October 7, 2002

Windows refund initiatives slow, but may be picking up again

Author: JT Smith

- By Daniel P. Dern -

As NewsForge readers are presumably well aware, not everybody whose
new desktop or notebook computer comes with a pre-installed OEM copy
of Windows wants to keep it.

Efforts to let buyers get refunds from either Microsoft or the system vendor,
such as the 1999
Windows Refund Day event were mostly one-day wonders, and sites like
OSResale.com made even
less of a splash. Things have been pretty much moribund on both fronts for a while.

However, options for Windows-free name brand systems have
improved -- slightly -- and things on the refund/resale end
may be about to pick up.

Here's an update, hot off the cyberpress.

A few bits of background

The end-user license agreement (EULA) for Windows seems to say a user
who does not accept the agreement can return the unwanted copy of the OS --
but such attempts generally meet with a mix of circular referrals between Microsoft
and the system vendor, or simple refusal. (The directions on
Windows Refund recommend
never booting up the OEM-installed OS.)

For example, the EULA on the retail version of Windows 2000 SP2 that
I bought and had pre-installed on my main production system (it's dual-boot,
I've also get Red Hat Linux, FYI) says, among many other things:

If you do not agree [to the terms of this EULA], Manufacturer and Microsoft Licensing, Inc. ("MS") are unwilling to license the SOFTWARE PRODUCT to you. In such event, you may not use or copy the SOFTWARE PRODUCT, and you should promptly contact Manufacturer for instructions on return of the unused product(s) in accordance with Manufacturer's return policies.

Note, the EULA cited in the original Windows Refund Day activity said:

If you do not agree to the terms of this EULA, PC manufacturer and Microsoft are
unwilling to license the software product to you. In such an event ... you should
promptly contact PC manufacturer for instructions on a return of the unused product(s) for a refund.

If you're already using Windows, you should be able to find the OS
EULA by going to HELP in the main Start Menu -- or try entering "EULA"
in HELP and then clicking once or twice.

There have been some efforts to enable end users to get refunds for, or to resell,
unwanted copies of operating systems, notably
Windows Refund efforts
such as the February 15, 1999, Windows Refund Day event, and the
OS Resale site.

At least one NewsForge reader reported he was able to
reject the end user license agreement and get a refund from Dell
for the bundled copy of Windows on his system.

However, when I called Microsoft and a few months ago, the answer was no dice.
The Microsoft sales rep said, you can't return, resell or transfer a pre-installed
copy of Windows; when it's bundled with the machine, it's part of the machine,
like the hardware.

Back to the update.

Refreshing the refund scene

Back in August, Seth David Schoen, staff technologist at
the Electronic Frontier Foundation, noted,
"There's not much new since the original Windows Refund Day, although I
think Microsoft's and OEMs' practices have changed slightly to reduce
the chance that people will seek refunds directly from Microsoft. In
addition, product activation attacks resale to some extent.

"There was a nice court case,
Adobe v. Softman,
which held that unbundling by a reseller in a particular situation was legitimate.
Unfortunately, that case doesn't provide much comfort to end users.
There isn't too much incentive for litigation over this, unless it
were a class action lawsuit."

Don Marti, editor in chief of Linux Journal, adds:
"Last I knew someone got a letter from IBM's lawyers saying that they
will issue a refund only for the entire Thinkpad, not just the copy
of Microsoft Windows." A reader's mail about this appears on
page six of the magazine's October 2002 issue, according to Marti.

Network consultant Rick Moen, organizer of the Windows Refund Day, says the issue's been on the back burner since then. "Basically, all of us who might be able to do a follow-up issue of the newsletter are Microsoft-free, and nobody's been willing to send us meaningful information on Microsoft's revised EULAs or the results of
efforts to either get refunds or find no-bundled-OS machines.

"Very likely, this reflects in part motivated individuals' greater
success in avoiding the Microsoft tax in the first places, due in part
to our 1999 campaign."

However, Jay Sulzberger, who was active in New York City Windows Refund
efforts, reports: "The situation is now entirely changed. Adam Kosmin has
a perfect case, and this time, we go to law."

See WindowsRefund.Net for more info
on Kosmin and related Windows Refund activity.

"The end user's right to choose an OS for the hardware the end user buys is
more significant than might at first appear," adds Sulzberger. "Today the Englobulators
are pushing hard for 'content protection.' 'Content protection' means an end
to private ownership of computers and an end to private, tribal, and public
use of the Net. 'Content protection' means that a small group of cartels
and monopolies would own every home computer in the world.

He continues: "The issue is
not 'fair use,' but who is allowed to own a printing press. And the move
to outlaw private ownership of computers is much easier if only one company
provides the OS for low-price home computers. Because then all you need do
is get that one company to agree to the new arrangements, and you are most
of the way to what the Englobulators want: ownership of all the world's
computers. So Refund Day is not just about saving $100 on your next
computer purchase. Refund Day is an action in the struggle to keep what we
have today: the right to own our own printing presses --computers -- and the
right to freely publish our own works."

Asked about this, Moen says he's not convinced the Kosmin case signals a big change.
"Companies like Toshiba dragged their
feet on honouring EULA terms _even_ before Windows Refund Day, and
attempted bits of chicanery like putting laptops in sealed bags where
you supposedly had to consent to the EULA in the act of breaking the
seal. Sometimes, you couldn't even _read_ that EULA until you opened
the bag, which highlights what a legal travesty all this is.

"It's hardly surprising that the legalistic chicanery continues.

"The manufacturer's aim is not, of course, to create a legally binding
contract, so much as it is to make customers go away, who would
otherwise attempt to assert their rights: The optimal way to win a
legal dispute is for the other side to give up immediately.

"It's sad that the PC industry feels it has to manipulate its customers
in this way, but that's what being captives of Microsoft Corporation
has brought them to.

"(It's my understanding that current Microsoft OEM contracts make
favourable pricing available only if the OEM agrees to pay Microsoft
a fee for each unit sold of _covered models_. This probably still
violates the latest DoJ consent decree, but Microsoft keeps trying new
minor variations every time it's told 'You can't do that' by a Federal
judge.)

"Please note that this problem is largely confined to name-brand laptops.
It's easier to avoid with workstations and servers, where someone who
doesn't want to buy Microsoft software has more and better options."

Linux Journal's Marti comments: "Since Windows Refund Day, many leading manufacturers are offering
systems with Linux pre-installed, including not just servers but an
award-winning movie graphics production system from Hewlett-Packard."

This is true -- for workstations and servers. However, as phone calls and Web
surfing over the past week verified, Window-less desktops and notebooks, with
or without Linux, are far from generally available from many leading
manufacturers. Despite developments like
HP's e-pc 42 offering OS choices of Windows XP/Pro, XP/Home, 2000, or
(in the box) Linux-Mandrake Premium, many big-name vendors appear to offer
sub-workstation desktop or notebooks with Windows, and only Windows,
pre-installed. In other cases, you have to ask specifically for Linux; it's often not offered on Web sites.

You can try to resell that unwanted OS

If you've got a regular license and copy -- particularly if you haven't
broken the shrink-wrap on the CD, or done other license-triggering
actions, and don't want to try the refund route,
you might try reselling it.

Pre-bundled OSes (and other software) are, in theory, not resellable.
Attorney Wendy Seltzer has been reported saying that
Softman v. Adobe appears to make this restriction unenforceable,
(See U.S. Court says buyers can unbundle EULA-covered software.)

Marti comments, "The United States District Court for the Central District of
California ruled
that breaking up a EULA-covered bundle (in this
case, an all-software bundle, even) is legal, because the transaction
has the form of a sale.

"One point [from this ruling] worth noting is:

The Court understands fully why licensing has many advantages for
software publishers. However, this preference does not alter the
Court's analysis that the substance of the transaction at issue
here is a sale and not a license.

"If you could change an outright sale into some other kind of
transaction by reciting a Scroll of Barratry over it, don't you think
McDonald's would have printed a EULA on their coffee cups by now?"

Of course, this assumes a marketplace in which you can offer it for sale.
Don't count on eBay, at least not for Microsoft OSes.
(See
eBay pulls MS auctions, neutralizes complaints
.)

Back in December 2001, Linux Journal started up the
OSResale site.
Richard Vernon, who was Linux Journal editor in chief at the time, commented,
"... We here at Linux Journal have been
thinking about all those folks out there aching to sell that unused
software that came with some piece of hardware they purchased and are
faced with the difficult task of unloading something they bought and
can't use. ... Due to the lack of a proper forum that lets sellers of
such software find buyers, we decided to provide OS Resale --an auction
site intended as a medium for those looking to rid themselves of
unusable software that came with their computers or other hardware."

However, the site didn't exactly get off to a rousing start,
and activity level stayed lackluster at best, according to
Rebecca Cassity, marketing manager at SSC Publications.

"The first sale was a copy of Windows NT Workstation 4.0, which went for $32.
There have been multiple auctions on the site, although I'm afraid I don't have an exact
number. The site has not received any response from Microsoft or from
other software manufacturers."

As of summer 2002, reported Cassity, "we've had under 10 auctions,
although I do not know the exact number."

The small response, she believes, "has partially been due to a lack of publicity. While
we have promoted OSresale.com on the Linux Journal Web site, through an
article (http://www.linuxjournal.com/article.php?sid=5678) and a press
release (http://www.linuxjournal.com/article.php?sid=5730), the site has
not received much outside attention."

A year later, reports Vernon, "No news except to say there's no news.
Our OS resale site is pretty dead. It's still there, but no action.
The effort was sincere though. :)"

The true meaning, and results of, the refund effort

Moen comments on his

Windows Refund Day
Web page (where you can also see a query from
me for this article, some months back):

"We who planned the Windows Refund Day effort have been hoping to at
least produce a closing issue of the newsletter, reporting on (at a
minimum) what Microsoft Corporation has done to its software licenses
since then. However, none of us uses Microsoft's legacy proprietary
software, so we lack information on Microsoft's specific license terms,
on products issued since that day. (Nobody has sent us examples,
either.)

"It seems clear that Windows Refund Day served as a major PR
embarrassment for Microsoft Corporation, highlighting as it did the
company's near-total control over hardware OEMs' software-bundling
policies, despite DoJ consent decrees to the contrary. However, it
also woke the public up to the existence of an entire self-sufficient
software world with no strong feelings either for or against Microsoft
Corporation but simply no interest in its products."

Marti points out,
"It's surprising that Microsoft is happy with all those copies of
Windows remaining in the hands of people who have never agreed to
their EULA."

For many, the issue may be moot, or noise-level. As Moen notes
on his site, "The long-term relevance of Windows Refund Day may lie in the fact that
I'm writing you this message from a full-featured Linux workstation
via a high-powered Linux mail server in my living room, and that
the reason I can't fill you in on Microsoft Corporation news is
that I'm essentially unaffected by that company's doings.

"Except in having had to pay for and then throw away the mandatory copy
of MS-Windows98 bundled with the used Sony VAIO PCG-505TX laptop I
bought just after Windows Refund Day -- money I'd rather not have
wasted on a product I had no use for."

Is there a principle here worth fighting for? For individuals, we're
probably talking a price bump of $50 to $100 for a system -- the price of a
good upgrade on the RAM or other part of a new system, but for many,
probably not worth spending more than, say, an hour's effort on.

On the other hand, there's the larger question, namely being able to
buy machines that don't come with Windows pre-loaded.
(See Scot Hacker's article,
He who controls the bootloader.) Dell recently announced a
clever workaround
that lets the the company ship FreeDOS instead of Windows -- but Dell doesn't seem
to offer the system for less.

Maybe if the big-name vendors find themselves beginning to lose major
sales to white-box vendors who aren't obligated to bundle Microsoft
Windows onto PCs, we'll see more back-pressure.

Meanwhile, the answer seems to be, if you don't want to end up with a copy
of Windows you don't want to use or have paid for, your best bet is to
buy a system that never had it. Or, if you need a specific model computer,
from a specific vendor, but don't want Windows on it, buy the dagnab system,
don't let the pre-installed copy of Windows boot up, and see if you can
resell the license or get a refund for it.

(Or buy a Mac.)

And stay tuned for further developments.

Daniel P. Dern is a freelance technology writer.
Most recently he was executive editor of Byte.com. His Web site
is www.dern.com.

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