Microsoft this week was sued in a Washington district court for allegedly violating privacy laws through Windows XP's Windows Genuine Advantage (WGA) copy protection scheme. Similar to cases filed in 2006, the new class action case accuses Microsoft of falsely representing what information WGA would send to verify the authenticity of Windows and that it would send back information [daily ip address and other details that could be used to trace information back to a home or user].
The complaint further argued that Microsoft portrayed WGA as a necessary security update rather than acknowledge its copy protection nature in the update. WGA's implementation also prevented users from purging the protection from their PCs without completely reformatting a computer's system drive.
There were at least two other lawsuits launched in 2006 over WGA. According to the Wikipedia article, none of them have been resolved. The system is built into Vista and Windows 7. It is something that should be avoided by people who value their privacy and any business that has to follow laws such as HIPPA."