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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."
It is a common clause in most licenses. Though, it seems that MS is just being a real dick of a corporation for putting up a fight. What would they prefer? BlueLight go to Solaris? Sheesh. (Having said that, they'll probably pay up for all new copies on Windows.)
There isn't much to argue about here - it is an unfortunate fact but the fine print makes it so. Some companies do allow the transfer of software licenses but it is often so expensive it is easier to obtain new licenses and update the software in the process. I wouldn't want to be in their shoes..
I thought that it had been determined that first-sale applied to software. Is that only for home users?
I can't say that I don't give a fuck. I've just run out of fuck to give.
So if you sell your PC with the windows license to another person, say, your next door neighbour, it becomes an illegal copy of windows? or Am I way off here?
Let's say I've got a 500 person company, we've got a couple NT servers, workstations for the employees, etc etc...
If some company buys us, or we merge, do we have to replace all those? Even though we aren't a web operation, we use computers in our day-to-day activities....
IANAL, and IANAB (I am not a businessman)
Yet another reason to use free software...
Does MS have a say in whether or not I can give my lil bro my old PC?
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.
Seriously, when an organisation is being sold as a unit, the vendors' interest in any icensed stuff is part and parcel of the deal, and transferable, just as any other property rights - Microsoft is just trying to do its' usual bullshit.
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
Seems like they can't win. First they have aggressive tactics from Wal-Mart, basically putting them out of business in many cities.
Now Target's making a bid for power, and Wal-Mart is scurrying. KMart is left in the dust. (By the way, at Target, I notice an unusually large proportion of highly attractive women. Could Target be hiring cute 'mystery shoppers' kind of like the 'leaners' hawking cellphones at bars?)
So now Microsoft gets in on the beating. It's just dismal.
...
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.
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Seth
$5 / month hosted VPS on linux = awesome!
They're selling the business unit, not the computers themselves alone. They're selling the owner of the license. If i were a slave and had a license for Windows, and I were sold but the PC was still considered in some contrived manner to be mine and came with me, would I have to relicense? no. Because I'm licensed. How should that work any different for a business unit?
In SOVIET RUSSIA... erm...NSA AMERICA, the Internet logs onto YOU!
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Wow! I never thought that Microsoft would so carelessly sign it's own death warrant! When it comes to business, don't rock the boat. Microsoft is meddling in the business affairs of corporations. It's one thing to piss of the mob. Worse case scenario is they kill you. Piss of a corporation... damn I don't even want to think about it... endless litigations and court appearances so you can keep a job, blacklisting, starving, no home... jeez what a living hell....
!!!!!!!WARNING!!!!!!!
Sorry this post has ended due to the fact it's author is now rocking himself back and forth sucking on the collar of his shirt mumbling
"Ticky Tack, Ticky Tack, Lawyers Coming, Give Me That! Got No Job, Got No Life, Got no Money, got No Wife!"
-=[ Who Is John Galt? ]=-
This is extactly what they want. Go after a company that has no chance of defending themselves in court and set a precedent that it is illegal to transfer software licenses in a business aquisition. Once they have this precedent, they can litigate larger business mergers or aquisitions. Thus requiring them to purchase all new licenses.
Imagine the revenue MS would have recieved if they forced the HP/Compaq merger to purchase all new licenses because they can't be transfered.
MS has 96% market penetration in desktop OS. There is no room to grow that business, unless they can force a legal requirement on businesses to buy more licenses in certain situations. They are obviously trying to "grow" their business.
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
IANAL so I've always wondered about the following: Let's say I have a company and I build a bunch of for-internal-use-only custom modifications of GPL software. That seems fine by GPL standards.
But...
What if I decide to sell my company? The software I've developed is certainly an integral part of the value of my company. Would GPL require me to publish all of the modified source code if I sell the company?
~~~~~~~
"You are not remembered for doing what is expected of you." - Atul Chitnis
Dear World,
IMHO...Microsoft wouldn't be pushing this if Bluelight.com and United Online were textile companies. They are Internet Service Providers and as such, direct competitors of MSN. Microsoft is on a 300M push of MSN now, so they need to disrupt its competition.
Companies change hands all of the time. Have you heard about this happening before? I haven't and suspect that you haven't as well. So, what's he real motivation? I say it is to help MSN by preventing the sale.
Later,
-Slashdot Junky
.
Landfill Mining Co.
Managing the (Un)natural Resources of Tomorrow
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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?
So we have telecoms like Cisco and Nortel selling far too much equipment like routers and switches a few years ago to hundreds of companies that didn't survive the dot bomb. Now they can't move new equipment out into the market because the equipment has been sold off to clearing houses at ridiculously small fractions of their purchase price, then being sold again by these clearing houses to companies still standing for a considerable profit (but still far less expensive than new from Cisco or Nortel).
I'm sure the telcos would just LOVE to include a "cannot resell" clause to equipment purchases, but they can't (can you just imagine some of the other clauses they'd eventually have to put in, "this router cannot be used in the illegal transfer of data, as defined by the DCMA"). Why should MS (or any other software company for that matter) be able to restrict the sale and transfer of licenses, so long as the original owners have no copies remaining? They're no more deserving of assured profit via new product purchases than the telcos are.
MS LICENSING AGENT [on phone, reviewing a file]:
I zee...this is all well and good, but I do not zee your PAPERS. You must have the proper papers! Vere are your papers!? Don't wait for ze phone delay--answer me now!!!
Vos teneo officium eram periculosus ut vos recipero is.
Is the nerve that they have to say this. Basically, what they're claiming is that even thought Kmart paid for the licenses, it can't resell them without Microsoft's consent. This has nothing to do with a EULA - Kmart is not the end user. What Microsoft is asserting is that buying something from Microsoft no longer entitles you to the rights of ownership.
The real reason why this is important is because this was a software sale, not a license. Microsoft sold Kmart the licenses. Unlike most users of Windows, which merely license the code, KMart bought licenses with the explicit purpose of redestribution, and now Microsoft is claiming that Kmart cannot sell what it legally owns, because of copyright restrictions. But Microsoft didn't license the software, they sold it as a commodity. So copyright shouldn't apply.
The society for a thought-free internet welcomes you.
Its nice to have a BSA audit, and take them out back, open up a big cardboard box, and show them the boxes[...]
It's nice to get fucked up the ass by some private organization, acting as though it has the authority to execute a search warrant without probable cause, in order to determine if you have "boxes" (and licenses) to all your copies of Microsoft software? That's your idea of fun? When the BSA knocks on my office door, demanding their audit, I'll slam the door in their face. And when they buy a search warrant from some pliant judge, I'll gladly show them Linux installed on hundreds of desktops and servers. Seriously.
Frankly, given the management hassle involved with MS licensing, never mind the potential risks even if you're legit, you'd have to be an idiot to deploy Windows en masse given Microsoft's current licensing crackdown. I know many organizations who are ripping their MS server infrastructure out in preparation for a potential migration to desktop Linux should the situation get worse. MS is walking on thin ice here. JMO!
--Maynard
"There's only 3 certainties in the world, my Son: Death, Taxes, and Microsoft; and Microsoft makes the first two worse."
Table-ized A.I.
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.
Her bill that she introduced near the end of this legislative session (the companion bill to Boucher's) would formally extend the doctrine of first sale to cover this sort of situation (i.e. once you've purchased a license, you can transfer your rights to another person or entity without the permission of the copyright owner). Then we wouldn't even be talking about all this.
Tuck
Tuck's Journal.
Maybe this will provide a good test case with lots of money on both sides.
:-)
Yeah, except for the fact that one company is bankrupt and the other is Microsoft. Boy, bet that would be a fair fight.
And the masses cried out, "09 F9 11 02 9D 74 E3 5B D8 41 56 C5 63 56 88 C0!"
Such non-transferable license agreements will never stand up in court.
Reselling licensed software is no different than transfering ownership of a legally purchased music CD.
Last time I looked, second-hand record shops have been alive and well for decades.
US Court says buyers can unbundle EULA-covered software.
Also take a look at this very well argued thesis on the same issue. Same paper in HTML format
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.
Kmart asked the court to overrule Microsoft's objection, saying the licenses the software maker referred to were not part of the sale. Kmart said the sale included one server license and 25 desktop licenses it bought from Microsoft.
It sounds like Kmart and Microsoft agree about what Kmart can or cannot do with the licenses and that it was merely a case of KMart not specifying that the licenses being talked about were not part of the sale.
Mmmm.. Donuts
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Just a little reality check; there is plenty to argue about here. What almost everyone in this thread seems to have ignored (and what makes the case interesting, despite the tiny dollars apparently involved) is that this is a bankruptcy proceeding. The question is not whether you or I can resell our MS products under the EULA, it's whether a bankruptcy court chooses to ignore the alleged "license" and deem the software an asset of the estate.
It is important to remember that Bankruptcy Courts, unlike ordinary courts, are not required to attempt to enforce the will of the parties to a given contract. Rather, they are supposed to look through the contract and determine whether the terms, as written, create a fraudulent (or otherwise voidable) conveyance. Consider the following: I know I am going bankrupt, but I want to save my Ferrari. I agree to sell it to you for a dollar. You agree not to sell it to anyone else for a year and to sell it back to me in one year for 100 dollars. In return you get the use of the Ferrari. We sign the contract, title passes to you and I declare bankruptcy. A year later I have discharged my debts, I'm free and clear and I enforce my contractual right to buy back my Ferrari for $100. Right?
Wrong. Such a contract would be voided by a Bankruptcy Court and you'd have to give up the car. You'd probably even lose the dollar you paid. The car would become part of estate and would be sold. The money would be used to pay creditors. This is called fraudulent conveyance. It's pretty complicated (and dull) and I can't begin to give all necessary details here but what is interesting about this case is that a court will decide whether the material effect of a purchase of software if to transfer ownership or merely to create a license right, regardless of the language in the EULA.
IAAL, and my guess is the Court will punt on it and come up with other reasons to permit the transfer.
"The true administration of justice is the firmest pillar of good government." - George Washington
Remember when Adobe sued that guy for breaking up the Adobe packaged software and sold them individually. Adobe sued for voilating the license. The judge ruled that the seller had the "Right of First Sale" and was permitted to sell the software.
The same holds for K-Mart. They own the software licenses, they have the right to sell their license to anyone, and I am confident the court will hold as such.
Do you recall a MS FUD campaign having to do with donating PCs telling recipients not to accept the PCs without the software licenses that go with it? Aren't these licenses ALSO non-transferable or am I missing something?
For MS to warn people against accepting free hardware without the software would seem to be encouraging piracy somehow wouldn't it? After all, MS clearly does not respect license transfers. So in the end, MS has been telling people to require non-transferable licenses and to operate these donated PCs illegally.
Makes ya wonder doesn't it?
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."
Obviously it depends on if K-Mart management had agreed in writing with a Microsoft sales representative to a specific license which explicitly removed the right of transfer for a reduced price. This is possible, in which case they should, under normal circumstances, have the right to license their copyrighted work with this restriction. However, if the set of licenses are OEM and bundled with each individual machine (the hardware as a product purchased from a vendor) on purchase, and further they were purchased without a clear and written contract signed by both consenting parties, then I think MS doesn't have a leg to stand on. Finally, I think it's very fishy that a convicted monopolist is invoking restraint-of-trade clauses in their shrink-wrap and bundled licensing deals as an impediment toward transferring a software asset legally purchased. Any contract lacking reciprocity or a misrepresentation of terms is null and void even if signed by both parties.
All this said without a law degree or any experience practicing law. Correction(s) by real lawyers encouraged.
--Maynard
Back about 10 years ago, the New York Times did a piece on a firm of lawyers in Texas that was particularly (ie vicious and nasty) respected because they could put anyone away with their particularly hard-hitting tactics, like depositioning the executives of a software firn to death while their business went to hell. The firm's initials were B & B. They developed these tactics about transfers of software to other firms in various deals. A certain insurance company had licensed software from a big software company. The insurance company got into financial trouble, divested some subsidiaries, and then outsourced its data center to a firm that was not the author of the insurance system running in the data center. B & B showed up representing the company that marketed the system and sued. During the trial, the people who had 'written' the system testified that they had copied it directly from a system put into the public domain by IBM, but B&B managed to 'win' the case by forcing both the insurance company and their data center outsourcer to surrender under the legal onslaught.
Kmart said the sale included one server license and 25 desktop licenses it bought from Microsoft.
All this over 25 licenses? Who cares about 25 licenses? This isn't even worth the "evil lawyers" fees?
There has got to be more to this story. Maybe Microsoft legal just sends out a boilerplate document and objects to any and all Chapter 11 filings. I'd like to know more about this story if anyone has more details.
Stories like this are great to save in my file and drag out for the next Open Source vs. Proprietary Software license debate.
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.
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
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.".