Microsoft's attempts to clarify Office licensing policies fall short

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.
Written by Ed Bott, Senior Contributing Editor

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.

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