Microsoft case results in prison time for restore CD copier [video]

https://news.ycombinator.com/item?id=16921634

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.

Edit: After reading Microsoft's blog post https://blogs.microsoft.com/on-the-issues/2018/04/27/the-fac... 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.

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.

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.

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

https://www.theverge.com/2018/4/25/17279190/microsoft-restor...

http://www.latimes.com/business/technology/la-fi-microsoft-r...

https://www.washingtonpost.com/news/true-crime/wp/2018/04/24...

https://www.seattletimes.com/nation-world/recycling-innovato...

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.

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.

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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.

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