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Microsoft: You Need Permission to Sell Our Software 628

Posted by michael
from the signed-permission-slip-from-mom dept.
IEEEmember writes "Microsoft has objected to the sale of bankrupt KMart's Bluelight.com Internet unit to United Online. Microsoft's objection to the sale is based on the non-transferability of software licenses protected by copyright law according to the Reuters story on Yahoo! News. This action by Microsoft should serve as a warning to any corporation that has a significant investment in Microsoft licenses. Dependency on Microsoft licenses may grant Microsoft the ability to veto your business decisions."
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Microsoft: You Need Permission to Sell Our Software

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  • Licenses (Score:3, Funny)

    by Ponty (15710) <awc2@bCHICAGOuyc ... e.com minus city> on Tuesday October 29, 2002 @04:05PM (#4558250) Homepage
    It is a common clause in most licenses. Though, it seems that MS is just being a real dick of a corporation for putting up a fight. What would they prefer? BlueLight go to Solaris? Sheesh. (Having said that, they'll probably pay up for all new copies on Windows.)
    • Re:Licenses (Score:5, Interesting)

      by airrage (514164) on Tuesday October 29, 2002 @04:09PM (#4558303) Homepage Journal
      This sort of rears it's ugly head every now and then. Honestly, MS is doing what everyone else does. Oracle, for instance, when we spun a company wouldn't let us transfer licenses to the new company; basically, because they want to resell all new licenses. Even though we had a license per person, since that person was in a new address, you needed a new license. Microsoft, unfortunately, doesn't care about the sale, obviously, they just want to be able to renegotiate a new deal with whomever buys the company. Honestly, I think the single greatest thing we could do in the IT industry is create a web-site where everyone puts in the prices they pay for licenses, hardware, etc. then we'd have all the information.
      • Re:Licenses (Score:3, Funny)

        by SirSlud (67381)
        > IT industry is create a web-site where everyone puts in the prices they pay for licenses

        I can hear the IT sector scream from here: "OH GOD, NO .. PLEASE NO, NOT AN OPEN MARKET!"

        Hopefully followed shortly by the *crash* of the Web of Lies(tm).
    • by truth_revealed (593493) on Tuesday October 29, 2002 @05:12PM (#4558951)
      Such non-transferable license agreements will never stand up in court.
      Reselling licensed software is no different than transfering ownership of a legally purchased music CD.
      Last time I looked, second-hand record shops have been alive and well for decades.

      US Court says buyers can unbundle EULA-covered software. [linuxjournal.com]

      Also take a look at this very well argued thesis [willamette.edu] on the same issue. Same paper in HTML format [google.com]
      • by rgmolpus (220120) <rgmolpus@nosPam.flash.net> on Tuesday October 29, 2002 @08:21PM (#4560333) Homepage
        Since this involves the US Bankruptcy Courts, the Judge there gets final say-so. Bankruptcy Judges intend to either:

        Totally liquidate the company and distribute as much money as possible to the Creditors

        or

        Create a new company that can survive - to keep paying taxes, the Legal Fees, the Accountants, etc.

        To that end, A Judge can accept or reject all types of third party claims - Like the one MS is presenting. If Microsoft prevails, the cash the Division would have to send MS would be a burden to the new company ( or whoever is buying the Unit ), so that's a ( to the Court ) Bad Idea. That $$$ could be used to Pay a Lawyer, Accountant, Back Taxes, or Court Fees.

        The Court can declare that one of the assets of the Division is a partial share of the Existing MS License, which gets chopped off and handed to the Division - Part and Parcel of the other "intangible" assets the division gets from K-Mart. The Division gets a license _from the Court_ to keep using the software, and MS gets told to shut up and smile.

        Or, the Court may say, refund K-Mart a pro-rata share of the money that represents the copies that are being xfered to the Division, So the Division can then buy a new site license.

        MS won't like this.

        The Bankruptcy Judge won't care.

  • by SixDimensionalArray (604334) on Tuesday October 29, 2002 @04:05PM (#4558257)
    There isn't much to argue about here - it is an unfortunate fact but the fine print makes it so. Some companies do allow the transfer of software licenses but it is often so expensive it is easier to obtain new licenses and update the software in the process. I wouldn't want to be in their shoes..
    • by mrmaster (535266)
      If Microsoft can step into business decisions when their software is included in business deals then they technically could step and stop almost all corporate mergers. If that is true then someone needs to start challenging these copyright and EULA laws.
      • by glenebob (414078) on Tuesday October 29, 2002 @04:36PM (#4558617)
        ...then they technically could step and stop almost all corporate mergers.
        No they couldn't. That's like saying you would starve to death if the price of gasoline went up (no gas = no drive = no work = no food). You'd just pay more for gasoline, wouldn't you? Be realistic...
      • by bigmouth_strikes (224629) on Tuesday October 29, 2002 @04:37PM (#4558625) Journal
        It's about licensing, nothing else.

        The whole idea is that you cannot pick up 10,000 cheap copies of Microsoft software when a company goes bankrupt, and then charge the full proce for it if you were reselling the MS products individually.

        It's standard procedure in the software licensing business, and K-Mart was well aware of this when purchasing the license.
    • by Legal Penguin (114844) on Tuesday October 29, 2002 @05:57PM (#4559311) Homepage
      Just a little reality check; there is plenty to argue about here. What almost everyone in this thread seems to have ignored (and what makes the case interesting, despite the tiny dollars apparently involved) is that this is a bankruptcy proceeding. The question is not whether you or I can resell our MS products under the EULA, it's whether a bankruptcy court chooses to ignore the alleged "license" and deem the software an asset of the estate.

      It is important to remember that Bankruptcy Courts, unlike ordinary courts, are not required to attempt to enforce the will of the parties to a given contract. Rather, they are supposed to look through the contract and determine whether the terms, as written, create a fraudulent (or otherwise voidable) conveyance. Consider the following: I know I am going bankrupt, but I want to save my Ferrari. I agree to sell it to you for a dollar. You agree not to sell it to anyone else for a year and to sell it back to me in one year for 100 dollars. In return you get the use of the Ferrari. We sign the contract, title passes to you and I declare bankruptcy. A year later I have discharged my debts, I'm free and clear and I enforce my contractual right to buy back my Ferrari for $100. Right?

      Wrong. Such a contract would be voided by a Bankruptcy Court and you'd have to give up the car. You'd probably even lose the dollar you paid. The car would become part of estate and would be sold. The money would be used to pay creditors. This is called fraudulent conveyance. It's pretty complicated (and dull) and I can't begin to give all necessary details here but what is interesting about this case is that a court will decide whether the material effect of a purchase of software if to transfer ownership or merely to create a license right, regardless of the language in the EULA.

      IAAL, and my guess is the Court will punt on it and come up with other reasons to permit the transfer.
  • by aridhol (112307) <ka_lac@hotmail.com> on Tuesday October 29, 2002 @04:05PM (#4558259) Homepage Journal
    I thought that it had been determined that first-sale applied to software. Is that only for home users?
    • by American AC in Paris (230456) on Tuesday October 29, 2002 @04:10PM (#4558314) Homepage
      I thought that it had been determined that first-sale applied to software. Is that only for home users?

      First sale only applies in cases where it is not time/cost effective to litigate otherwise.

      Unleash the hounds!

      Fnord

    • by danheskett (178529) <danheskett@CURIE ... minus physicist> on Tuesday October 29, 2002 @04:11PM (#4558324)
      I thought that it had been determined that first-sale applied to software. Is that only for home users?
      If you go and buy Windows at a retail outlet, you get a copy that is "FPP" - "full packaged product" aka retail. It is sold at the MSRP or a discount thereof. If you actually read the license it specifically mentions that you can in fact resell, give, destroy, etc etc however you please so long as it done in its entirety and with all copies (cant sell part of the software, can't sell just a certain piece, etc).

      When you call up MS or signup with their Open or Select license plans, you basically agree to more restrictions for a reduced price.

      When you give them money they are ineffect giving you a dicounted copy of whatever in return for the promise of not doing certain things - like splitting it up into smaller pieces and reselling it, etc etc.

      Its a common thing really for software to be licensed this way.

      Its surprising that they seek to enforce it, but AFAIK its entirely within their rights and the contract that was probably agreed to when Blue Light bought the software.
      • I understand. Since you put it this way, I have to agree with Microsoft's position. And, I believe they should have contracts signed by someone from KMart. Or are their Open and Select licenses click-through as well (bad decision if they are, IMHO)
  • EULA's? (Score:2, Interesting)

    Would this really be enforceable? AFAIK, no legal precedent has been set regarding the EULA's where this provision is. Maybe this will provide a good test case with lots of money on both sides.
  • So this is illegal? (Score:3, Interesting)

    by girish (19258) <{moc.yagnatap} {ta} {todhsals+hsirig}> on Tuesday October 29, 2002 @04:06PM (#4558264) Homepage
    So if you sell your PC with the windows license to another person, say, your next door neighbour, it becomes an illegal copy of windows? or Am I way off here?
    • by danheskett (178529) <danheskett@CURIE ... minus physicist> on Tuesday October 29, 2002 @04:15PM (#4558379)
      No, its perfectly legal.

      When you buy a PC from an OEM, it has an "OEM" version of Windows - aka, the OEM gets a discounted rate for bundling it with the PC. The EULA's on everyone I've seen says it just dandy and fine to resell it however you want so long as you don't split it into pieces and sell the pieces.

      The same applies to a retail, or "FPP", version of Windows. You can resell the software or do whatever you want with it in accordance with your local laws etc. MS has no way to regulate that and they specifically tell you in the EULA that you can do this.

      All that goes out the window when you "license" the software directly from MS or a major partner (CDW, HP-Compaq IIRC, etc). Those copies come from a licensing plan which essentially lets you get a cheaper copy of whatever in return for more license restrictions - ie - you can't resell this copy of Windows, etc.
    • I haven't read a Microsoft license in a while, so I can't comment. But this is clause not unusual. In the 1980s I bought a Zenith Z-100. It came with Z-DOS, a version of MS-DOS, which included a clause in its license that if I sell the computer I cannot sell Z-DOS with it; the buyer would have to buy a new copy from Zenith. I thought it was crap then, and I still think it's crap, but they're free to put such a clause in their license if you're stupid enough to accept it.

  • by vasqzr (619165) <vasqzr@noSPAM.netscape.net> on Tuesday October 29, 2002 @04:06PM (#4558270)


    Let's say I've got a 500 person company, we've got a couple NT servers, workstations for the employees, etc etc...

    If some company buys us, or we merge, do we have to replace all those? Even though we aren't a web operation, we use computers in our day-to-day activities....

    IANAL, and IANAB (I am not a businessman)

    Yet another reason to use free software...

    • by windex (92715) on Tuesday October 29, 2002 @04:12PM (#4558342) Homepage
      You would be transfering a legal entity, thus making your 500 person company a part of a larger corporation, any agreement your 500 person company has is just as valid as it was before, since it still technically exists. For example, the company I work for has one prefered company name and three aliases from aquired companies which are still used in some cases by vendors. All are valid legally speaking.

      Bluelight is part of K-Mart, K-Mart owns the licences for bluelight's computers, K-Mart can't sell the rights to those licenses when it sells Bluelight.

      Yeah.
  • Question? (Score:4, Funny)

    by The Dobber (576407) on Tuesday October 29, 2002 @04:06PM (#4558271)

    Does MS have a say in whether or not I can give my lil bro my old PC?

  • Yikes. (Score:5, Insightful)

    by Skyshadow (508) on Tuesday October 29, 2002 @04:07PM (#4558276) Homepage
    Holy Business Disaster, Batman!

    If this stands, Microsoft has successfully become the deciding party in all major corporate mergers and aquisitions. Who is going to buy another sizable company knowing that they'll be forced to relicense all of their software?

    Talk about extending your monopoly.

    IMO, nobody at Microsoft believes that they will lose in the long run, and that's made them both overcomfortable and vulnerable. The more they tighten their graip, the more syste^H^H^H companies will slip through their fingers.

    • Re:Yikes. (Score:5, Insightful)

      by chennes (263526) on Tuesday October 29, 2002 @04:10PM (#4558318) Homepage
      This could potentially set a huge precedent - it's not just Microsoft's licenses that carry these agreements. If they manage to succeed with this line of reasoning I think we can expect a lot more software companies throwing their weight around. Which, in the end, is *very* good for the opensource community - we can transfer software all we want!
      • Re:Yikes. (Score:5, Insightful)

        by WCMI92 (592436) on Tuesday October 29, 2002 @07:25PM (#4559858) Homepage
        "This could potentially set a huge precedent - it's not just Microsoft's licenses that carry these agreements. If they manage to succeed with this line of reasoning I think we can expect a lot more software companies throwing their weight around. Which, in the end, is *very* good for the opensource community - we can transfer software all we want!"

        What this REALLY should do is emphasize how CORRECT the findings were by Judge Jackson against MS.

        The REAL issue here is that MS is leveraging it's monopoly to HARM a competitor.

        Blue Light is an ISP. One that is cheaper than MSN, therefore meaning that to stop it being sold means MS eliminates a competitor.

        And it is a signal to all MS competitors: If you use ANY of our software (and almost all do), WE have a say in your business!
      • Hello? OpenSource? (Score:3, Insightful)

        by ackthpt (218170)
        This could potentially set a huge precedent

        Why, YES! Yes it could!

        Get OpenSource and the problem goes away! Gee, wasn't it Mr. Balmer who was bad-mouthing OpenSource? Small wonder, now we see the evil plan unfurl like a roll of used toilet paper.

      • Re:Yikes. (Score:3, Insightful)

        by mpe (36238)
        This could potentially set a huge precedent - it's not just Microsoft's licenses that carry these agreements. If they manage to succeed with this line of reasoning I think we can expect a lot more software companies throwing their weight around.

        IIRC there was a hospital in Scotland which got bitten by this kind of clause in proprietary software licences.

        Which, in the end, is *very* good for the opensource community - we can transfer software all we want!

        So long as people don't belive the FUD which gets thrown around about there being complex legal issues surrounding using open source software. Whilst drawing attention away from the ability of proprietary software licencing to complicate any kind of sale, merger or split of a corporate entity which uses software.
    • Re:Yikes. (Score:5, Insightful)

      by Servo (9177) <dstringf AT gmail DOT com> on Tuesday October 29, 2002 @04:56PM (#4558775) Journal
      When merger/acquisitions take place, the cost of the physical machines and softare is taken into account.

      My best guess is that they will continue to happen, but its going to devalue deal for those who are selling off a business unit. For a company buying another, they factor in the assumed debt and cost of the acquisition, and they will look at it as an assumed debt.
    • Actualy this can be a good thing. Sell the company minus the software. Install Linux instead. No MS software transfer, no problem. Just remember to export all documents to an open format first. (added bennifit may be not selling consumer info to a third party ;-)
      Then the buyer can then decide if they want to take the time to change OS'es to a high priced alternative with no resale value.
  • by Illuminati Member (541846) on Tuesday October 29, 2002 @04:07PM (#4558280)
    ...Microsoft's objection to the sale is based on the non-transferability of software licenses protected by copyright law...This action by Microsoft should serve as a warning to any corporation that has a significant investment in Microsoft licenses. Dependency on Microsoft licenses may grant Microsoft the ability to veto your business decisions.

    Software non-transferability license clauses are very typical. And MS is willing to defend them. It isn't "veto'ing your business decisions", its "slapping you on the wrist for not paying attention to the license".

    And they call ME a troll...
    • by Skyshadow (508) on Tuesday October 29, 2002 @04:12PM (#4558335) Homepage
      No, it's "slapping you on the wrist for not paying attention to the license" when you don't have a monopoly on desktops. When you do, it's complete effective control of a major function of the US economy. This gives MS an incredible amount of control over companies which compete with them in any sector ("No, you can't transfer your licenses. If you want to buy the Quicken business unit, you'll have to pay for all-new stuff").

      This is scary stuff. Microsoft is essentially subverting governmental-style powers at this point. I wonder if we could get Bush to declare MS a threat to national (economic) security...

  • FUD (Score:4, Insightful)

    by Ooblek (544753) on Tuesday October 29, 2002 @04:07PM (#4558284)
    Sorry attempt at FUD. It is Microsoft and other companies. The story relates something to the effect that the objection was over not only software licensing, but tax issues. Whenever a big public corporation sells part or all of itself, there is always someone who objects. The story just stated that Microsoft opposed it because KMart hadn't made clear what licenses were to be transferred to the buyer. Its just a bunch of companies looking to make some money off the transaction, and it just happens to include Microsoft.
    • Re:FUD (Score:3, Interesting)

      by nathanm (12287)
      It is Microsoft and other companies.
      Right, but those other companies are debtors that K-Mart owes money. If you read the whole article, they aren't objecting to the sale itself, just that the proceeds would go to K-Mart and not themselves.

      On the other hand, Microsoft is objecting to the sale on the sole premise of possible lost future sales. If bluelight.com is sold, Microsoft thinks its new owner should have to pay for all new software licenses, even though K-Mart already bought licenses once.
    • Re:FUD (Score:3, Insightful)

      by gsfprez (27403)
      No - this is an attempt to pass on the truth. You are obfuscating the point of the story - Microsoft is FINALLY pointing out that your software licenses are THEIR property, not yours..

      "The licenses that debtors (Kmart) have of Microsoft's products are licenses of copyrighted materials and, therefore, may not be assumed or assigned with[out] Microsoft's consent,"

      there are also some tax issues, but no one here gives a flying-fsck about that.

      If KMart also sells off some of their Ford trucks, where would it be Ford's problem if the trucks were sold to someone else? Hell no.

      The truth remains...Microsoft IS able to determine what someone does with their licenses AFTER PURCHASE and WITHOUT SO MUCH AS A SIGNATURE as far as resale and transfer, and there's fuck-all any of us can do about it, except not involve ourselves with them to being with. Right of first sale is cirlcing the drain right next to fair use and unrestricted use.

      You may or MAY NOT transfer your copy of XP to your little brother if you get money for it. You MUST contact Microsoft and establish that the license can be transfered. Period.

      Yes - we have a country full of lawbreakers.... they also go 70 in 65 zones, don't stop within 1 foot of the white line at stop signs, and (humor)tear the tags off of their matresses(/humor)

      Just because you've BEEN doing it DOES NOT mean that its legal. Microsoft has decided that since there are more than likely multi-millions of dollars "worth" of MS software involved with this transaction, they are going to step in and assert their "rights".

      Remember THAT during your next round of computer purchases, pointy-haired-boss-kissing-IT- director-of-Mega-Corp.

      That's truth. Not FUD.
      • Re:FUD (Score:5, Insightful)

        by poot_rootbeer (188613) on Tuesday October 29, 2002 @05:29PM (#4559096)
        If KMart also sells off some of their Ford trucks, where would it be Ford's problem if the trucks were sold to someone else? Hell no.

        If the contract KMart and Ford signed when KMart leased a fleet of company vehicles stated that KMart could not sub-lease those vehicles to other companies, and that contract was upheld as legally valid, you're damn skippy that it would be Ford's problem.

        Microsoft IS able to determine what someone does with their licenses AFTER PURCHASE and WITHOUT SO MUCH AS A SIGNATURE as far as resale and transfer

        Bet your ass that there is a signature, made at the time of purchase, in a large corporate licensing contract like this one.

        Bet your ass that the poor KMart executive who put his John Hancock on the form is probably in the middle of his exit interview right now.

        Microsoft has decided that since there are more than likely multi-millions of dollars "worth" of MS software involved with this transaction, they are going to step in and assert their "rights".

        And what's wrong with that? No, really, I want to know what the problem is when an entity attempts to defend rights which were granted to it by law.
      • Re:FUD (Score:5, Insightful)

        by Lumpy (12016) on Tuesday October 29, 2002 @05:37PM (#4559158) Homepage
        .Microsoft IS able to determine what someone does with their licenses AFTER PURCHASE and WITHOUT SO MUCH AS A SIGNATURE

        Ahh but corperate wide licenses DO have a signature.
        They are complete legal documents that are scouered over by corperate lawyers, revised, sent back and forth until they are acceptable and then SIGNED by both parties..

        I know I recently had to shuttle around some software contracts for a simple little crappy app here... I finally gave up and forced the user to use a open source version that in the end is better anyways..

        it is really good for your company to force the lawyers to hash over EVERY EULA and contract.. it forces the users to look at open / free version before fighting for 3 months for a stupid app that they really can live without anyways....

        Out IT policy here has been "use FREE/OPen source first, closed with an EULA last." it was here before I started, and will be here a long time...
      • Re:FUD (Score:5, Informative)

        by Planesdragon (210349) <slashdot&castlesteelstone,us> on Tuesday October 29, 2002 @05:59PM (#4559334) Homepage Journal
        You MUST contact Microsoft and establish that the license can be transfered. Period.

        No. You are bound ONLY by the terms of the EULA that shows up when the software is installed (or that's included with the box when you buy your computer.)

        Read the license, understand its terms, and all will be well. The license is "permission" to make copies of the software--and if the license is voided, you no longer have permission and need to talk to MS all over again. (Or just buy a stock license.)

        That's truth. Not FUD.

        Let's look at the statement:

        " No - this is an attempt to pass on the truth. You are obfuscating the point of the story - Microsoft is FINALLY pointing out that your software licenses are THEIR property, not yours."

        Sounds like FUD to me. The SOFTWARE is MS's property, but the LICENSE is whomever paid money for it. If you get a "license" that the person who originally aqquired it is not allowed to transfer, then you don't have permission.

        You are guilty of spreading FUD, the same as someone who claims that code compiled with gcc needs to be GPL'd is. MS cannot surprise you with unforseen terms--not unless there's a "MS may modify this" clause in the license.

    • Re:FUD (Score:5, Insightful)

      by Skyshadow (508) on Tuesday October 29, 2002 @04:19PM (#4558450) Homepage
      Sorry attempt at FUD. It is Microsoft and other companies.

      It's dangerous to dismiss a major monopoly with a history of illegally abusing its position as just another company.

      This particular instance might not be such a big deal, but the prescident it establishes should make the blood of anyone who relies on business for their livelyhood (aka, just about all of us) run cold.

      The applications of this sort of thing extend way beyond K-Mart. Essentially, MS is reserving the right to decide who can transfer licenses and who cannot. This is life or death stuff, especially for any company which develops software for Windows (again, this is most development houses -- they can't escape to Linux even if it were a viable desktop replacement, which it's not).

      So, in the future, all your business decisions would be "Is this good for us?" followed immediately by "Will this piss off Bill Gates?" -- this would seem to "discourage" anyone from competing with MS in any sector, esp. competition from startups (most successful startups end up being bought, after all; investors would not want to see the possibility of this eliminated).

      Be afraid.

      • Re:FUD (Score:3, Informative)

        by HiThere (15173)
        development houses -- they can't escape to Linux even if it were a viable desktop replacement, which it's not).

        Why do you say it's not a viable desktop replacement? It might need a bit of technical support for a few days ... but not much. There is specialized software that isn't available for Linux, and some of what is available is too expensive. But how much of what is needed falls into that area?

        Linux isn't a viable desktop OS for neophytes without any support group. I'll agree with that, but that's a far different statement than your blanket assertion. For most companies, all it would take is a decision and a week or two. And you probably wouldn't move everyone. Moving 97% should suffice.

        (Of course, if this starts happening seriously, the Open Office site will need more bandwidth...)

  • How so? (Score:2, Redundant)

    by blane.bramble (133160)
    Surely if the business unit owns the licenses, and the *entire* business unit is sold (transferring the business unit to a new owner), the licenses are still valid, as they still belong to the (now renamed) business unit?
  • From the story:

    "The licenses that debtors (Kmart) have of Microsoft's products are licenses of copyrighted materials and, therefore, may not be assumed or assigned with Microsoft's consent," said Microsoft.

    That statment is confusing as hell to me. It's got to be "without" doesn't it?
  • by ackthpt (218170) on Tuesday October 29, 2002 @04:08PM (#4558299) Homepage Journal
    Must be in the new EULAs.

    A good warning to people to actually pay attention to what these travesties actually say.

    When my former employer went belly-up they sold licenses as they were assets of the company. What Microsoft is, in act, doing is making their software a non-asset, consumed immediately and utterly worthless beyond that. That's a pretty piss-poor business plan, for both parties.

  • Poor KMart (Score:5, Funny)

    by cybermace5 (446439) <g.ryan@macetech.com> on Tuesday October 29, 2002 @04:08PM (#4558300) Homepage Journal
    Seems like they can't win. First they have aggressive tactics from Wal-Mart, basically putting them out of business in many cities.

    Now Target's making a bid for power, and Wal-Mart is scurrying. KMart is left in the dust. (By the way, at Target, I notice an unusually large proportion of highly attractive women. Could Target be hiring cute 'mystery shoppers' kind of like the 'leaners' hawking cellphones at bars?)

    So now Microsoft gets in on the beating. It's just dismal.
  • by ErikRed1488 (193622) <erikdred1488@netscape.net> on Tuesday October 29, 2002 @04:10PM (#4558316) Journal
    According to the OEM EULA with Windows, the copy of Windows must remain with the hardware. The license is forever married to the box it came with. Microsoft caused a big stink about this a month or two ago, warning schools about accepting donated hardware.

    Now Microsoft is saying that normal licenses can't be transfered because the software is copyrighted?

    It was my understanding that a license was an asset. You owned it and you could transfer it. Something isn't sitting right with me here. There must be more to the story that's being left out. (Yea, I know, Microsoft is the Evil Empire. However, I still think there's more than meets the eye going on here.)
    • There must be more to the story that's being left out.

      Yeah there is. People are looking at their licenses for XP/2000/ME and assuming KMart has the exact same license. They compare Kmart selling a division to giving their little brother their old PII. This is just not the case.

      You and almost everyone else is reading too much into the story trying to find a conspiracy that doesn't exist. Try reading the article from the point of view of who the article's intended audience is. (Note: The article's intended audience was not the anti-Microsoft crowd.)

  • by signine (92535) <slashdot AT signine DOT org> on Tuesday October 29, 2002 @04:11PM (#4558323) Homepage
    The article really doesn't provide enough information to make the assumption that Microsoft is making an unfair business decision on this point. It's entirely possible that Microsoft sold licenses based upon support contracts or a subscription-based service offered only to K-Mart, or possibly even custom code to drive the site. Without this knowledge it's difficult to make a valid assumption as to whether or not Microsoft is being unfair with this particular dispute.

    This is probably the same reason Microsoft is objecting, with a business that large it's hard to keep track of all of your clients and what exactly they have from you. Would you allow a company to sell 10,000 licenses for software that you had given them on the basis that they were maintaining a multi-million dollar support contract with you? I don't think so, and though it would be up to the company to make sure the support contracts were upheld, this would only be the case if they were notified of this dependency and paperwork was filed, etc.

    Microsoft may very well be in the right in saying "Hey, you should tell us what of our intellectual property you're selling before you sell it."
  • by intermodal (534361) on Tuesday October 29, 2002 @04:13PM (#4558348) Homepage Journal
    They're selling the business unit, not the computers themselves alone. They're selling the owner of the license. If i were a slave and had a license for Windows, and I were sold but the PC was still considered in some contrived manner to be mine and came with me, would I have to relicense? no. Because I'm licensed. How should that work any different for a business unit?
    • by Zathrus (232140) on Tuesday October 29, 2002 @04:23PM (#4558490) Homepage
      I believe the question is who actually owns the licenses.

      If Bluelight owns the licenses then it's a non-issue - they own the license, they're being sold, and the computers are moving with them. There is no transferal of license.

      If, however, K-Mart owns the licenses then it's a question of tranferrence - now K-Mart is selling a business unit and a bunch of computers which are not owned by the business unit. That's legally shaky, at least if you follow the EULA.

      There may be a bigger question of whether or not the EULA is enforceable, but I suspect MS's lawyers will ensure that that question never comes up. If it does, expect them to drop the case suddenly.
  • by kenp2002 (545495) on Tuesday October 29, 2002 @04:16PM (#4558391) Homepage Journal
    Wow! I never thought that Microsoft would so carelessly sign it's own death warrant! When it comes to business, don't rock the boat. Microsoft is meddling in the business affairs of corporations. It's one thing to piss of the mob. Worse case scenario is they kill you. Piss of a corporation... damn I don't even want to think about it... endless litigations and court appearances so you can keep a job, blacklisting, starving, no home... jeez what a living hell....

    !!!!!!!WARNING!!!!!!!
    Sorry this post has ended due to the fact it's author is now rocking himself back and forth sucking on the collar of his shirt mumbling

    "Ticky Tack, Ticky Tack, Lawyers Coming, Give Me That! Got No Job, Got No Life, Got no Money, got No Wife!"

  • by mgkimsal2 (200677) on Tuesday October 29, 2002 @04:17PM (#4558412) Homepage
    From what I gather, this isn't specifically a EULA issue in that the 'end user' agreement wouldn't necessarily state anything about this. I'm going out on a limb to guess that - as with most big companies - Kmart negotiated a blanket licensing deal with MS. THOSE terms most likely dictate that in consideration for 'less than market rates' for the software, certain terms apply. If Kmart actually paid 100% 'retail' price for each desktop, each SQL server, and everything else, they could probably simply abide by the 'transfer' clause in the standard EULA (you can transfer, but remove the original copy on first machine). I don't think anything's that cut and dried when you're talking millions of dollars and MS (or any other sufficiently large software house - could you easily transfer millions of dollars of Norton AV from one company to another? Or Adobe stuff?)
  • Not Just MS (Score:4, Insightful)

    by istartedi (132515) on Tuesday October 29, 2002 @04:17PM (#4558413) Journal

    What if their plans included "a bunch of Dell computers" or "some unspecified number of RedHat and IBM support contracts". The same thing would probably happen. Given the state of corporate accounting, it wouldn't surprise me to see spreadsheet entries that specify "a truckload of stuff" worth "a lot of money". MS (or any company) can't afford to let stuff like this slide. Otherwise Bluelight could claim to have more than what they really have, and since it was an uncontested public statement a judge would ask "why didn't you contest this earlier" if MS later complained about fraudulent licenses.

  • by raehl (609729) <raehl311@[ ]oo.com ['yah' in gap]> on Tuesday October 29, 2002 @04:18PM (#4558424) Homepage
    I don't think we're talking about EULA licenses or licenses for software that K-Mart purchased. We're talking about licenses for software that is licensed as in RENTED.

    A lot of software is sold on a "Pay me $X per year to use our software" agreement, and along with that you get support, new versions, etc. Microsoft is moving to that model over the old "Pay us $X everytime you upgrade" model. Too many businesses electing to simply just not pay to upgrade their windows versions when the old ones work.

    Microsoft wants to know who it is licensing its software to, and maybe also prevent its licenses from being transferred to another party (and thus preventing the sale of new licenses to that party). It's no different than your landlord not letting you sublet your apartment to anyone without their permission.
    • Re: sublets (Score:4, Informative)

      by coyote-san (38515) on Tuesday October 29, 2002 @04:43PM (#4558672)
      Actually, it's very different from your landlord having the final say on sublets.

      When you lease an apartment, you owe payments until the end of the lease. You're also accepting responsibility for any damage to the apartment.

      When you sublet it, you're asking the landlord to accept a lot more risk of late payments, damage to this unit or others, even damage to the reputation of the complex (e.g., because the guy you sublet it to is dealing out of it). They may not want the hassles, or may not feel that you have the resources to compensate you if the worst comes to pass. That's why they want to have a say in who you sublet the apartment to.

      In contrast, Microsoft really isn't out anything here except the possibility of new sales. K-Mart isn't getting a rebate on the purchase price of its software, or obligated to continue paying for support contracts (assuming it's soon in bankruptcy and a court is invalidating ongoing contracts.)
  • Cray and UNICOS (Score:4, Interesting)

    by lostchicken (226656) on Tuesday October 29, 2002 @04:18PM (#4558433)
    Ever wonder why there is no market for used Crays in the hobbyist market like there is for other systems (VAXen, IBM S/370, etc.)? It's because there is a similar no transfer clause in the UNICOS (Cray UNIX) agreement.

    This kind of thing keeps the price of systems on ebay down, and would prevent some company based on UNICOS (weather analysis, etc.) from being sold. While this kind of action is deplorable, it isn't new.
  • Don't worry (Score:3, Interesting)

    by SexyKellyOsbourne (606860) on Tuesday October 29, 2002 @04:18PM (#4558435) Journal
    As long as Microsoft hasn't pulled any of their infamous dirty tricks, a fair and partial judge will throw this silly case right out of the courtroom.

    It has no legal precedence, and most importantly, no common sense whatsoever. Microsoft is just trying to use the crooked US justice system to make a quick grab for the assets of an $80 million company, though chances are it will be only the lawyers who win anything.

    If Microsoft does win, the Supreme Court would have their say -- and if Microsoft takes over the Supreme Court, then we're doomed in so many other ways that open revolt is our only choice.
  • by Andy Dodd (701) <atd7@corne[ ]edu ['ll.' in gap]> on Tuesday October 29, 2002 @04:18PM (#4558439) Homepage
    The company I work for was bought out by a larger company at the beginning of the summer.

    This week we received an email stating that unless we can convince the IT people that we have a specific need for Microsoft Access, it will be removed from all PCs belonging to the old company.

    Why? Our site license for Access didn't transfer when we were bought.
  • Is GPL better? (Score:4, Interesting)

    by linuxwrangler (582055) on Tuesday October 29, 2002 @04:23PM (#4558480)
    IANAL so I've always wondered about the following: Let's say I have a company and I build a bunch of for-internal-use-only custom modifications of GPL software. That seems fine by GPL standards.

    But...

    What if I decide to sell my company? The software I've developed is certainly an integral part of the value of my company. Would GPL require me to publish all of the modified source code if I sell the company?
    • Re:Is GPL better? (Score:4, Informative)

      by Kismet (13199) <pmccombs@NOsPaM.acm.org> on Tuesday October 29, 2002 @04:56PM (#4558776) Homepage
      What if I decide to sell my company? The software I've developed is certainly an integral part of the value of my company. Would GPL require me to publish all of the modified source code if I sell the company?

      No. You don't even have to hand it over to the new owners if you don't want them to have it, unless, of course, you are letting them use the binaries.

      The source and binaries accompany each other under the GPL, or at least they are both availble. Unless you are selling your company to the general public, you don't have to release your code to the general public.
  • by Slashdot Junky (265039) on Tuesday October 29, 2002 @04:26PM (#4558516)
    Dear World,

    IMHO...Microsoft wouldn't be pushing this if Bluelight.com and United Online were textile companies. They are Internet Service Providers and as such, direct competitors of MSN. Microsoft is on a 300M push of MSN now, so they need to disrupt its competition.

    Companies change hands all of the time. Have you heard about this happening before? I haven't and suspect that you haven't as well. So, what's he real motivation? I say it is to help MSN by preventing the sale.

    Later,
    -Slashdot Junky
  • by quacking duck (607555) on Tuesday October 29, 2002 @04:30PM (#4558552)
    So we have telecoms like Cisco and Nortel selling far too much equipment like routers and switches a few years ago to hundreds of companies that didn't survive the dot bomb. Now they can't move new equipment out into the market because the equipment has been sold off to clearing houses at ridiculously small fractions of their purchase price, then being sold again by these clearing houses to companies still standing for a considerable profit (but still far less expensive than new from Cisco or Nortel).

    I'm sure the telcos would just LOVE to include a "cannot resell" clause to equipment purchases, but they can't (can you just imagine some of the other clauses they'd eventually have to put in, "this router cannot be used in the illegal transfer of data, as defined by the DCMA"). Why should MS (or any other software company for that matter) be able to restrict the sale and transfer of licenses, so long as the original owners have no copies remaining? They're no more deserving of assured profit via new product purchases than the telcos are.
  • by Spencerian (465343) on Tuesday October 29, 2002 @04:32PM (#4558577) Homepage Journal
    MS LICENSING AGENT [on phone, reviewing a file]:

    I zee...this is all well and good, but I do not zee your PAPERS. You must have the proper papers! Vere are your papers!? Don't wait for ze phone delay--answer me now!!!
  • by gillbates (106458) on Tuesday October 29, 2002 @04:38PM (#4558636) Homepage Journal
    The licenses that debtors (Kmart) have of Microsoft's products are licenses of copyrighted materials and, therefore, may not be assumed or assigned with Microsoft's consent

    Is the nerve that they have to say this. Basically, what they're claiming is that even thought Kmart paid for the licenses, it can't resell them without Microsoft's consent. This has nothing to do with a EULA - Kmart is not the end user. What Microsoft is asserting is that buying something from Microsoft no longer entitles you to the rights of ownership.

    The real reason why this is important is because this was a software sale, not a license. Microsoft sold Kmart the licenses. Unlike most users of Windows, which merely license the code, KMart bought licenses with the explicit purpose of redestribution, and now Microsoft is claiming that Kmart cannot sell what it legally owns, because of copyright restrictions. But Microsoft didn't license the software, they sold it as a commodity. So copyright shouldn't apply.

  • by Tablizer (95088) on Tuesday October 29, 2002 @04:48PM (#4558722) Homepage Journal
    "There's only 3 certainties in the world, my Son: Death, Taxes, and Microsoft; and Microsoft makes the first two worse."
  • by Tuckdogg (550113) <jswhite.atty@ g m ail.com> on Tuesday October 29, 2002 @05:01PM (#4558817) Homepage Journal
    Her bill [house.gov] that she introduced near the end of this legislative session (the companion bill to Boucher's) would formally extend the doctrine of first sale to cover this sort of situation (i.e. once you've purchased a license, you can transfer your rights to another person or entity without the permission of the copyright owner). Then we wouldn't even be talking about all this.
  • by alispguru (72689) <bane AT gst DOT com> on Tuesday October 29, 2002 @05:26PM (#4559063) Journal

    Kmart said the sale included one server license and 25 desktop licenses it bought from Microsoft.

    So, they're holding up an $8.4 million dollar transaction over a transfer of licenses worth, what, $10,000? Less?? Someone's priorities are screwed up here - KMart should just throw those licenses on the floor.
  • by donutello (88309) on Tuesday October 29, 2002 @05:39PM (#4559174) Homepage
    Kmart asked the court [marketwatch.com] to overrule Microsoft's objection, saying the licenses the software maker referred to were not part of the sale. Kmart said the sale included one server license and 25 desktop licenses it bought from Microsoft.

    It sounds like Kmart and Microsoft agree about what Kmart can or cannot do with the licenses and that it was merely a case of KMart not specifying that the licenses being talked about were not part of the sale.
  • Right of First Sale (Score:3, Interesting)

    by HaeMaker (221642) on Tuesday October 29, 2002 @06:00PM (#4559344) Homepage
    Remember when Adobe sued that guy for breaking up the Adobe packaged software and sold them individually. Adobe sued for voilating the license. The judge ruled that the seller had the "Right of First Sale" and was permitted to sell the software.

    The same holds for K-Mart. They own the software licenses, they have the right to sell their license to anyone, and I am confident the court will hold as such.
  • by erroneus (253617) on Tuesday October 29, 2002 @06:08PM (#4559427) Homepage
    Do you recall a MS FUD campaign having to do with donating PCs telling recipients not to accept the PCs without the software licenses that go with it? Aren't these licenses ALSO non-transferable or am I missing something?

    For MS to warn people against accepting free hardware without the software would seem to be encouraging piracy somehow wouldn't it? After all, MS clearly does not respect license transfers. So in the end, MS has been telling people to require non-transferable licenses and to operate these donated PCs illegally.

    Makes ya wonder doesn't it?
  • by 4of12 (97621) on Tuesday October 29, 2002 @06:14PM (#4559471) Homepage Journal

    Microsoft has hereby succeeded in defining software as a service instead of an asset, which is what they've been trying to move towards all along because it represents a more lucrative revenue model than selling something that can be used and used and used until you get decide you want something more.

    It will be interesting to see how this plays out in the long term.

    Fundamentally there's no reason why a bunch of instructions on a hard disk cannot be used a whole heckuva a lot more than till the next upgrade cycle. Neither is there any good reason I can see why it can't simply sold outright to someone else that wants to use it. Of course, when Palladium and hardware locking becomes tighter, time-bombed software will make it easier for this model to be enforced. Meanwhile, there's growing quantities and quality of free software that can be run AS MUCH AS YOU LIKE!

    This will mean that many current businesses may be severely overvalued. Their true worth in sale will be much less if critical parts of their infrastructure are not transferable.

    You think Qwest's recent $4e10 write-down of its networks is large? How much have businesses invested in Microsoft software?

  • by Lucas Membrane (524640) on Tuesday October 29, 2002 @08:35PM (#4560467)
    Back about 10 years ago, the New York Times did a piece on a firm of lawyers in Texas that was particularly (ie vicious and nasty) respected because they could put anyone away with their particularly hard-hitting tactics, like depositioning the executives of a software firn to death while their business went to hell. The firm's initials were B & B. They developed these tactics about transfers of software to other firms in various deals. A certain insurance company had licensed software from a big software company. The insurance company got into financial trouble, divested some subsidiaries, and then outsourced its data center to a firm that was not the author of the insurance system running in the data center. B & B showed up representing the company that marketed the system and sued. During the trial, the people who had 'written' the system testified that they had copied it directly from a system put into the public domain by IBM, but B&B managed to 'win' the case by forcing both the insurance company and their data center outsourcer to surrender under the legal onslaught.
  • by Proudrooster (580120) on Tuesday October 29, 2002 @08:57PM (#4560605) Homepage
    Kmart said the sale included one server license and 25 desktop licenses it bought from Microsoft.

    All this over 25 licenses? Who cares about 25 licenses? This isn't even worth the "evil lawyers" fees?

    There has got to be more to this story. Maybe Microsoft legal just sends out a boilerplate document and objects to any and all Chapter 11 filings. I'd like to know more about this story if anyone has more details.

    Stories like this are great to save in my file and drag out for the next Open Source vs. Proprietary Software license debate.
  • by salesgeek (263995) on Tuesday October 29, 2002 @11:25PM (#4561414) Homepage
    I've been selling technology for a while and four things really have bothered me about software:

    1) It's almost always overpriced.
    2) It generally is oversold and doesn't deliver.
    3) There's no consumer recourse if it doesn't work.
    4) The license "agreement" is usually total unfair to the customer.

    Say what you will, but why do I want to pay too much for broken software that doesn't do what it's supposed to do that ties me up with strings like Gulliver? This is just another example where KMART/BLUELIGHT/Whoever:

    1) Paid too much for their software
    2) It was oversold
    3) It underdelivered
    4) The license is hosing the buyer

    Enough already. Don't these people know the number one rule for a parasite is not to kill the host!?

    $G

If I had only known, I would have been a locksmith. -- Albert Einstein

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