Sold or Licenced?

We’ve all been there, we have a machine that has Windows installed on it and for some reason that machine is on the way out or we want to do something else with it, and we ask ourselves “Why can’t I just install it on another machine?”

In the early years you bought your operating system, installed it wherever you needed it and as far as you were concerned you owned that software.  Volume licensing was something big companies did, a home user with two machines bought one copy of the software, installed it on both and that was the end of it.  The problem is that companies didn’t like you doing that, big companies want you to buy as many copies of the software as computers you own.  Two computers, two copies to buy.

It’s only recently with the advent of the internet and almost everyone having at least some access to phone lines that companies have been able to come up with enforceable ways to prevent people from installing the companies software on every computer in sight.  The first thing they did was to get rid of the idea that they are actually selling you something.

To quote Microsoft themselves:

The software is licensed, not sold. This agreement only gives you some rights to use the features included in the software edition you licensed. Microsoft reserves all other rights.

You aren’t “buying” the software, you are just renting it for some indefinite period.

The second thing companies did was to make it impossible to use the software on more than one machine at a time, this used to be done using pieces of hardware called “dongles” and was generally only really done where the extra cost could be justified.  These days though a large proportion of people have “always-on” internet connections through which the software can regularly authenticate itself and Microsoft is no different in adding this defence to their operating systems in order to enforce this rental agreement, typically through the initial Product Activation and afterwards through Windows Update.

In their defence Microsoft at least have been helpful to people trying to find out what rights they have regarding their software and given them an easy way to find out what we can and can’t do, enter the Microsoft End User License Terms search tool.  For example, I like many other people have bought a computer with Windows 7 preinstalled and have another computer for which I bought a copy of Windows 7.  What are my rights with those copies of Windows 7?

Installation

Windows 7 – OEM Copy – Preinstalled on computer

2.  INSTALLATION AND USE RIGHTS.

a.  One Copy per Computer. The software license is permanently assigned to the computer with which the software is distributed. That computer is the “licensed computer.”

Windows 7 – Retail Copy – Bought from store

2.  INSTALLATION AND USE RIGHTS.

a.  One Copy per Computer. Except as allowed in Section 2 (b) below, you may install one copy of the software on one computer. That computer is the “licensed computer.”

b.  Family Pack. If you are a “Qualified Family Pack User”, you may install one copy of the software marked as “Family Pack” on three computers in your household for use by people who reside there.

There is a clear distinction here, the retail copy says nothing about being “permanently assigned” to a machine and only indicates that it may only be installed on one computer.  The only time I can install on more than one computer is if I’ve bought a “Family Pack” which has an allowance for three machines with one licence.

Transfer

But what if I want to move an already installed copy to another machine? Back to the EULA:

Windows 7 – OEM Copy – Preinstalled on computer

16. TRANSFER TO A THIRD PARTY. You may transfer the software directly to a third party only with the licensed computer. The transfer must include the software and the Certificate of Authenticity label. You may not keep any copies of the software or any earlier version. Before any permitted transfer, the other party must agree that this agreement applies to the transfer and use of the software.

Windows 7 – Retail Copy – Bought from store

18. TRANSFER TO A THIRD PARTY. a.  Software Other Than Windows Anytime Upgrade. The first user of the software may make a one time transfer of the software and this agreement, by transferring the original media, the certificate of authenticity, the product key and the proof of purchase directly to a third party. The first user must remove the software before transferring it separately from the computer. The first user may not retain any copies of the software.

So effectively they are telling me that for the machine with Window 7 pre-installed the only way to transfer the licence is to give someone the machine itself (with software and all) while with the retail copy I can effectively hand the box with the DVDs and receipt over to someone else so long as I completely wipe the original machine and destroy any backups I may have made of the software.

Virtualization

More recently people have also been asking about Virtual Machines, and their rights to install Windows on both the host and guest machines.  Sadly Microsoft already caught that eventuality as well, as their EULAs states

3.  ADDITIONAL LICENSING REQUIREMENTS AND/OR USE RIGHTS.

d.  Use with Virtualization Technologies. Instead of using the software directly on the licensed computer, you may install and use the software within only one virtual (or otherwise emulated) hardware system on the licensed computer.

You may only use Windows 7 on the virtual machine instead of the host machine, or otherwise buy two individually licensed copies.  Interestingly this section is duplicated between both OEM and Retail EULAs, suggesting that if you so chose you could install another operating system such as Linux and run a legal OEM copy of the operating system within a virtual machine, so long as the host hardware bears the correct Microsoft licence sticker.  I’m not a lawyer so I cannot guarantee this is legal or would even work in the first place, but the implication is certainly there.

But what have I got?

What this boils down to is that in order to work out what you can do with your licence, you first need to know if it is an OEM or Retail licence.  An OEM licence will typically have a sticker stuck to the machine with OA (short for OEMACT, which in turn is short for Original Equipment Manufacture Activation Control Technology) or OEM written on it along with the manufacturer.

A full retail copy will have a DVD in a presentation box and a sticker similar to this one.  This will not be stuck to the machine (as it is a portable licence) but will instead be in the retail box.

Surely they don’t mean me….

Everyone thinks that these terms won’t apply to them, that they should go ahead and use it as they were going to anyway and install it on all 6 of their home PCs and the simple fact is that you cannot do that any more. The necessity of product activation means that while you can install it on all your machines, after a month or two you are going to have to activate all those copies.

But while you were installing you were forced to actively accept the EULA, and when Product Activation time comes will be when Microsoft will has you in a legal bind with only two real choices, pay up or stop using it. The third option is legal action but you already accepted the EULA, even if you didn’t read it, Game Over.