How does copying free-to-download software land you in prison?
It takes a strange turn of fate to be behind bars for duplicating something you can get for free online. In this case it also took a set of aggressive actions by Microsoft to pursue and support these charges, and use widely-criticized tactics to maximize the sentence.
Microsoft was instrumental in bringing the case to criminal court.
Microsoft claims that they did not bring this case to court, but it is clear this case was brought because of their actions.
Microsoft was heavily involved and supported the Department of Justice’s move to pursue a criminal conviction of Eric Lundgren. Microsoft claimed the value of a "Dell Restore CD" to be $299.00 in order to justify bringing this case. It was later lowered to $25 per disc during trial. But the restore software is easily accessible online for millions of users and given away from DELL for free as seen HERE.
For the trial, Microsoft flew an employee from Ireland who misrepresented the functionality and valuation of a Dell Restore CD, testifying that the free restore media has the same value and function as a newly-licensed Microsoft Operating System, a key factor in the sentencing.
It’s defies logic to assert that a successful business-owner was trying to run a profit-making scam involving free-to-download software.
Mr. Lundgren's intent was neither to make money nor to lose money though this venture. His intent was clearly attempting to help people repair computers, something he is well known for.
He sourced hundreds of legal parts and tools to fix and repair electronic waste while operating a company in China called Source Captain, Inc. Eventually, he brought his experience back to America and founded the first Hybrid Recycling company in America, which recycles more electronic waste in a single year than Microsoft has in the past decade. Microsoft’s claims that this was intended to be some kind of profit-making scheme don’t pass the smell test.
Microsoft also claims in their statements on this case that "Lundgren went to great lengths to mislead people," and that "Lundgren established an elaborate counterfeit supply chain in China."
The product was exactly what was requested, so it is unclear why Microsoft would claim this. The person who contacted Lundgren to order this product (Bob Wolff) informed Mr. Lundgren that a refurbisher wanted to make copies of the freely available online repair tool in order to mitigate any customer service issues. The buyer was well aware of what he ordered and nobody involved thought it was a criminal offense. In the end, the refurbisher chose to make his own copies of the disk due to the large quantity of different models of laptops that he received. The idea that copying discs involves an elaborate scheme likewise doesn't hold water.
No discs were ever sold, anyway.
Mr. Lundgren had intended to sell the disks for ($0.25) to cover shipping and manufacturing costs, though these discs were never sold. His goal was to make a self-perpetual system that would allow consumers to receive free physical access to the commonly and freely available online repair tool. Even though freely accessible, many consumers did not know how to find, download and burn to disc this freely and legally available restore tool back in 2011.
He wanted to make the solution to fix your computer easy and convenient for all consumers so that computers would be used rather than thrown away. Unfortunately, this would result in consumers buying fewer computers and operating systems from Microsoft. In court, Microsoft citing their concerns about the loss of future sales.
No one should go to prison for copying labels.
Microsoft has tried to claim that Mr. Lundgren knows he was guilty because he plead guilty to two of the 21 counts against him. But Mr. Lundgren only plead to the same thing he informed law enforcement of since the beginning: Duplicating commonly and freely available Dell Restore CDs, without the licenses. As TechCrunch writes:
Microsoft does not sell discs. It sells licenses.
Lundgren did not sell licenses. He sold discs.
These are two different things with different values and different circumstances.
I don’t know how I can make this any more clear. Right now a man is going to prison for 15 months because these judges didn’t understand basic concepts of the modern software ecosystem. Fifteen months! In prison!
Due to Microsoft's involvement over the course of five years, the DOJ issued 21 generic federal indictments. Mr. Lundgren was facing 57 years in prison and $8,370,000.00 in fines. Mr. Lundgren was told by his lawyer that even though there were no victims and no damages, it would be nearly impossible to win all 21 federal indictments. His lawyers advised him to take a plea deal as 98% of those charged do regardless of guilt. Although the prosecutor attempted to get Mr. Lundgren to plead guilty to counterfeiting licensed operating systems, Mr. Lundgren would only agree to pleading to his actions; duplicating commonly and freely available Dell Restore CDs.
Microsoft refused to deescalate.
While Microsoft claims that Mr. Lundgren refused to stop after being warned, he never got a warning, and in fact Microsoft has refused to come down from their aggressive actions.
The first "warning" Mr. Lundgren had came in the format of an armed raid at his home, when armed agents in masks stormed his property in California and detained a senior-citizen couple staying at his house.
Again TechCrunch notes:
This case has been ongoing for years and Microsoft has supported it from start to finish; it has as much sentenced Lundgren to prison for a crime he didn’t commit as the fools of judges it convinced of its great “pecuniary loss.” I expect the company to push back against this idea, saying that it only had consumers’ best interests in mind, but the bad-faith arguments we have seen above, and which I have heard directly from Microsoft, seem to suggest it was in fact looking for a strong judgment at any cost to deter others.
If it was possible that Microsoft was not aware how bad the optics on this case are, they’ve been warned over and over as the case has worn on. Now that Lundgren is going to prison it seems reasonable to say that his imprisonment is as much a Microsoft product as the OS it accused him wrongly of pirating.
You don't need Microsoft's permission to be a "legitimate refurbisher."
In response to criticism on the handling of this case, Mircosoft defended themselves, by saying "Microsoft has a strong program to support legitimate refurbishers and recyclers."
Microsoft is speaking of it's Registered Refirbisher (MRR) program, where it sells new licences to refirbishers as they repair computers. The program is controversial because Microsoft requires that participants re-purchase Windows COAs (Certificate of Authenticity) for computers which mostly already have a COA.
The most common interpretation of these licences is that they follow the hardware in perpetuity until the hardware's demise. In that interpretation, purchasing a new COA is unnecessary. Microsoft, over the years, had waged many legal battles to sue refurbishers who held to that interpretation, and many joined the MRR program to avoid hassling lawsuits.
However, by requiring that Microsoft Windows be re-purchased, this program has the effect of eliminating the economic feasibility of refurbishing low-end laptops and PCs. These low-end machines would become premature electronic waste.
Microsoft's official refurbishing program is just a fraction of the market.
The MRR represents less than 18% of the recycling and refurbishing industry. There are 50,000,000 tons of electronic waste produced every year. In the last 12 years, Microsoft has quoted that they recycled 12,000 tons (11M/KG as stated on the Microsoft blog). This is literally less than a few percent of the overall product production. Microsoft, the 28th largest company in the world, recycles less than 0.03% of the world's electronic waste generated annually.
More recycling and refurbishing options are clearly needed to handle the world's electronic waste. Instead of trying to block those efforts, and punish recyclers, Microsoft has a key role to play in dealing with our waste problems. That's why it's critical we stand up for repair.