Software

E-waste recycler gets prison time, $50K fine for selling free Windows software copies

Microsoft cooperated with federal prosecutors to imprison Eric Lundgren for 15 months for 'counterfeiting' software it provides for free online.

Building a slide deck, pitch, or presentation? Here are the big takeaways:
  • E-waste recycler Eric Lundgren duplicated Windows recovery disks to re-sell at cost to computer refurbishers, for which he received a $50K fine and 15-month prison sentence.
  • Microsoft and OEMs provide Windows downloads for free on their websites.

Eric Lundgren—the electronics recycler accused of counterfeiting Windows recovery discs—has been sentenced to a 15-month federal prison sentence and $50,000 fine, following the loss of his appeal in an appeals court in Miami.

Lundgren's assertion that the recovery discs, which are intended to "keep eWaste out of landfills by empowering consumers to repair their legally owned property," was not accepted by the court, which reaffirmed a lower court's ruling against Lundgren "without hearing oral argument in a ruling issued April 11," according to a report in the Washington Post.

Lundgren's saga with the courts is a particularly odd one, given the nature of the alleged crime. Lundgren manufactured recovery discs for use with Dell laptops, which were intended for sale to other computer refurbishers, for the purpose of bundling the recovery disc with a refurbished computer. The manufactured discs are duplicates that bear the Windows and Dell logos, and are "nearly identical" to the labels from the original Dell recovery discs, according to a Los Angeles Times report. Including those logos is counterfeiting—which Lundgren pleaded guilty to—but this is a separate problem of counterfeiting software.

The primary issue here is conflating installation media, and the Windows software license. Without a license key, attempting to install Windows from the recovery disc results only in a feature-limited, 30-day trial of Windows, prompting the user to either input a valid license key or purchase a license online from Microsoft.

SEE: Hardware decommissioning policy (Tech Pro Research)

Lundgren only produced recovery discs, he was not producing, or claiming to produce, Windows licenses. The CDs in question were intended to be sold to refurbishers at cost, for 25 cents each, so they could be provided to purchasers of used computers, the Washington Post report said. According to Lundgren, in an email with TechRepublic in March, none of the CDs were sold, as all of them were confiscated.

To further add to the problem, Microsoft freely provides downloads of Windows on their website for computer owners to reinstall Windows for any reason. PC OEMs, including Dell, do the same. Historically, original recovery CDs have been bundled with computers, at the time of purchase, though (ironically) in a move to reduce e-waste, PC OEMs have begun distributing physical media only on request, urging users to download the software instead. OEMs are permitted to charge a convenience fee for the media, but this does not include a Windows license, the authorization to use Windows comes from the license originally bundled with the computer.

Microsoft has issued a statement to various members of the press regarding the company's cooperation with Federal prosecutors in Lundgren's case, reading in part that "Unlike most e-recyclers, Mr. Lundgren sought out counterfeit software which he disguised as legitimate and sold to other refurbishers," which is at least partially counterfactual, adding "This counterfeit software exposes people who purchase recycled PCs to malware and other forms of cybercrime, which puts their security at risk and ultimately hurts the market for recycled products." This is a very peculiar statement to make, as the report in the Washington Post notes, this issue was never raised in Lundgren's trial.

There is some persistent misunderstanding in how all of this works. Common wisdom would dictate that a Windows license transfers with a computer for the full lifespan of the device, which the original report in the Washington Post claimed. Microsoft contends that this is not the case, as the company charges computer refurbishers $25 for Windows licenses.

TechRepublic contacted Microsoft for this story, but did not receive a response by press time.

Also see

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Image: iStockphoto/Eviphotography

About James Sanders

James Sanders is a Tokyo-based programmer and technology journalist. Since 2013, he has been a regular contributor to TechRepublic and Tech Pro Research.

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