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Microsoft: You Need Permission to Sell Our Software
IEEEmember writes "Microsoft has objected to the sale of bankrupt KMart's Bluelight.com Internet unit to United Online. Microsoft's objection to the sale is based on the non-transferability of software licenses protected by copyright law according to the Reuters story on Yahoo! News. This action by Microsoft should serve as a warning to any corporation that has a significant investment in Microsoft licenses. Dependency on Microsoft licenses may grant Microsoft the ability to veto your business decisions."
Sure, pick on the company with no money to fight you in court. Why don't you dunk them in salt and kick 'em in the bleeding, festering wounds while you're at it?
If this stands, Microsoft has successfully become the deciding party in all major corporate mergers and aquisitions. Who is going to buy another sizable company knowing that they'll be forced to relicense all of their software?
Talk about extending your monopoly.
IMO, nobody at Microsoft believes that they will lose in the long run, and that's made them both overcomfortable and vulnerable. The more they tighten their graip, the more syste^H^H^H companies will slip through their fingers.
Every year during my review, I just pray the words "slashdot.org" aren't mentioned.
Sorry attempt at FUD. It is Microsoft and other companies. The story relates something to the effect that the objection was over not only software licensing, but tax issues. Whenever a big public corporation sells part or all of itself, there is always someone who objects. The story just stated that Microsoft opposed it because KMart hadn't made clear what licenses were to be transferred to the buyer. Its just a bunch of companies looking to make some money off the transaction, and it just happens to include Microsoft.
A good warning to people to actually pay attention to what these travesties actually say.
When my former employer went belly-up they sold licenses as they were assets of the company. What Microsoft is, in act, doing is making their software a non-asset, consumed immediately and utterly worthless beyond that. That's a pretty piss-poor business plan, for both parties.
A feeling of having made the same mistake before: Deja Foobar
If Microsoft can step into business decisions when their software is included in business deals then they technically could step and stop almost all corporate mergers. If that is true then someone needs to start challenging these copyright and EULA laws.
First sale only applies in cases where it is not time/cost effective to litigate otherwise.
Unleash the hounds!
Fnord
Obliteracy: Words with explosions
According to the OEM EULA with Windows, the copy of Windows must remain with the hardware. The license is forever married to the box it came with. Microsoft caused a big stink about this a month or two ago, warning schools about accepting donated hardware.
Now Microsoft is saying that normal licenses can't be transfered because the software is copyrighted?
It was my understanding that a license was an asset. You owned it and you could transfer it. Something isn't sitting right with me here. There must be more to the story that's being left out. (Yea, I know, Microsoft is the Evil Empire. However, I still think there's more than meets the eye going on here.)
I was not touched there by an angel.
The article really doesn't provide enough information to make the assumption that Microsoft is making an unfair business decision on this point. It's entirely possible that Microsoft sold licenses based upon support contracts or a subscription-based service offered only to K-Mart, or possibly even custom code to drive the site. Without this knowledge it's difficult to make a valid assumption as to whether or not Microsoft is being unfair with this particular dispute.
This is probably the same reason Microsoft is objecting, with a business that large it's hard to keep track of all of your clients and what exactly they have from you. Would you allow a company to sell 10,000 licenses for software that you had given them on the basis that they were maintaining a multi-million dollar support contract with you? I don't think so, and though it would be up to the company to make sure the support contracts were upheld, this would only be the case if they were notified of this dependency and paperwork was filed, etc.
Microsoft may very well be in the right in saying "Hey, you should tell us what of our intellectual property you're selling before you sell it."
If there is a God, you are an authorized representative. - Kurt Vonnegut Jr.
You would be transfering a legal entity, thus making your 500 person company a part of a larger corporation, any agreement your 500 person company has is just as valid as it was before, since it still technically exists. For example, the company I work for has one prefered company name and three aliases from aquired companies which are still used in some cases by vendors. All are valid legally speaking.
Bluelight is part of K-Mart, K-Mart owns the licences for bluelight's computers, K-Mart can't sell the rights to those licenses when it sells Bluelight.
Yeah.
There's plenty to argue about.
Is this a fair or unfair clause? Is it really enforceable? Can the licences be transferred indirectly as part of a merger? Is MS abusing their dominant position? Is it actually a breach of copyright if you sell them the machine that has Windows installed, or is this covered by the first sale doctrine?
The argument about whether EULAs are enforceable at all is probably moot since they most likely did actually explicitely purchase licences rather than boxed products, but there's plenty to talk about.
Does the Microsoft EULA state that you cannot sell the license? Then what are those things I see on ebay? If those are legal then I don't see why Kmart is being targetted. Just becoz it si bankrupt? If Kmart is wrong then so is Ebay. Boy Microsoft always chooses enemies, which it can win over!
I understand. Since you put it this way, I have to agree with Microsoft's position. And, I believe they should have contracts signed by someone from KMart. Or are their Open and Select licenses click-through as well (bad decision if they are, IMHO)
I can't say that I don't give a fuck. I've just run out of fuck to give.
Therefore, are licenses no longer an asset, and instead a liability?
Functionally, the standard purchase license is like toilet paper. It has value until it is used. That may not be the way it is treated tax wise, but that is the way it is value wise. To that end, software purchased for use by a company should be immediately depreciated to value $0. To do otherwise is not marketwise correct. The license proves that point.
Ok, one three, everyone flush. 1...., 2.....,
In a place beyond time and space, in a land far better than this, look for me there...
From what I gather, this isn't specifically a EULA issue in that the 'end user' agreement wouldn't necessarily state anything about this. I'm going out on a limb to guess that - as with most big companies - Kmart negotiated a blanket licensing deal with MS. THOSE terms most likely dictate that in consideration for 'less than market rates' for the software, certain terms apply. If Kmart actually paid 100% 'retail' price for each desktop, each SQL server, and everything else, they could probably simply abide by the 'transfer' clause in the standard EULA (you can transfer, but remove the original copy on first machine). I don't think anything's that cut and dried when you're talking millions of dollars and MS (or any other sufficiently large software house - could you easily transfer millions of dollars of Norton AV from one company to another? Or Adobe stuff?)
creation science book
Wel, no. Because of the terms of the EULA which state that you may resell or give away said software in its entirety. Group licensing is different. The end users don't have to click through a EULA at all. All license terms are negotiated at time of sale, by lawyers.
If you fall off a building, go real limp, because maybe you'll look like a dummy and people will be like hey, free dummy
No, it's because on eBay, Microsoft is losing a $100 sale. The KMart site is a hundred thousand dollar sale. They pick the battles that they care about.
That said, I think part of the license that you hold (you don't own the license, you license the software: the money you pay is to have the opportunity to abide by the license) says that the license is exclusively between you and $big_software_company, and that you can't transfer it to someone else. So you've paid to adhere to that term. Fun, eh?
Although the article is light on details, I would guess these are not regular boxed copies of microsoft software.
:)
Many people are asking if this means that they can not sell their copy of windows. These are completly different situations. Kmart probably didn't buy a truck load of boxed copies of windows. They licensed the software at a significant discount (a discount because of the quantity they were buying AND because of the restrictive agreement).
I work in the California State University system (CSU Chico specifically). Due to budget cuts the state had to discontinue the site license they had with Microsoft, fortunetly part of the contract was that any computer that already has the software on it when the contract ends, gets to keep it. Needless to say, we upgraded all of our computer labs from win98 to win2k and from office2k to officeXP over the summer
I believe the question is who actually owns the licenses.
If Bluelight owns the licenses then it's a non-issue - they own the license, they're being sold, and the computers are moving with them. There is no transferal of license.
If, however, K-Mart owns the licenses then it's a question of tranferrence - now K-Mart is selling a business unit and a bunch of computers which are not owned by the business unit. That's legally shaky, at least if you follow the EULA.
There may be a bigger question of whether or not the EULA is enforceable, but I suspect MS's lawyers will ensure that that question never comes up. If it does, expect them to drop the case suddenly.
You obviously don't know what monopolies and anti-trust actions are all about. Although this kind of situation is unlikely to stack up evidence against Microsoft (because other companies have similar licensing policies), you need to realize that the very fact that Microsoft has a monopoly prevents businesses from being able to choose more license-friendly alternatives.
Try this comparable situation to understand better. Say that you live in an area where one company has a total monopoly on heating oil, gas, electricity and HVAC equipment. You get ready to sell your house, and the giant power-monopoly tells you that the furnace, hot water heater, supply lines, storage tanks and ductwork can't be considered part of the sale, based on the contract you had to sign if you wanted heat and power in your house. They also put an unreasonable price tag on "transferring" these assets to another owner.
My guess is that with Blue-light, there weren't lawyers reading all of the software EULAs. They probably just clicked "accept" like everybody else. What choice did they really have?
GreyPoopon
--
Why is it I can write insightful comments but can't come up with a clever signature?
Sorry guys, this is a no brainer. Just ignore it. If more people would start doing this then EULA would become useless. Software patents would be null and void, stupid concepts like software licenses would become a mute point.
Here is how it works in my world. If I buy it I own it and that is the end of it. I pay you money for say office xp then it's mine. No some stupid licenses, not some some piece of platic with dimples in it. Office XP is mine. Mine to do with as I please and that is excatly how I operate.
It's about licensing, nothing else.
The whole idea is that you cannot pick up 10,000 cheap copies of Microsoft software when a company goes bankrupt, and then charge the full proce for it if you were reselling the MS products individually.
It's standard procedure in the software licensing business, and K-Mart was well aware of this when purchasing the license.
Oh, I can't help quoting you because everything that you said rings true
That's exactly true. Of course, there are two different types of licenses I find: the first is the server/admin/software license. Typically this is what comes with the software in the form of a serial-number, or key, or product-key, etc. So when you buy the software on EBAY, you are buying the software and the one server/product license that comes with that software. Next, is the seat license, which many break down into named and unnamed (this maybe review for some of you), but essentially this is the HIGH, HIGH, HIGH margin sale. Now, what would be awesome, (see earlier post in thread about web-site), would be to tell these companies that the licenses I'm about to purchase are "universally transferrable" so I can sell the seats on ebay, transfer to a subsidiary, store in a database and use throughout my conglomeration. This is really a take-off on how the refining companies sell energy credits, but I would love to see in the IT industry. Would it be nice to go into the open market and buy say 1000 seat licenses for Oracle 8i?
"This isn't a study in computer science, its a study in human behavior"
If you could buy 10,000 cheap licenses somewhere, chances are that your would-be customers could, too. That's what's called a "free market." :)
What's this Submit thingy do?
A license is a right to do something. You don't automatically have a right to sell your rights.
Do you have a driver's license? Can you sell me your drivers license (if I've lost mine?) You could sell me the piece of plastic it's printed on, but you would not be selling me the privlege to drive, and if I were pulled over the authorities would not allow me to use your drivers license to assert your privleges for myself.
(On the other hand, if all I needed was a piece of plastic to pick my teeth with, I could buy the plastic which represents your drivers license and use it as I see fit.)
The analogy to the sale of Microsoft products on Ebay fails only because (unlike the traffic cop) Microsoft has no effective way to tie the "License to Use" to a person (or a computer) and instead ties it to the media. Having the media allows you to "fool" the enforcement mechanism and assert a privlege to use the license in a way which (Microsoft claims) you do not have.
But that's where all the Passport, Palladium and .NET stuff comes in. Once they know that Mr. Ebay Seller's license number is tied to Mr. Ebay Seller's passport account, they can prevent Mr. Ebay Buyer from making use of the license he bought on Ebay. Mr. Buyer will instead have to buy a new license from Microsoft.
It makes me wonder; perhaps they already have that information and all the people who bought M$ software on Ebay (or obtained it through other license transfers) will one day wake up to find they can no longer use their license, and must buy a new one. Or the related question; if Microsoft asserted that my license key was registered to someone else, (and thus, I had no license) would I be able to prove they were wrong? Even if you bought the software legitimately, are you sure no one copied-down the license key before you received it?
The thing about things we don't know is we often don't know we don't know them.
What does M$ expect to get out of it?
Remember, MS owns MSN, an ISP.
If BlueLight gets sold, it's possible whomever it is sold to will become a competitor to MSN. We all know how much MS likes competition...
This is MS bringing out their 200-ton anti-competition stompy-foot to kick a tiny competitor while it's down.
And how it is different from a grocery store buying 10,000 gallons of milk from farmers and reselling them one gallon at a time, neatly repackaged and at higher relative price?
So, they're holding up an $8.4 million dollar transaction over a transfer of licenses worth, what, $10,000? Less?? Someone's priorities are screwed up here - KMart should just throw those licenses on the floor.
To a Lisp hacker, XML is S-expressions in drag.
I would've thought MS would want CDs with IE and OE to be spread around. I'm sure they'd prefer that to bluelight sending out Mozilla CDs.
If I bought bluelight from kmart and MS stoped me from sending out CDs with IE and OE I wouldn't mind at all. No OE among my subscribers means less helpdesk calls caused by worms and viruses.
You make the mistake of thinking you can educate the fundamental stupidity out of people. You can't.
In fact, I gather that the spokesperson from Microsoft has claimed that they can block the transfer of these licenses because of copyright ownership rather than simply claiming commercial contract law.
This is very interesting, because commercial contract law is of course subject to local interpretation, and in fact is often far weeker than it may appear. Contracts that are adhesive, or where the buyer had no choice but to enter, may be expediatically nullified in full or in part by an honest judge. When a monopoly is involved, and hence where there is no alternative choice available, courts can interpret any agreements engaged in as potential agreements of adhesion, depending on the broad mindedness of the judge.
To stake a claim on copyright, however, has other dangers, or similarly to claim that copyright and commercial contract law can be mixed together to form restrictions that neither provide seperatelym or to deliberately and fraudulently take away fair use rights and commercial right to second sale. This is often referred to as misuse of copyright. In fact, the one means by which a commercial entity can be stripped of it's existing copyrights is through a successful persuit of a misuse of copyright case against it.
Of course, it doesn't take much courage for a bully to pick on a bankrupt company. Nor does it seem to take much courage for Microsoft to try and use terror tactics to convince other's that Microsoft's incorrect and invalid interpretation of copyright and contract law are somehow valid.
Overall, I am simply disgusted.
"The Court understands fully why licensing has many advantages for software publishers. However, this preference does not alter the Court's analysis that the substance of the transaction at issue here is a sale and not a license," Judge Pregerson writes. If you put your money down and walked away with a CD, you bought that copy, EULA or no EULA. http://www.linuxjournal.com/article.php?sid=5628
Microsoft has hereby succeeded in defining software as a service instead of an asset, which is what they've been trying to move towards all along because it represents a more lucrative revenue model than selling something that can be used and used and used until you get decide you want something more.
It will be interesting to see how this plays out in the long term.
Fundamentally there's no reason why a bunch of instructions on a hard disk cannot be used a whole heckuva a lot more than till the next upgrade cycle. Neither is there any good reason I can see why it can't simply sold outright to someone else that wants to use it. Of course, when Palladium and hardware locking becomes tighter, time-bombed software will make it easier for this model to be enforced. Meanwhile, there's growing quantities and quality of free software that can be run AS MUCH AS YOU LIKE!This will mean that many current businesses may be severely overvalued. Their true worth in sale will be much less if critical parts of their infrastructure are not transferable.
You think Qwest's recent $4e10 write-down of its networks is large? How much have businesses invested in Microsoft software?
"Provided by the management for your protection."
Well MS certainly says you can't, but that doesn't mean that you're not legally allowed to. A corporation is under ZERO obligation to inform you of your rights or even to tell the truth about what you may or may not do in the license. It's somewhat like my the contract I signed as a condition of employment. Much of it is standard and reasonable, but a whole lot of it is completely unenforceable and would never stand up in court. It's just in there because the company figures that it will influence the behaviour of some.
I'm not saying that you ARE allowed to sell the MS software on a Dell under US law, but just because it's in a license doesn't make it so.
.
. --- If you're looking for free e-mail you won't find it here! http://www.noemailhere.com
Correction, driving is not a right, but a privilege, hence, one can never sell their driver's "license" as it is not really a license in the same sense as software licenses.
Whether or not KMart licensed the software or bought shrink-wrapped copies is not mentioned in the article, nor is it the fundamental issue. The real issue I have is with the statement "...products are licenses of copyrighted materials and, therefore, may not be assumed or assigned with Microsoft's consent." This quote tends to suggest that Microsoft believes that they still have the right to control the sale of their software not because of the license agreement, but rather because they own the copyright on it. Microsoft says nothing of compliance with the license agreement, instead focusing on copyright law. According to first sale doctrine, the copyright holder is only entitled to compensation from the first sale of a copyrighted work; it appears as if Microsoft believes they are entitled to compensation for every sale of their software.
The society for a thought-free internet welcomes you.
I'm confused. What is the problem with using a GPL'd binary? If I'm looking for an alternative to Word, I can use AbiWord or OpenOffice.org Writer. I don't to worry about licensing issues because I don't intend to modify the source.
The real strength in these products is when you can use the product WITHOUT needing the source. You get the 'free as in beer' part and you don't need to worry about the 'viral nature of the license' because you're not writing any code for it.
My father is a blogger.
1. get a tax write off for the value of the software
2. Dump the software, boxes, manuals, etc. on MS corporate hq.
3. (optional). have a bonfire.
When travelling, it's ok if the airlines lose your emotional baggage.
Why, YES! Yes it could!
Get OpenSource and the problem goes away! Gee, wasn't it Mr. Balmer who was bad-mouthing OpenSource? Small wonder, now we see the evil plan unfurl like a roll of used toilet paper.
A feeling of having made the same mistake before: Deja Foobar
I've been selling technology for a while and four things really have bothered me about software:
1) It's almost always overpriced.
2) It generally is oversold and doesn't deliver.
3) There's no consumer recourse if it doesn't work.
4) The license "agreement" is usually total unfair to the customer.
Say what you will, but why do I want to pay too much for broken software that doesn't do what it's supposed to do that ties me up with strings like Gulliver? This is just another example where KMART/BLUELIGHT/Whoever:
1) Paid too much for their software
2) It was oversold
3) It underdelivered
4) The license is hosing the buyer
Enough already. Don't these people know the number one rule for a parasite is not to kill the host!?
$G
-- $G
>Actually he is correct. You are paying for a LICENSE to use the software.
No, I'm paying for the software itself. If I walk into Best Buy and purchase a copy of office and a copy of the latest Harry Potter book, I have bought the exact same rights to both. A EULA is no more enforcable than a seal over the book saying that if I broke it, I agree not to resell the book.
>You do not OWN the software.
Yes, I do. I own exactly one copy of the software to do with as copyright allows.
>You can only do what the license allows you to do. You cannot do anything you please.
Says who? Unless there is a signed contract somewhere, I retain *all* of the usual rights of a purchaser of a piece of copyrighted material.
>It is not like buying a book. You actually buy the book. Whereas, with software, you are merely licensing it.
I'm sure that software companies would like us to believe that, but it's simply not true. If I lay down my money and walk out of the store with something, I've bought it.
>Go pull out your EULA that came with the software that you just "licensed" (not bought!)
I don't care what the EULA says. I didn't agree to it before the purchase, so it's not a binding contract.
-- Give me ambiguity or give me something else!
If I did have the right to do X, but the license says I didn't, and their salespeople said I have to pay $Y extra for the right to do X, they'd be lying to me as an inducement to buy. Why isn't that fraud?
Thing is, KMart isn't selling the licenses. It's selling bluelight.com, the entity which licensed the software. It seems to me that the licenses should, under conventional law, remain with the entity that holds them when it's sold to someone else. For the licenses to stay with KMart, bluelight.com would have to transfer the licenses to KMart.
MS may have made a mistake pulling this during a bankruptcy proceeding where the judge has a lot of leeway in saying "This is the way it'll be.".
Ought to sit up and pay very close attention here. Build a company...base it on .Net or other MS technology. The board decides to sell the company. When MS steps in to *block* the sale...someone's head is on the chopping block -- in a big way. Remember, corporate politics is all about CYA .
Another reason for OS solutions.