UK Judge Rules COA is Not Evidence of a License

blane.bramble writes "In a ruling against a company selling counterfeit and genuine licenses, a UK judge seems to have ruled that the Certificate of Authenticity is not itself sufficient proof of license possession. This could have major ramifications for UK businesses that consider keeping the COA as proof of being licensed. The quote in question is 'Thus it can confer no license for the use of any Microsoft software by passing on the COA (certificate of authenticity), nor can the COA be evidence of, or itself confer, such a license'."

Comments

Implicit sadness

[Sparr0]

The real problem here is that this judge, if the quote is truly from a judge, implicitly acknowledges the concept of a license to use software, a right that is not (under US and UK copyright law) the copyright holder's to license.

Boiling down my understanding

[hanshotfirst]

The defence argued that if a large organisation, such as a bank, bought a large number of computers and never used the bundled Microsoft software and sold on the licences, that a company such as Digital could sell those licences, for which Microsoft had already been paid.

The judge rejected the argument. "The fallacy in the argument is that if the bank does not accept the EULA [licence] terms [by operating the software and agreeing the terms], it receives no licence. Thus it can confer no licence for the use of any Microsoft software by passing on the COA (certificate of authenticity), nor can the COA be evidence of, or itself confer, such a licence. Thus, provided that the licensing system is enforceable in law, the circumstances exemplified cannot give rise to a legitimate trade in COAs."

I'm trying to get my head around this ruling. On one hand it makes sense, on the other hand it doesn't. My question: if the bank receives no license because it paid money but didn't accept the EULA, then what did it receive for the money it paid?
Possible answers I can come up with:
1. The bank bought a computer, and chose not to use some software bundled with it, the same as if I "bought" Norton Antivirus with a new computer but never used it because I choose to use AVG. Dell won't refund to me their cost of the Norton software just because I don't choose to use it. Arguable, but not overly evil.
2. The bank bought a computer which was probably loaded with an OEM "only for sale with a new computer" license for Windows. The license should travel with the hardware, then. Arguable, moderately evil because of the whole "only with a computer" distinction.
3. ???
4. The judge got it wrong, and the bank should be able to sell the unused license the same as if they bought too many office chairs and sold the ones they never used. Non-evil, but IANAL.
Thoughts?

Dump Microsoft

[Attaturk]

I'm not trolling - we're in the same boat. We still have a few MS machines in our company but we've been slowly getting rid of them over the last couple of years. With Vista, Windows Genuine "Advantage" etc., MS licensing paranoia etc. it's pretty self-evident that simply owning Microsoft licenses is an increasing risk - not to mention added burden on your IT team. Dump them. The alternatives are there and it's definitely worth it, if only to be free from the yoke of oppression. ;-)

Re:Dump Microsoft

[drooling-dog]

At some point public companies that subject themselves to what has become unnecessary expense and legal exposure will have to explain to their shareholders why they continue to do so. Certainly there will be cases where the transition costs are prohibitive, but that's no reason not to be looking into it.

Re:Dump Microsoft

[cyber-dragon.net]

We are in the same situation at my company. Management did an analysis of risk and TCO of running windows, which thanks to me included probability of getting sued by Microsoft, security etc and decided it was not a good business decision to stay with them. And yes, I gave a fair an impartial analysis and was realistic about training and maintenance times caused by the switch. Over the last year we have been slowly replacing all computers with either Linux for engineers or Macs for execs. Well, some of the engineers wanted Macs after the first couple came in too.

Bottom line... we have dropped IT costs in just machines and setup time by about 20k a year, and we are not a large company. It used to take one person an afternoon to set up two windows machines since they had to wipe and re-install to get rid of all the pre-installed crap. Then run bandwidth intensive updates, install and update virus software etc. We could not use an image as the hardware was always just enough different it did not work, but even if we did it would not reduce the time much as a lot if it is updates which need to be monitored.

With Linux we have an image we copy from CD onto the machine which has everything pre-done and bam, one machine out the door in 20-30 minutes (10 of which was getting it out of the box).

The Macs are just as easy... the only thing we install is Office (necessary evil for execs, they MUST have their powerpoint) and that is done via copying a folder and inputting a key. No complicated process. Hell it even picks up our wireless network during install (gigabit landline reserved for engineers) and considers it a native interface rather than a hack like Windows.

Now instead of spending 80% of my day troubleshooting Windows I spend maybe 15% on maintenance tasks and the rest adding value to the company by implementing new things like the VOIP phones that we can use thanks to the network not having so much unnecessary traffic on it, which incidentally is going to save us another $5k a year or so while we pay for the hardware and $10k a year after.

All made possible by dumping Microsoft Windows XP.

Re:When what is?

[Rude Turnip]

"I wondered the same thing. Okay, so when you buy software, you're not really buying the software, you're buying a license (or so they tell us). Fine; but where the hell is the license? What confers it? The purchase receipt? Possession of the original authentic media? The front page of the manual? The click-through license?"

More importantly, how is it that a *minor* (who cannot be legally bound to a contract) can walk into any store, hand over cash and receive a copy of Windows? Won't somebody think of the children?

btw, I'm only half joking, the point being that if any kid can simply buy a copy of Windows in a store, then it's a freaking RETAIL TRANSACTION, not a contractual agreement. Here's another good question...since a software retailer takes copies of Windows into their inventory, shouldn't the supposed "license" be with the retailer and not Microsoft?

What about using paper currency?

[rdmiller3]

Instead of reinventing the wheel, companies could use an existing "certificate" with built-in anti-counterfeit measures... common paper currency.

For example...

To complete your registration, label an ordinary envelope,
"WidgiCorp SuperApp Registration". Then choose a [US]$1.00 bill
and enter the full serial number from that bill: _________________
Press the "Register Now" button to send the serial number.

Put this bill into the envelope and store it with your copy of
the license agreement. This serial number will be added to a
publicly accessible list of registrations so that posession of
this bill will prove that you have licensed this software.

And there you have a counterfeit-resistant, anonymous, verifiable proof of registration.

OEM preinstalled software

[roman_mir]

So my Dell laptop came with WinXP preinstalled and on the bottom of the laptop there is this certificate of authenticity and there is nothing else. Does it mean I am actually not allowed to run the preinstalled WinXP on this machine legally?

Microsoft will use the terms that it sees fit.

[jbossvi]

For those who can't see this coming:
BSA comes to your business for a audit.
-You have COA? we will need to see the receipts.
-You have receipts? we will affidavits from all persons who clicked the EULA.
-You have COA, receipts, EULA's? we will need to see the CD's.
-etc.etc.etc.
repeat till you fail their never ending requirements of Proof of Purchase/Ownership/Bloodletting.

Re:Well, duh

[Anonymous Coward]

The Certificate of Authenticity is just that, it has never been billed as a Certificate of License. Why would anyone assume anything else?

Well, microsoft says so. During their audits, the fact that a business has receipts, cancelled checks and purchase orders for microsoft software isn't sufficient proof of legal software purchase. Microsoft wants the CoA.

Re:When what is?

[Kadin2048]

I don't think it's illegal for a minor to enter into a contract, it's just that their signature doesn't have any weight. It can't be 'illegal' for them to enter into a contract, because as far as the law is concerned, they can't do it. They don't have the necessary legal status (unless they've been legally emancipated).

It's not a prohibition, like selling drugs (where you can do it, but it's illegal), it's just a nullification of their ability to agree to the terms. Thus, anything they'd sign would be unenforceable. That's why credit card companies don't give cards to minors -- you couldn't force them to pay up.

IANAL, naturally...but I don't think that you could endanger the morals of a minor by making them click on a clickthru license (snarky anti-Windows comments go here); however you couldn't hold them to the terms of whatever they "agreed" to, because they can't legally enter into a contract.

Re:Well, duh

[Compholio]

But it isn't true anyway. The COA tells you that your copy is "genuine", not that it is "licensed". For example, if you violate the terms of the license, you lose your license, but you still retain the COA.

Then how do you prove you have a license then? Keep the original receipt? How do you prove you haven't had your license revoked? Oh wait, we're talking about an artificial construct that Microsoft has utter control over and can use to screw you whenever they feel like it.

Re:Out of Context? You screwed buddy

[HTH NE1]

What Microsoft is doing here is taking legitimate software (they made it and they sold it) and by fiat converting it into pirated/counterfeit software solely by stint of how they have their EULA structured. The software hasn't been reproduced, isn't being used by multiple people, in fact the core of the argument rests on the fact that the software has been completely unused prior to the sale.

I thought the EULA wasn't binding until agreed to. Until I install the software or break certain seals, I do in fact own that copy of the software, up until I agree that I don't via the EULA. I don't need a license until I agree to a license that says I need one. It's up to them to put the license agreement between me and ability to use it. And if I never agreed to a license that revokes First Sale Doctrine saying I couldn't resell it, then I sure as hell can resell it.

(And if that flies, expect Microsoft license agreements to be amended with terms that say you agree that all Microsoft software requires a license and cannot be resold so that once you agree to one you've agreed to them all.)

Judge: interesting statements

[MobyDisk]

The judge made some very interesting statements in this judgement:

if the bank does not accept the EULA [licence] terms [by operating the software and agreeing the terms], it receives no licence.

That is interesting. The judge is saying that if the buyer does not agree to the EULA (even if they don't disagree with it -- if they just never install or use the software) that the license vanishes into nowhere. The company does not get a refund, nor do they get the license. That is pretty bizarre.

Thus, provided that the licensing system is enforceable in law, the circumstances exemplified cannot give rise to a legitimate trade in COAs

Whooahhh hold on...!!! So the judge made the ruling under the assumption that the licensing system is enforcable. But he doesn't state that it is enforcable. It sounds like he just told the defendants to claim that the licensing system isn't valid. That is also odd, since the defendent thought they were working within the system, and they weren't interested in challenging it. And the judge wasn ruling about how a system works, but hinting that the system isn't valid. Sounds like he should have let it go to trial.

Re:Out of Context? You screwed buddy

[CerebusUS]

I thought the EULA wasn't binding until agreed to. Until I install the software or break certain seals, I do in fact own that copy of the software, up until I agree that I don't via the EULA

From the article:

The defence argued that if a large organisation, such as a bank, bought a large number of computers and never used the bundled Microsoft software and sold on the licences, that a company such as Digital could sell those licences, for which Microsoft had already been paid.

The judge rejected the argument. "The fallacy in the argument is that if the bank does not accept the EULA [licence] terms [by operating the software and agreeing the terms], it receives no licence. Thus it can confer no licence for the use of any Microsoft software by passing on the COA (certificate of authenticity), nor can the COA be evidence of, or itself confer, such a licence. Thus, provided that the licensing system is enforceable in law, the circumstances exemplified cannot give rise to a legitimate trade in COAs."

So, according to this judge, in the UK, if you don't agree to the licenses, you don't, in fact, own anything, even if you've paid for it.

Kinda scary.

Re:Well, duh

[m874t232]

Because facts have no place in a court of law

No, it's because these are the wrong facts. The COA will protect you against claims that you knowingly purchased a pirated copy, but there are many other facts that need to be established in order to determine that you actually have a license (like the fact that you purchased the software at all).