A California man is headed for a 15-month stay in federal prison over “restore CDs” — disks that reinstall Microsoft’s Windows operating system after a failure — after a ruling two weeks ago by a federal appeals court.
In his 2017 trial in federal district court, Eric Lundgren, 33, was found to have infringed Microsoft’s intellectual property by $700,000 for ordering and importing the restore disks, which a witness told the court were nearly worthless. Lundgren, an activist whose cause is “e-waste,” or throwing out otherwise usable technology, saw the disks as a way to keep consumers from tossing old computers when they believed them to be broken.
Such disks may only be used on computers that already have a license for the Windows operating system. Lundgren observed that many users, when confronted with a system failure, would simply opt to buy a new one, rather than hunt up a disk or go through the laborious process of a system restore.
Lundgren had 28,000 of these disks made and shipped to Florida, where he and a broker planned to sell them to computer repair shops for about 25 cents each. This way, the shops wouldn’t have to make restore disks themselves.
Somehow, this drew the attention of U.S. customs agents, who seized a shipment of the disks, then got the Florida broker to flip on Lundgren, catching him in a conspiracy where all of $3,400 was transacted. Both got indicted on a charge of conspiracy to traffic counterfeit goods and criminal copyright infringement, but the government’s snitch got off with a six-month home-arrest sentence for his cooperation.
The Washington Post, in its account, notes that neither Microsoft nor any other computer manufacturers sell any restore disks. They’re free, and apparently so worthless as to be thrown away with great frequency. Lundgren argued that he was making the disks available only to those who already had a license for the Windows software. Government lawyers still valued the disks at $299 each, in an indictment saying Lundgren cost Microsoft $8.3 million — which, if it isn’t nonsense, is couch-cushion change to a company that stashes $138.5 billion of its cash overseas.
Microsoft’s lawyer argued to the court that the sales of the disks “displaced Microsoft’s potential sales of genuine operating systems,” while ignoring the fact these disks were inoperable without an existing license paid for or granted by the company. An expert witness testified there was “zero or near zero” monetary value in any of the disks; they were useful mainly as a convenience to users or maintenance technicians.
Despite that, Senior United States District Judge Daniel T.K. Hurley of the United States District Court for the Southern District of Florida, appointed by the Clinton administration in 1994, said these disks had a value of $700,000. That qualified Lundgren for 15 months in the joint and a $50,000 fine, which Hurley handed to him after saying some nice things in his sentencing.Following the three-judge appellate court ruling on April 11, Lundgren says he’s not appealing. He views a full appellate court review or going to the Supreme Court to be costly longshots with little chance of success.