
Microsoft case results in prison time for restore CD copier [video] - kristoff_it
https://www.youtube.com/watch?v=FaoJErxYLtM
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mynameisvlad
This happened back in April:

[https://news.ycombinator.com/item?id=16921634](https://news.ycombinator.com/item?id=16921634)

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krmmalik
In around 2002, my father and I owned a computer assembly and repair business
in a small town about 200 miles away from London, UK.

We were doing just under $1.5m in revenue a year. I was just 22 years old. We
had a few large clients that were contributing to the bulk of our revenue.
Life was good.

I can't get into the details of exactly how it happened because I dont want to
open a new legal case or anything, but Microsoft used similar intimidation
tactics to drive my father and I out of business, despite the fact that
legally we hadnt done anything wrong. We got really scared. We were a small
company and I was very young and we had no financial muscle comparative to
Microsoft and as a result of the bad publicity etc, we lost our major clients
anyhow.

Microsoft drove us into the ground.

A year before that, we had a major University in the UK as a client that
defaulted on a payment for a large volume of inventory and left us to pick up
the tab. Thankfully it didn't kill the business, but it certainly brought it
to the teetering edge.

This is how many larger institutions destroy the small player and why so many
are afraid of going into Entrepreneurship. He has the most financial clout
often tends to win.

I have many other stories from other associates I could share too, but we
really need people to step forward that have legal experience that can help
the small player that doesnt have the financial clout for taking on the big
boys, not to mention regulation needs to change but im not so hopeful for
that.

Just thought I'd share. I've not mentioned this anywhere public in over 15
years.

~~~
WalterGR
_In around 2002, my father and I owned a computer assembly and repair business
in a small town about 200 miles away from London, UK._

Why would Microsoft run a computer assembly and repair company into the
ground, especially in 2002?

That’s pretty hard to believe without there being more to the story.

~~~
teilo
This is almost certainly about OEM Windows licenses.

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ashelmire
It is outrageous that private corporate disputes over copyright result in jail
time, rather than just financial or corporate sanctions.

Edit: After reading Microsoft's blog post [https://blogs.microsoft.com/on-the-
issues/2018/04/27/the-fac...](https://blogs.microsoft.com/on-the-
issues/2018/04/27/the-facts-about-a-recent-counterfeiting-case-brought-by-the-
u-s-government/) and the e-mails Mr. Lundgren sent, however, it does seem
pretty clear that he was trying to profit from these repair cds and sell them
as, basically, genuine cds. US government brought the case through customs and
it seems there was willful intent to defraud the government.

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kartan
I agree with the point that having technology illiterate judges allows for
abuse from technology companies.

The fight of tech corporations against reuse of hardware it is ecologically
sustainable.

And finally, tech companies are negating the ownership of our own hardware.
The software is licensed, hardware only works with certain software, so you
don't own anymore what you buy. And laws are obsolete when it comes to this
fact.

~~~
antoineMoPa
You mean unsustainable?

~~~
kartan
Yes. Thank you for the correction.

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at-fates-hands
FYI Microsoft didn't bring the case, ICE did.

The main fact which a lot of people seem to be is he made these copies so he
could sell them. The same ones you can get for free from Dell.

 _Clifford Lundgren pled guilty to conspiring to traffic in counterfeit goods,
in violation of 18 U.S.C. § 2320(a)(1), and criminal copyright infringement,
in violation of 17 U.S.C. § 506(a)(1)(A) and 18 U.S.C. § 2319(a) and (b)(1).
Lundgren’s plea related to his role in a scheme in which he created and
intended to sell about 28,000 copies of Dell reinstallation discs for
Microsoft Windows, without permission from Microsoft._

He was making copies en masse in China then was shipping them back in an
effort to resell them. I've read in various places the cost was in the
neighborhood of 80K to make the copies. I'm not a business expert, but I don't
know many people who put down 80K of their own money to create a product
they're going to give away for free.

Customs intercepted the discs when they were shipped and started investigated
what was going on.

~~~
giancarlostoro
Ouch. This makes more sense to me than Microsoft going after the man. I would
hope they (Microsoft) wouldn't hunt down people doing this sort of thing.

~~~
DanBC
He wasn't just making and selling the discs (that people could get for free
from the OEM), he was also giving instructions about how to make the discs
more accurate copies of the original media, and how to evade customs.

[https://blogs.microsoft.com/uploads/prod/sites/5/2018/04/FIN...](https://blogs.microsoft.com/uploads/prod/sites/5/2018/04/FINAL-
FILED-BRIEF-11.17.17-004.pdf)

[https://blogs.microsoft.com/uploads/prod/sites/5/2018/04/2LU...](https://blogs.microsoft.com/uploads/prod/sites/5/2018/04/2LUNDGREN6.pdf)

~~~
giancarlostoro
Yeah... that guy totally asked for jail time. It sucks because everytime I've
read the whole case I missunderstood that it wasn't Microsoft specifically
hunting him down and sadly others will make the same mistake as me. I'm
someone who respects Microsoft, I cannot imagine people who already distrust
Microsoft misunderstanding this completely for years to come.

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tux1968
What's depressing is that this man was "selling" the copies for 25 cents in
order to recover the cost of the physical CD he was burning -- not to enrich
himself.

This is a good guy being screwed over by Microsoft and the legal system.

~~~
DanBC
No, he wasn't. He was selling some of the discs for $4, some for $10, and
others for $30 to $40. He went out of his way to create discs that would fool
customers into thinking they had a genuine microsoft product, and he went out
of his way to evade customs. He knew that his product risked being siezed by
customs, and he gave advice to his associates about evading customs
inspections.

He spent $80,000 creating the discs.

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JadeNB
In case you don't want to watch the video, here are the citations from the
description:

[https://www.theverge.com/2018/4/25/17279190/microsoft-
restor...](https://www.theverge.com/2018/4/25/17279190/microsoft-restore-disk-
eric-lundgren-sentence-right-to-repair)

[http://www.latimes.com/business/technology/la-fi-
microsoft-r...](http://www.latimes.com/business/technology/la-fi-microsoft-
restore-disc-20180215-story.html)

[https://www.washingtonpost.com/news/true-
crime/wp/2018/04/24...](https://www.washingtonpost.com/news/true-
crime/wp/2018/04/24/recycling-innovator-eric-lundgren-loses-appeal-on-
computer-restore-discs-must-serve-15-month-prison-term)

[https://www.seattletimes.com/nation-world/recycling-
innovato...](https://www.seattletimes.com/nation-world/recycling-innovator-
eric-lundgren-loses-appeal-on-computer-restore-discs-must-serve-15-month-
prison-term)

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RaleyField
People's take on this is depressingly cringeworthy. Prison time was for trying
to pass CDs as genuine Microsoft media.

Imagine this: You go to one of these shops looking to buy a new computer, you
ask to get genuine copy of Windows. The shop can't guarantee genuine copy
because they haven't compared hashes of these bootleg CDs with the ones
published on Microsoft's website. If they did they would burn them themselves.

Customers were unnecessarily put at risk because data on those disk wasn't
assured to be genuine. That's why damages aren't based on manufacturing price
but price customers paid for the genuine product.

If you asked me I wouldn't fault them if they added damages for compromising
combined purchases because people don't normally buy just software license but
packages of hardware with genuine software.

And the sad cringe is in the fact that when EVEN you people don't see why
chain of custody is incredibly important then you can't expect all these shop
owners to be any better.

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agumonkey
Apparently there are more facts to this story
[https://www.reddit.com/r/videos/comments/8f9lsc/microsoft_se...](https://www.reddit.com/r/videos/comments/8f9lsc/microsoft_sends_ewaste_recycler_to_prison_for_a/)

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jesseryoung
Microsoft higher ups should've stepped in earlier on this one. This is clearly
a case of a guy trying to do right and help out customers and not
understanding how the law treats software and how that's different than
hardware. They could've easily cut him a deal where he could hand out genuine
Windows licenses with the sale of these devices.

It is legal (mostly) for you to pick up a piece of hardware that somebody
threw away and do anything you want with it. You can legally use it yourself,
sell it or just give it away.

In the eyes of the law, software doesn't work that way. Could you pick up a
software license key that somebody threw away and re-use it? Depending on the
license the original person purchased, likely not. It sucks, I don't agree
with it but it's how it is.

~~~
DanBC
Have you read the emails that this man was sending? He was deliberately trying
to fool his customers (who were asking for genuine MS discs, not some copy
he'd made) and he was deliberately trying to evade customs.

[https://blogs.microsoft.com/uploads/prod/sites/5/2018/04/2LU...](https://blogs.microsoft.com/uploads/prod/sites/5/2018/04/2LUNDGREN6.pdf)

[https://blogs.microsoft.com/uploads/prod/sites/5/2018/04/FIN...](https://blogs.microsoft.com/uploads/prod/sites/5/2018/04/FINAL-
FILED-BRIEF-11.17.17-004.pdf)

~~~
jesseryoung
No I had not...

Yeah, this guy was totally attempting to make a profit off of piracy.

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btown
The WaPo has a great writeup on this case, relevant quotes below:
[https://www.washingtonpost.com/news/true-
crime/wp/2018/04/24...](https://www.washingtonpost.com/news/true-
crime/wp/2018/04/24/recycling-innovator-eric-lundgren-loses-appeal-on-
computer-restore-discs-must-serve-15-month-prison-
term/?noredirect=on&utm_term=.7758dc6a1885)

"""

The appeals court upheld a federal district judge’s ruling that the disks made
by Eric Lundgren to restore Microsoft operating systems had a value of $25
apiece, even though they could be downloaded free and could be used only on
computers with a valid Microsoft license. The U.S. Court of Appeals for the
11th Circuit initially granted Lundgren an emergency stay of his prison
sentence, shortly before he was to surrender, but then affirmed his original
15-month sentence and $50,000 fine without hearing oral argument in a ruling
issued April 11....

Glenn Weadock, a former expert witness for the government in its antitrust
case against Microsoft, was asked, “In your opinion, without a code, either
product key or COA [Certificate of Authenticity], what is the value of these
reinstallation disks?”

“Zero or near zero,” Weadock said. Why would anybody pay for one? Lundgren’s
lawyer asked. “There is a convenience factor associated with them,” Weadock
said.

Still, [U.S. District Judge] Hurley decided Lundgren’s 28,000 restore disks
had a value of $700,000, and that dollar amount qualified Lundgren for a
15-month term and a $50,000 fine. The judge said he disregarded Weadock’s
testimony. “I don’t think anybody in that courtroom understood what a restore
disk was,” Lundgren said.

A three-judge panel of the 11th Circuit deferred to Hurley in his judgment
that Weadock was not credible and that “while experts on both sides may have
identified differences in functionality in the discs, [Hurley] did not clearly
err in finding them substantially equivalent.” The ruling was written by
Judges William H. Pryor Jr., Beverly B. Martin and R. Lanier Anderson.

"""

~~~
DanBC
One of the reasons they put that value on the discs is because Lundgren was
trying to sell the discs for that much.

He spent $80,000 creating 16,000 discs. That's not "no value".

\---begin---

COURT: What is your view why somebody is going to China to have 16,000
counterfeit discs produced? What do you think they are doing? Is this a
charitable thing? I don’t mean to be—what is your take on this? You say it has
no value, it might be convenient for the customer. What do you think is going
on? They spent $80,000, if I understand one of the exhibits, to produce this.
What do you think was happening?

WEADOCK: I can’t speak for the Defendant, Your Honor.

COURT: But you need to speak. You came in and told me, in your expert opinion,
these have no value at all, which I understand that.

WEADOCK: Right.

COURT: Here is clearly a criminal enterprise, these gentlemen have pled guilty
to crimes, and we know from the exhibits—again, I don’t have it right in front
of me, but looking at the monies from Chase and so on, it is about $80,000.
What is your sense as to what was being done?

WEADOCK: My sense is that the discs have value as a convenience to the end
user who will be able to install Windows on those computers.

\---end

Note that the customers didn't need these discs. They could have ordered
replacements from the OEM.

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agumonkey
That's insane

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ddtaylor
Why is this thread marked as [Flagged] ?

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palebluedot
That means that users have flagged the story (I'm not sure how many user flags
it takes for it to be marked "[flagged]", however).

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manov
[Video]??

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RickJWagner
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