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Thursday, 5 January 2012

An acute case of recovery: can Comet see through Windows?


This Kat is often in a love-hate relationship with the Microsoft Windows operating system on her computer. Therefore she was interested to read yesterday that the software giant had commenced proceedings in the High Court for England and Wales against retailer Comet for allegedly making and selling unauthorised Windows recovery CDs.

As readers will know, these recovery CDs are used for fresh re-installations of the Windows operating system. Normally, the Windows operating system is pre-installed on new computers. However, in recent times, computer manufacturers have tended to stop including the recovery CDs with their computers, instead installing the software on to special hard drive partitions and placing the onus on the purchaser to make their own recovery CDs. Microsoft alleges that Comet made more than 94,000 Windows Vista and Windows XP recovery CDs in a factory in Hampshire, selling them to customers for £14.99 each from its 284 stores across the UK between March 2008 and 2009 (reportedly making in excess of £1.4m in sales).

In a statement, David Finn, associate general counsel, Worldwide Anti-Piracy and Anti-Counterfeiting at Microsoft yesterday said:
'As detailed in the complaint filed today, Comet produced and sold thousands of counterfeit Windows CDs to unsuspecting customers in the United Kingdom ... Comet’s actions were unfair to customers. We expect better from retailers of Microsoft products — and our customers deserve better, too.'
In response, Comet issued a press release stating that:
'Comet has sought and received legal advice from leading counsel to support its view that the production of recovery discs did not infringe Microsoft’s intellectual property.

Comet firmly believes that it acted in the very best interests of its customers. It believes its customers had been adversely affected by the decision to stop supplying recovery discs with each new Microsoft Operating System based computer.

Accordingly Comet is satisfied that it has a good defence to the claim and will defend its position vigorously.'
Comet's actions may have been in the best interests of its customers, but were they legal?  The IPKat suspects that Comet may struggle to defend its actions under section 50A of the Copyright Designs and Patents Act 1988. Under section 50A(1), it is not an infringement of copyright for a 'lawful user' of a copy of a computer program to make any back-up copy of it, which is necessary for it to have for the purpose of its lawful use. 'Lawful user' in section 50A(2) is defined as a person who has the right to use the program. Comet seems to be trying to respond to commercial need by making back up discs on behalf of its customers.

The IPKat is not as yet aware of the full facts of the case. However, it seems to him that if such discs were made in advance and not in response to a specific request from a customer, Comet may have difficulties in establishing that it made the discs as a result of a request from a 'lawful user'. Further, even if Comet could succeed on this point, the alleged charge of £14.99 per recovery CD seems disproportionate to the cost incurred by Comet in actually making it.

Merpel: Linux, anyone?

Recovery position here

8 comments:

Anonymous said...

Well, it's certainly not 'equitable conduct' on Comet's part!! If they were acting in the best interest of customers they wouldn't be charging £14.99 for merely burning a DVD!

Mark said...

Is there a public policy argument about purchasers of products having the right to get the product repaired (and the right for their contractors to do those repairs), and this overriding copyright - either by way of implied licence, exhaustion or rights or non-derogation from grant - cf BL v Armstrong Patents?

Anonymous said...

Mars UK Ltd v Teknowledge Ltd
does not wholly preclude a defence based on British leyland v Armstrong

Nigel said...

Can Comet not be a lawful user in relation to stocks of PCs which it held - (lawful user is defined as a person with a right to use the program - you don't have actually to use it and person surely includes a corporation per the Interpretation Act). When we know the facts, did Comet hold stocks of PCs greater than the number of disks held?

Anonymous said...

As a casual observer, I would be more sympathetic to Comet's position:
a) on policy grounds, I see nothing wrong with what they are doing. A PC purchaser has the right to make a recovery disk. Comet is providing this disk to the user as a (commercial) service to save them the hassle. I see no detriment to Microsoft.
b) on legal grounds, while the machines are in the possession of Comet, I agree with a previous poster, that they could well regard themselves as lawful users of the machines, and so able to make such a recovery disk.

Incidentally, if you went to the public at large (not always a reliable judge), they might think that £14.99 for a recovery disk (actually usually a set of disks) is not so outrageously expensive as the typical charging rates of lawyers in IP litigation ...

Almost Emeritus said...

The terms of the licence would need to be considered. Being someone who does actually read the small print of software licences, I have experienced the following.

Whereas the software licence for my old Amstrad PCW allowed transfer to a third party ad infinitum as long as the former licensee transferred or destroyed all copies of the original software in his possession, Microsoft's more recent licences for home users tend to be more limited, a reflection of their lower cost compared with the fully-specified expensive professional product aimed at the business user.

I still use a Windows 98 PC at home, not because I am mean, but because some of its original software is far superior to the current offerings: for an example Google "Microsoft Photo editor". Most of the Windows 98 software runs happily on XP, and as many of the licences include use on a single laptop in addition to the main PC [laptops were an expensive luxury 15 years ago], I have been able to legally use the relevant software on a succession of subsequent laptops.

Upgrade software from Windows 2000 to XP allowed only a single transfer, but it is now not uncommon for the licence for pre-installed software to be limited to only the original purchaser on the original PC, no provision being made to transfer to anyone else. The system restore disks, whether as supplied or as created by the user, simply restore the PC to its settings as it left the factory, are specific to the original PC, and would be incapable of being used on a different model.

A regards Comet's entitlement to use the software of computers that they have offered for sale, my understanding is that the entitlement to use the licence only comes into existence when the user first uses the PC and ticks the box which agrees to the terms of the licence. Unless and until this is done, there is surely only a potential right to use the software because no licence yet exists.

Having spent a not inconsiderable time making a set of restore disks for my daughter's laptop, £14.99 would have been be a price well worth paying!

Anonymous said...

I'm sure the previous commentator is still using Windows 98 because they haven't yet finished reading the EULA for Windows 2000.

Anonymous said...

As usual, it makes sense to ignore the Act and go straight to the Directive. Article 5(1) seems to allow third parties to make copies on a user's behalf. So maybe there is a defence.

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