California man Eric Lundgren, an electronic waste entrepreneur who produced tens of thousands of Windows restore disks intended to extend the lifespan of aging computers, lost a federal appeals court case in Miami after it ruled “he had infringed Microsoft’s products to the tune of $700,000,” the Washington Post reported on Tuesday.
Per the Post, the appeals court ruled Lundgren’s original sentence of 15 months in prison and a $50,000 fine would stay, despite the software being freely available online and only compatible with valid Windows licenses:
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.
All told, the court valued 28,000 restore disks he produced at $700,000, despite testimony from software expert Glenn Weadock that they were worth essentially zero.
Lundgren is well known for his e-waste recycling efforts (he built an electric car for $13,000 out of recycled parts that beat a top-of-the-line model from Tesla). He had planned to sell the disks to repair shops for 25 cents apiece, believing that it would simplify the process for many users who otherwise would not feel confident setting up a fresh install on older computers.
In February, Lundgren told the Washington Post that Microsoft deliberately makes it inconvenient to restore old devices to a functional state in order to sell new software licenses—and crucially, that because the disks could only be used to restore a computer that already had a transferable Windows license, that he believed he was not in violation of the law.
The discs were never sold, per the Post, after customs officials seized a shipment in 2012. Unfortunately, in what seems to have been a huge mistake, the disks had “labels nearly identical to the discs provided by Dell for its computers and had the Windows and Dell logos,” the Post wrote. As a result, Lundgren pleaded guilty to two of 21 charges, conspiracy and copyright infringement. He told the paper, “If I had just written ‘Eric’s Restore Disc’ on there, it would have been fine.”
He added that he believed Microsoft tried its hardest to quash him under the “false pretense” that selling the disks was equivalent to software piracy, rather than just making it easier to reinstall a licensed copy of Windows. Microsoft originally claimed the disks were worth $299, but the court eventually valued them at $25 apiece.
Per the Post:
“In essence, I got in the way of Microsoft’s profits, so they pushed this into federal court on false pretense,” Lundgren said. He said [Microsoft program manager Jonathan McGloin] “testified that a free restore CD was worth the same price as a new Windows operating system with a license. ... This was false and inaccurate testimony provided by Microsoft in an attempt to set a precedent that will scare away future recyclers and refurbishers from reusing computers without first paying Microsoft again for another license. ... Anyone successfully extending the life cycle of computers or diverting these computers from landfills for reuse in society is essentially standing in the way of Microsoft’s profits.”
“I thought it was freeware,” Lundgren told the Post. “... The value’s in the license. They didn’t understand that.”
He told the Post prosecutors told him he could have several weeks to get his affairs in order before surrendering for his sentence, “But I was told if I got loud in the media, they’d come pick me up. If you want to take my liberty, I’m going to get loud ... I am going to prison, and I’ve accepted it. What I’m not okay with is people not understanding why I’m going to prison.”
Update 4/26/2018: In a statement to Gizmodo, a Microsoft spokesperson provided their side of the story:
“Microsoft actively supports efforts to address e-waste and has worked with responsible e-recyclers to recycle more than 11 million kilograms of e-waste since 2006. Unlike most e-recyclers, Mr. Lundgren sought out counterfeit software which he disguised as legitimate and sold to other refurbishers. This counterfeit software exposes people who purchase recycled PCs to malware and other forms of cybercrime, which puts their security at risk and ultimately hurts the market for recycled products.”
Correction: This post originally cited reporting to the LA Times that was in fact a prior Washington Post article by that was reposted on the LA Times’ website. Both articles were written by Tom Jackman, who writes about crime and the justice system for the Post. We regret the error.