IP: Re MS offers rewards to system builders who "snitch"

[David Farber <dave () farber net>]

> 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.html
>
> Microsoft 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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