After copying Windows discs, electronics recycler faces prison time and massive fine

Eric Lundgren faces a 15-month prison sentence and $50,000 fine for manufacturing 28,000 copies of Microsoft OS recovery discs.

Building a slide deck, pitch, or presentation? Here are the big takeaways:
  • Eric Lundgren, an electronics recycler, produced cloned Dell recovery discs for use with refurbished PCs.
  • Recovery discs can only be used fully with the original Windows license, which accompanies OEM computer hardware.

Eric Lundgren, an electronics recycler, is facing a 15-month prison sentence and $50,000 fine for manufacturing copies of Windows recovery discs intended for distribution with refurbished PCs.

According to the report in the Los Angeles Times, the discs were intended for sale at cost to other computer refurbishers, for the purpose of bundling the recovery disc with a refurbished computer. The manufactured discs bear the Windows and Dell logos, and are "nearly identical" to the labels from the original Dell recovery discs. According to Lundgren, the restore CDs were only compatible with Dell laptops which were already issued a license and certificate of authenticity from Microsoft.

Both Dell and Microsoft freely provide downloads of Windows for computer owners to reinstall Windows for any reason. Original recovery CDs have historically been bundled with computers, though 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 can charge a convenience fee for the media, but the recovery media does not include a separate Windows license—the authorization to use Windows comes from the license originally bundled with the computer.

SEE: Hardware decommissioning policy (Tech Pro Research)

The issue at hand is the conflation of the installation media, and the Windows software license. Without a valid 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. The discs in question are recovery discs for Windows 7, which per Microsoft's licensing policy at the time, required a sticker with the product key to be placed on the computer by the OEM when it was sold.

For computers with Windows 8, 8.1, and 10, the license key is stored in the BIOS, without a key printed on a sticker. In this case, it isn't possible for the original license bundled with the hardware to be revoked, as the license is inextricably tied to the hardware with which it was originally bundled.

In general, given that electronics recyclers deal primarily in large lots of identical computers—either fleet computers from companies, or computers returned to the original vendor—it stands to reason that these computers would already carry a license for Windows, whereas custom white-box systems with limited production runs may not.

Microsoft charges computer refurbishers $25 for a Windows license for used parts. Microsoft's contention in the case is that Lundgren's actions deprive the company of a sale of a new license, though Lundgren is not issuing licenses of Windows. According to the report in the Times, Lundgren claimed that "the assistant U.S. attorney on the case told him, 'Microsoft wants your head on a platter and I'm going to give it to them.'"

The manufactured discs were seized by customs officials, none were ever sold. Lundgren is presently out on bail pending an appeal before the 11th Circuit Court.

Update: A previous version of this story named IT Asset Partners as a party to the suit. The company was incorporated by Lundgren after charges were brought, but is not named in these charges. Lundgren left the company late last year.

Also see

Man in handcuffs
Image: iStockphoto/BrianAJackson

About James Sanders

James Sanders is a Java programmer specializing in software as a service and thin client design, and virtualizing legacy programs for modern hardware.

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