Microsoft Wins Landmark Ruling Against Reseller Over Software Infringement

Microsoft Corp. has obtained a landmark ruling that will affect the way many resellers and original equipment manufacturers (OEMs) obtain software, particularly through unauthorized distribution or the "gray market." The ruling, made by Judge Raymond Dearie, United States District Court, Eastern District of New York, in the case Microsoft vs. Harmony Computers & Electronics Inc., declares that obtaining software through such means is an illegal practice that could subject the reseller to civil or criminal prosecution. Microsoft has offered a number of licensing programs, such as the Delivery Service Partner (DSP) program, to make it easier for resellers and OEMs to obtain legitimate copies of its products.

Key Takeaways:

• The landmark ruling by Judge Raymond Dearie in the case Microsoft vs. Harmony Computers & Electronics Inc. states that obtaining software through unauthorized distribution or the "gray market" is an illegal practice.
• This ruling affects resellers and OEMs who obtain software through such means, subjecting them to civil or criminal prosecution or both.
• Microsoft offers the Delivery Service Partner (DSP) program to make it easier for resellers and OEMs to obtain legitimate copies of its products.
• The company currently offers a number of other licensing programs, such as the Delivery Service Partner (DSP) program, for resellers and OEMs to obtain Microsoft products in smaller quantities.
• Microsoft licenses MS-DOS and Windows to computer manufacturers to distribute with the PCs they sell, with OEM license agreements prohibiting the distribution of Microsoft products by themselves without an accompanying licensed PC.
• Judge Dearie stated that if the OEM under its license with Microsoft had no right to distribute MS-DOS or Windows standalone, neither did the reseller.
• This ruling addresses a common belief in the PC industry that the problem lies only with an OEM violating its license agreement, but now it is clear that any reseller or OEM who sells unauthorized standalone products is also committing copyright infringement.
• In 1992, Congress amended the Copyright Act, increasing criminal penalties for copyright infringement of software, making it a felony.

Statistics:

• The ruling could subject resellers to civil or criminal prosecution, or both, for obtaining software through unauthorized distribution.
• Microsoft licenses MS-DOS and Windows to computer manufacturers to distribute with the PCs they sell.
• The company has offered a number of licensing programs to make it easier for resellers and OEMs to obtain legitimate copies of its products, with the Delivery Service Partner (DSP) program being one such option.
• 1992 - Congress amended the Copyright Act to increase criminal penalties for copyright infringement of software.

Sources:

• Microsoft Corp.
• Judge Raymond Dearie, United States District Court, Eastern District of New York.
• Microsoft vs. Harmony Computers & Electronics Inc.
• Joachim Kempin, senior vice president of worldwide OEM sales at Microsoft.
• David Curtis, associate general counsel at Microsoft.