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IP: Re MS offers rewards to system builders who "snitch"
From: David Farber <dave () farber net>
Date: Tue, 01 May 2001 04:44:48 -0400
X-Sender: jnoble () pop dgsys com Date: Mon, 30 Apr 2001 21:30:45 -0400 To: farber () cis upenn edu, ip-sub-1 () majordomo pobox com From: John Noble <jnoble () dgsys com> Subject: Re: IP: MS offers rewards to system builders who "snitch" Cc: David Farber <dave () farber net>Microsoft, apparently intent on requiring corporate customers to buy Windows twice (once with each PC and again as part of corporate licensing programs), is offering "prizes" to system builders who report the receipt of RFPs for systems without Windows installed. This program appears to be intended to reveal to Microsoft the identities of companies which either use alternative operating systems or have attempted to avoid purchasing two Windows licenses for each machine. See http://www.aaxnet.com/news/M010425.htmlMicrosoft claims that none of its site licenses cover boxes purchased in the future. Which makes the bounty program even sneakier than you think, and exceedingly clever.Will system builders and resellers turn in RFQs and trust Microsoft to maintain the promised "privacy"? Well, they're obviously pitching to individuals, not companies, and I bet there's plenty of employees at many builders who would scramble for the opportunity. What will happen to companies that submit the RFQs? I suspect they will be subjected to one of Microsoft's fearsome license audits, and will probably end up paying many thousands of dollars in fines. ...And what will happen to the builders and resellers whose employees report the RFQs. Acceptance of the bid quoted below (even without the notice in the bounty offer that "there is no volume licensing program at Microsoft that covers operating systems for new PCs") makes out a clear infringement claim. The vendor is copying and distributing unlicensed software, and it doesn't matter a whit that the customer claimed to have a license, or whether the vendor knew or should have known that the claim was false..... Following is an excerpt from a bid that was recently revised to include operating systems. "The Company has a site license for most Microsoft software including the Windows Operating Systems. The vendor will be responsible for installing a Company image that includes the Windows Operating Systems at no additional charge. Documentation providing proof of the Company's site license will be provided upon award of the contract. All software required to operate or interface with the equipment covered in this bid shall be supplied without additional cost to the Company. Such software includes but is not limited to drivers for hard drives to interface with network software. Windows 98, ME and NT drivers shall be provided, if available. All software drivers should be pre-installed and configured without memory or internal conflicts prior to delivery."But even if the vendor just shipped the OS-free PC, and the customer installed Windows, the vendor may well have contributory infringement exposure. The notice that none of its license cover new PC purchases, together with evidence that 80-90% of the OS-free PC's are subsequently loaded with unlicensed Windows may be enough to impose liability for contributory infringement under RIAA v. Napster. I assume a company can get a site license from MS for 100 boxes, or pay a little more or maybe a little less and get the same license from the box vendor with the software pre-installed, or pay a lot more to get 100 one-box licenses from a software retailer. So MS knows that the buyer of 100 OS-free PCs who didn't come to them for a license, is either infringing or using Linux, and can pick up the phone and call the suspect's headquarters and talk to no one but the receptionist: "Hi, I'm thinking of applying for a job as a secretary, but I need to know if your computers have Windows or something else that I don't know how to use." If it's Windows, they're busted. MS cuts one deal with one customer to nail one vendor on testimony that the vendor knew that the customer was going to load Windows. Even without the testimony, Napster gives MS a sound claim that the vendor "sold equipment with constructive knowledge of the fact that their customers may use that equipment to make unauthorized copies of copyrighted material." Napster, quoting Sony. It doesn't even have to happen -- just the prospect that it might, is going to mostly eliminate the problem. And here's the best part. The big box vendors aren't going to bitch. They'd just as soon take their slim cut on the license as long as they don't have to worry about losing the sale to some other vendor who will sell the OS-free PCs. Before the first Consent Decree, MS dealt with the same problem by requiring box vendors to pay the license fee on every box sold, whether or not the box was loaded with Windows. They may have found a legal way to the same end. Although the vendor is entitled to sell the OS-free PC on evidence that the customer is really running another OS, it's way more trouble than it's worth. John Noble
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