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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