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Microsoft Persuades Court to Imprison Man for 'Counterfeiting' Software They Give Away for Free

Computer recycler Eric Lundgren was sentenced to 15 months in prison for selling what Microsoft claimed to be counterfeit software—software that was available for anyone to download free from the Internet.

Many in the tech community are up in arms at Microsoft and the company is now on the defensive, trying to explain their actions on a special website. “We are sharing this information now and responding publicly because we believe both Microsoft’s role in the case and the facts themselves are being misrepresented," the company explained.

But the company's statement omits the fact that the court misinterpreted the source and value of the software, something Microsoft did not correct during the trial. That misinterpretation exaggerated Lundgren’s crime, leading to the severe sentence.

Lundgren ordered 28,000 discs to be made and shipped to Florida. His intent was to sell the discs to computer refurbishing shops for 25 cents apiece. That would allow the refurbishing companies to provide discs to their customers to save time instead of having to create them on their own. The discs would also allow customers to fix any issues with their computers should they arise.

Microsoft insisted that the software he sold on discs was Microsoft operating system software. Instead, they were simply recovery discs that anyone can download for free—something that’s frequently done by those who refurbish or sell second-hand computers. In fact, the discs can’t even be used without running on a licensed system with their Windows software already installed. Lundgren simply copied them as a convenience for his customers. Nevertheless, Microsoft persuaded the judges that the violation constituted $700,000 in theft, resulting in the 15-month prison sentence.

Technology website TechCrunch picked apart Microsoft’s deception in excruciating detail here.

Microsoft claims they did not bring this case to trial, saying it was U.S. Customs that referred the case to federal prosecutors after intercepting shipments of counterfeit software imported from China by Lundgren. Microsoft accused Lundgren of setting up a production line in China to produce these discs, but he simply asked a firm to duplicate a free Dell disc that he was given. Lundgren pleaded guilty to duplicating the Dell discs, but not to counterfeiting Microsoft software.

According to the Los Angeles Times:

The appeals court upheld a federal district judge's ruling that the discs Eric Lundgren made to restore Microsoft operating systems had a value of $25 apiece, even though the software they contained could be downloaded free and the discs could only be used on computers that already had a valid Microsoft license. The U.S. 11th Circuit Court of Appeals 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.