohibited licensees from transferring the software. Here, for example, is the language in the license agreement for Office Home and Business 2013:

You may not transfer the software to another computer or user.   You may transfer the software directly to a third party only as installed on the licensed computer, with the Certificate of Authenticity label and this agreement.  Before the transfer, that party must agree that this agreement applies to the transfer and use of the software.  You may not retain any copies.

That raises the perfectly legitimate question, “What happens if my computer fails?” Modern PCs are often sealed devices, which must be completely replaced if a component such as an SSD, power supply, or motherboard fails.

That topic isn’t covered in the license agreement, so a Microsoft spokesperson took to a corporate blog to reassure users. In a comparison chart that lists the three retail versions of Office 2013, under the heading “Transferrable?” the word "No" appears for all three products.

But there’s an asterisk next to that heading, and a footnote beneath the chart reads: “*An exception is granted when the software is on a PC that is replaced under warranty.”

Well, that’s reassuring, right?

Not exactly.

First of all, why should your rights to reinstall software that you purchase directly from Microsoft be contingent on your purchase of a warranty for the underlying PC? That might have some logic if you purchased an OEM copy of Office with the PC, but it makes no sense at all in this context.

In addition, and more importantly, the original license agreement includes this clause:

This agreement (together with terms accompanying any software supplements, updates, and services that are provided by Microsoft and that you use), and the terms contained in web links listed in this agreement, are the entire agreement for the software and any such supplements, updates, and services (unless Microsoft provides other terms with such supplements, updates, or services).

The point of an “Entire Agreement” clause is to prevent you from claiming that a representative of the company made a statement that invalidated one or more  terms of the contract. Which is exactly what this blog post tries to do.

If the BSA ever kicked down your door and accused you of violating your license agreement because you couldn’t prove that your Office licenses were attached to the original PC on which they were installed, you could pay your lawyers to bring this blog post to the attention of the judge trying the case. Of course, that assumes that Microsoft doesn’t change its mind and remove or edit this post later.

That’s not just a paranoid assumption on my part. It’s an exact summary of what Microsoft did with its OEM license terms for Windows several years ago, where it published an exception to the license terms for “hobbyists” and then, a few years later, “deliberately and methodically scrubbed all traces of those documents from the web.” Go read that story and then spot the parallels with this situation.

Look, I understand Microsoft’s motivations here. They want to encourage people to use their new subscription-based offerings, and they want to avoid creating loopholes that people can exploit to work around licensing restrictions. But if they want to create an exception for replacement PCs, that language needs to be in the license agreement, not in a blog post. And if their lawyers aren't willing to document that exception, they should step forward and say so.

Topics: Enterprise Software, Microsoft

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  • original warranty

    I don't think Microsoft is trying to sell extra warranties; in the UK a least, PCs come with 12 month warranties at least and some with 3-5 year warranties. Not much use if your PC dies after 14 months, but at least you don't buy a PC, buy Office, have the PC fail the first week and lose Office too. It doesn't change the life of Office being tied to the life of the PC.
    • In the UK and Europe in general they may find themselves apple'd...

      The eu did not take kindly to apple'd insistence that you could not install software you legitimately purchased from them on non apple hardware; if you legally bought it from apple it is yours and you can do what you like with it. Same as jailbreaking.

      I suspect if MS try to push it, they will find the same answer; if they sold a licence, the user can use their purchased licence on hardware they see fit. Sure one at a time and you can't sell it on, but you can't keep using it if you upgrade your processor/motherboard? The eula can say what it likes... I doubt it'll stand up.
      • The Oracle EU verdict

        I suspect it won't be long before MS finds itself on the end of the Oracle EU precident.
        Alan Smithie
        • Wow

          Love my job, since I've been bringing in $5600… I sit at home, music playing while I work in front of my new iMac that I got now that I'm making it online.(Click Home information)

      • Wow, Ed

        Microsoft screws up again.

    • The alternative / solution

      Libre Office
      • Or apache open office...

        But you're quite right, the only reason Microsoft office is still king (and I really do mean only reason) is because everyone else has it. How many times have you heard a non techy person wonder why their windows machine doesn't come with office? Something they see as an essential part of the machine.

        The reality is though that this seems to have gone to MS's head lately. It's the last real desire product they have and hey do appear to be doing their best to kill it.

        The problem is that if people start using alternatives they will realise they don't actually need office most of the time. So the reality is that MS should be protecting their baby. They are not; on competing mobile platforms they hold back, trying to use office to sell their platform. It's sound so long as a competitor doesn't rise up on those platforms. Similarly making the already expensive home office realistically more expensive, people will look around more. It's a strategy I don't understand; don't make a product everyone will want. Instead assume everyone will want whatever you do as an absolute certainty and base your corperate strategy from that standpoint.
        • Not EVERYONE has it

          Not the latest vesion, anyway. I work for a company [no names, please] still using Office 2003 - and it works quite nicely, thank you.
          We have yet to see any "benefits" (ie. staff re-training) of downgrading to any of the Ribbon infested new clunkers. There's a saying: "If you don't like it, or don't need it, then don't buy it". Well we didn't - so we haven't.
          • You just said you do have it.

            "Not everyone has it"

            "We do"


            So you do use Microsoft office? Just not the latest release. You still use Microsoft office over alternatives.

            I was reasoning that at the moment I am still allowed to use the first version of office I own on any windows machine I like. There's the small issue that it came on something like 20 floppies and I can now only Find about 11. However my office 97 cd still works and I can install that straight off the cd. I'm still using MS office. With this licensing suggestion, someone beginning today can't make that choice

            They either buy an annual subscription, or they buy a traditional install. If they buy the traditional install, the implication is that just like windows 8, MS match a hardware profile to the activation and it will not activate on other hardware. Now I haven't seen that in writing yet, but it is how windows 8 is working; as a home builder, I've already had to call them up because I swapped bits out whilst waiting for another mobo, and it simply refused to activate once I put the original bits back in. This eula looks the same for office. If you buy it now, they take away your choice to use that software later on.

            Your office 2003 example highlights the change. Office 2003 as it shipped should now be obsolete in business; you can't open any native files from the office suites released over the last 5 years. However MS issued a compatibility pack that allows you to use the X format.

            My point was that this kind of behaviour lead to more people using office. If they get tight fisted and insist your licence is only for that machine until you upgrade it, people are more likely to shop around.
          • Office 2013

            @alan_r_cam, just hope your company does not go to Windows 8. Office 2003 will not install on Windows 8.
          • Office 2003 won't install?

            That's strange. I read this, became curious, and immediately went and installed both Office 2000 and Office XP onto my Win 8 Pro (64-bit) setup. Using compatibility mode, they both installed and ran with no problems. So, can't see any reason why Office 2003 wouldn't.
          • Just did it myself, it's fine.

            I googled it and saw that people said projects wouldn't work. It does here also.

            Anyone know if it's broken features? Install and opening is okay.
          • It may install but ... it may be broken

            I installed Outlook 2000. I can read the .PST file but cannot modify data. The error message says:
            "An error occurred while attempting to open the Windows Address Book. Unable to find the WAB DLL."
            Yes, I have found WAB.DLL all over the place.
          • That is the best reason to move away from M$ Office.

            Office isn't even backward compatible with itself!

            Remember when all the states were attempting to go to the open doc standard? M$ said, 'we are the only open standard you need. You will always be able to open old versions of documents.' The next year, exploits were discovered in the '97 format. Instead of fixing the exploits, M$ pushed out an update that essentially edited the registry telling newer versions of office not to open older format documents. My company has documents going back to the mid 90s that we cannot open unless I go to the user's computer and change the registry.

            We really need opened formats that will always be compatible!
        • office is not for me

          All my companies are truly multi platform, with an obvious emphasis on BSD UNIX , mostly because it happens to handle any task thrown at it better than anything else. But we don't hesitate to use Microsoft products where they make any sense (which is extremely rare these days). Microsoft's Office package is only available for the Windows and Macintosh platforms and thus does not serve us, at all. Therefore, even on Windows and Macs, we use OpenOffice. Needless to say, that saves us both an enormous amount of money and, any dealing with the BSA and similar pirates.

          Never ever had any compatibility problems, considering most of our customers are Microsoft victims, or patients (depends on from which side you look at it).
      • Agreed

        There's almost no reason for a home user to buy MS Office at this point. Maybe when you could re-install the copy of Office you dropped $250.00 on every time you upgraded your computer it was worth it to bite the bullet and buy the software, but not under these licensing conditions.

        OTOH, this does solve the Windows RT backward compatibililty issue rather nicely doesn't it? It doesn't matter that RT won't run all your old software, because you're not legally entitled to re-install it anyway!!!

        What a sad joke Microsoft's Office licensing has become.
        • even sadder

          is a legal system that upholds these long winded and confusing contracts as being enforceable.
          • Contracts are the result of negotiation

            EULAs are ultimata, pure and simple. Calling them "agreements" is an abuse of the language.
            John L. Ries
          • true that

            I agree with you.
          • John L. Ries: "EULAs are ultimata, pure and simple"

            Not as long as there is choice. And with desktop office suites, there's lots of choice:

            o Corel WordPerfect Office X6 (commercial - Windows)
            o SoftMaker Office 2012 (commercial - Windows, GNU/Linux, Android)
            o iWork (commercial - OS X, iOS)
            o Kingsoft Office (commercial - Windows, Android)
            o LibreOffice (open-source - Windows, OS X, GNU/Linux, BSD)
            o OpenOffice (open-source - Windows, OS X, GNU/Linux, BSD)
            o Calligra Suite (open-source - GNU/Linux, BSD)
            o Abiword and Gnumeric (open-source - Windows, GNU/Linux, BSD)

            All but iWork and the Calligra Suite are available for Windows. There's no need to list office suites expressly for mobile devices and cloud-based office suites as one gets the idea.
            Rabid Howler Monkey