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posted by chromas on Thursday April 26 2018, @04:20AM   Printer-friendly
from the don't-copy-that-floppy dept.

Engadget reports that Eric Lundgren, who ordered unauthorized copies of Microsoft Windows, has lost in appeals court. He had received a 15-month prison sentence and $50,000 fine.

From Engadget:

Lundgren realized that people were simply discarding old computers and buying new ones, rather than trying to restore Windows. He decided to begin manufacturing restore CDs that could be sold to computer repair shops for a quarter each.

[...] However, things began to go downhill after US Customs got ahold of a shipment of these disks in 2012. They charged Lundgren with conspiracy to traffic in counterfeit goods, as well as criminal copyright infringement. The premise here was that Lundgren was providing users with a copy of the Windows operating system on these restore disks, but that was untrue. The users needed to have a previously purchased license, or the restore disks wouldn't work.

[...] While Lundgren argued that these disks had zero value, Microsoft claimed (through a letter and an expert witness) that these were "counterfeit operating systems" and that they had the potential to hurt Microsoft's sales. The pricing was set at $25 a piece, which was what Microsoft claimed it charged repair shops for these disks. The catch here is that this is the price for a fully licensed operating system, not Lundgren's version.

From The Verge:

Microsoft issued this statement to The Verge on the ruling:

"Microsoft actively supports efforts to address e-waste and has worked with responsible e-recyclers to recycle more than 11 million kilograms of e-waste since 2006. Unlike most e-recyclers, Mr. Lundgren sought out counterfeit software which he disguised as legitimate and sold to other refurbishers. This counterfeit software exposes people who purchase recycled PCs to malware and other forms of cybercrime, which puts their security at risk and ultimately hurts the market for recycled products."

The Right to Repair has been hotly debated in recent months, particularly because California proposed a law that would require electronics manufacturers to make repair information and parts available to product owners and to third-party repair shops and services. Seventeen other states have proposed similar legislation. Most major tech companies, including Apple and Microsoft, are opposed to the idea of letting users fix their own devices on the grounds that it poses a security risk to users, which we can see in Microsoft's above statement. Although as Lundgren's case demonstrates, the companies are likely more concerned over a loss in profit than anything else.


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  • (Score: 3, Insightful) by anubi on Thursday April 26 2018, @06:32AM (7 children)

    by anubi (2828) on Thursday April 26 2018, @06:32AM (#672045) Journal

    Let me repost a snippet from above:

    The premise here was that Lundgren was providing users with a copy of the Windows operating system on these restore disks, but that was untrue. The users needed to have a previously purchased license, or the restore disks wouldn't work. ( emphasis mine )

    Looks to me like Lundgren was only providing a replacement disk for the standard restore-to-factory disk commonly shipped with machines. I fail to see anything wrong with what he is doing.

    I feel his "sin" is about like selling a replacement wrench that fits a table saw.

    While the manufacturer claims loss of the sale of another table saw because the customer might have been forced to buy another table saw just to get a copyrighted wrench.

    Stuff like this just fuels my internal distrust of lawmakers by crafting this kind of law.

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  • (Score: 3, Informative) by TheRaven on Thursday April 26 2018, @09:07AM (3 children)

    by TheRaven (270) on Thursday April 26 2018, @09:07AM (#672095) Journal

    Looks to me like Lundgren was only providing a replacement disk for the standard restore-to-factory disk commonly shipped with machines. I fail to see anything wrong with what he is doing.

    The one wrongdoing that he has admitted is that he was printing disk labels that made these appear to be the vendor-provided disks that are usually bundled with the system. If there's a problem with the disks, this makes the customers believe that it's the original vendor's responsibility to fix it.

    The copyright infringement claim is a bit harder to support. These days, OEM Windows installs typically come with a restore partition, but not a physical restore disk. If you buy such a disk, then it costs extra ($25 sounds about what I've seen). End users are able to download restore images from Microsoft if the disk with the restore partition fails (or if they replace the disk).

    He'd have been fine if he'd downloaded the restore images and used them to reinstall when refurbishing a machine and left it with a restore partition.

    He'd probably have been fine if he'd provided an unlabelled disk containing the restore image and sold it as a downloading service (i.e. he was downloading the image on behalf of the customer).

    It sounds as if the thing that tripped him up was trying to sell the burned images as if they were official restore disks. The penalty seems excessive for this, but the US seems to have completely over-the-top penalties for copyright infringement in general.

    --
    sudo mod me up
    • (Score: 1, Insightful) by Anonymous Coward on Thursday April 26 2018, @09:43AM

      by Anonymous Coward on Thursday April 26 2018, @09:43AM (#672098)

      I'll go as far as a much smaller penalty for attempted deception by mimicing original labeling to the extent of misleading a customer as to who made the thing - but withhold the heavy hammer until he dishonors a cease-and-desist from doing *that*. I know I certainly like to know who stands behind what I am buying... you know, sanctity of the brand name.

      Personally, I would be lenient because I am not convinced anything nefarious was involved. Had this been a ruse to distribute malware, I would throw the book as hard as I could throw it.

      IANAL, that's fer sure, but at the price he was asking, it sure looked to me like he was just providing a service to download the re-imaging software onto CDROM for the convenience of those who had misplaced their disk. Kinda like I was more than happy to purchase some LINUX CDROMS, when I know full good and well I could download it myself, but I was more than happy to have a magazine preselect some stuff they thought I would like, and include it as a purchase premium for their magazine.

      I just think the penalty is in *far* excess to the "crime". All this copyright crap is getting so far out of hand over here I am getting embarrassed to admit I have to remit taxes to these guys.

      Here's hoping the international community will get pissed off enough to rein us in. This witch hunt is getting way off of what I consider sane. They allow companies to harvest and share all sorts of stuff on we peasants, but have a peasant harvest and share *their* stuff and they suddenly think they have "rights" to it. They certainly won't honor my rights to data I make. If I try to look at this practically, trying to keep everything I do private, I may as well live out my life in a sealed cave... and if they didn't want their work copied, may as well never expose it to the public. This kinda stuff is about as unenforceable as trying to keep anyone from peeing in the pool or farting in the theater. It seems the powers that be try to find a few and publicly martyr them. What infuriates me is we public sit around like a bunch of sheep watching other sheep go to slaughter, when we should question if those lawmakers passing this law should be allowed to continue in office, or whether they - and the law they passed - tossed out on its ear.

    • (Score: 2) by All Your Lawn Are Belong To Us on Monday April 30 2018, @09:37PM (1 child)

      by All Your Lawn Are Belong To Us (6553) on Monday April 30 2018, @09:37PM (#673934) Journal

      The additional element is that the discs he was generating apparently were OEM issued images, complete to the special company folders. And then some of them were wrong - purported "Lenovo" disc carrying a "Dell" support folder, for example.

      The supplemental emails make it very much seem like he wasn't restoring computers, he was only selling what absolutely appeared to be company-generated repair discs (down to criticizing the punctuation when it didn't match *perfectly*), maybe to other people who were doing the restorations. He was getting $4 per disc.

      And if Microsoft charges $25 for the disc but offers the restore image for free, then a case can be made that the disc version has value - people are willing to pay the $25-$40 to get it on disk even if they could have gotten the download for free. If you can get a song perfectly legally in MP3 form but the LP is offered for sale at $100, does that make a replicated LP copy a) counterfeit contraband, b) copyright violation, c) no crime, or d) something else? I think that's a debatable question even though I have feelings about it (and suspect the law does not support the way I feel).

      --
      This sig for rent.
      • (Score: 3, Insightful) by TheRaven on Wednesday May 02 2018, @09:44AM

        by TheRaven (270) on Wednesday May 02 2018, @09:44AM (#674510) Journal
        There's now a blog up from Microsoft with a lot more details, including copies of emails between him and his colleague. From the way it was reported in the press, it sounded as if he was downloading free restore images and burning copies to give away with refurbished computers that he stole. That turns out to be nowhere near the truth - he and a colleague set up a counterfeiting operation in China to produce disks that looked identical to the official ones and defraud people into believing that they were getting manufacturer restore disks for a discounted price. His intention was to make money by misleading his customers. Absolutely no sympathy.
        --
        sudo mod me up
  • (Score: 3, Insightful) by loonycyborg on Thursday April 26 2018, @10:03AM

    by loonycyborg (6905) on Thursday April 26 2018, @10:03AM (#672104)

    Only his wrongdoing they managed to prosecute is unauthorized copying of windows xp reinstall disks. Something that microsoft allegedly could sell for $25 each. The punishment is most definitely over the top though. Not only did he not sell any actual disks(because shipment got intercepted), but he wasn't even planning to sell them for $25. No real damage was done even if you think that those disks could have theoretically sold for $25 but for a lot less. Such blatantly extreme punishments are definitely incompatible with principles of free society. Government shouldn't have to waste time forcing people to shape their usage of information according to microsoft's whims through overblown punitive damages.

  • (Score: 3, Interesting) by Immerman on Thursday April 26 2018, @01:57PM (1 child)

    by Immerman (3985) on Thursday April 26 2018, @01:57PM (#672145)

    I also fail to see anything wrong with what he was doing - but I do see something illegal. He was making and distributing copies of copyrighted software without a license. It doesn't matter that the software was useless without also having a usage license - copyright still applies.

    Think of it this way - if the software *didn't* need a usage license he'd clearly be violating copyright, agreed? And the usage license has NOTHING to do with copyright, it's an independent requirement imposed by Microsoft. Why would you assume that imposing an additional requirement would remove existing limitations?

    • (Score: 3, Insightful) by requerdanos on Thursday April 26 2018, @05:37PM

      by requerdanos (5997) Subscriber Badge on Thursday April 26 2018, @05:37PM (#672216) Journal

      I also fail to see anything wrong with what he was doing - but I do see something illegal.

      Well, everything here looks nice except for him making counterfeit Windows discs. In my opinion, that's both illegal and wrong.

      Making workbench copies labeled "California Man Presents: Windows Reload CD" doesn't meet that test--if illegal, that would still not be wrong.

      Even the "Criminal copyright infringement" part of it is probably apt for someone making counterfeit software discs.

      Why would you assume that imposing an additional requirement would remove existing limitations?

      It is rather that the license or lack thereof is a pointless and irrelevant side issue, not a primary consideration. The guy was making counterfeit Dell-branded Windows CDs. He isn't Dell. He isn't Microsoft. That's a no-no. What kind of counterfeit Dell-branded Windows CDs, with or without license, is kind of beside the point.

      Having geeks bicker about "Yeah, but [pointless nonsense about licenses]" just makes geeks look bad. Would everyone doing that, please stop. If he had provided counterfeit replacement license stickers, that would be illegal too. He didn't, and wasn't charged with that. All is right with the world in that respect.

      Quoting an article in The Washington Post [washingtonpost.com] where he admits counterfeiting, and that it was stupid:

      In 2013, federal authorities intercepted shipments of 28,000 restore discs that Lundgren had manufactured in China and sent to his sales partner in Florida. The discs had labels nearly identical to the discs provided by Dell for its computers and had the Windows and Dell logos. “If I had just written ‘Eric’s Restore Disc’ on there, it would have been fine,” Lundgren said.

      He is hailed as an "e-waste recycling genius." Okay, he is that, but that mostly isn't what he was prosecuted for.

      He was prosecuted for manufacturing and importing counterfeit commercial software CDs from China. That's the way that works.

      I have done plenty of stupid stuff too; I am not criticizing him. I am just pointing out that due to some regrettable decisions, what he did is both wrong and illegal, and he has only himself to thank.