“This is a difficult sentencing,” Senior U.S. District Judge Daniel T.K. Hurley told him last year, “because I credit everything you are telling me, you are a very remarkable person.”

Before he launched his company, IT Asset Partners, Lundgren lived in China, learning about the stream of e-waste and finding ways to send cheap parts to America to keep electronics running. One of his projects was to manufacture thousands of “restore disks,” usually supplied by computer-makers as a way for users to restore Windows to a hard drive if it crashes or must be wiped. The disks can be used only on a computer that already has a license for the Windows operating system, and the license transfers with the computer for its full life span. But computer owners often lose or throw out the disks, and though the operating system can be downloaded free on a licensed computer, Lundgren realized that many people didn’t feel competent to do that, and were simply throwing out their computers and buying new ones.

Lundgren had 28,000 of the disks made and shipped to a broker in Florida. Their plan was to sell the disks to computer refurbishing shops for about 25 cents apiece, so the refurbishers could provide the disks to used-computer buyers and wouldn’t have to take the time to create the disks themselves. In turn, the new users might be able to use the disks to keep their computers going the next time a problem occurred.

But Lundgren’s assertions about restore disks don’t apply to computers that go to refurbishers, the court concluded. While software licenses transfer when computers change hands among individuals, commercial sellers like refurbishers must buy new licenses for $25, according to Microsoft. The company said refurbishers would not be creating new restore disks, but would instead get them with the license purchase and supply those to its customers.

But in 2012, U.S. customs officers seized a shipment of disks and began investigating. The disks were never sold. Eventually, the Florida broker, Robert Wolff, called Lundgren and offered to buy the disks himself as part of a government sting, Lundgren said. Wolff sent Lundgren $3,400, and the conspiracy was cemented. Both were indicted on a charge of conspiracy to traffic in counterfeit goods and criminal copyright infringement. Wolff made a plea deal and received a six-month home-arrest sentence.

Lundgren pleaded guilty but argued that the value of his disks was zero, so there was no harm to anyone. Neither Microsoft nor any computer manufacturers sell restore disks. They supply them free with new computers and make the software available for free downloading for those who have paid for the software and received a license — typically a sticker with a “Certificate of Authenticity” number on it. Lundgren said that he was trying to make the disks available for those who needed them and that they could be used only on licensed computers.

Initially, federal prosecutors valued the disks at $299 each, the cost of a brand-new Windows operating system, and Lundgren’s indictment claimed he had cost Microsoft $8.3 million in lost sales. By the time of sentencing, a Microsoft letter to Hurley and a Microsoft expert witness had reduced the value of the disks to $25 apiece, stating that was what Microsoft charged refurbishers for such disks.

But both the letter and the expert were pricing a disk that came with a Microsoft license. “These sales of counterfeit operating systems,” Microsoft lawyer Bonnie MacNaughton wrote to the judge, “displaced Microsoft’s potential sales of genuine operating systems.” But Lundgren’s disks had no licenses and were intended for computers that already had licenses.

Glenn Weadock, a former expert witness for the government in its antitrust case against Microsoft, was asked, “In your opinion, without a code, either product key or COA [Certificate of Authenticity], what is the value of these reinstallation disks?”

“Zero or near zero,” Weadock said.

Why would anybody pay for one? Lundgren’s lawyer asked.

“There is a convenience factor associated with them,” Weadock said.

Still, Hurley decided Lundgren’s 28,000 restore disks had a value of $700,000, and that dollar amount qualified Lundgren for a 15-month term and a $50,000 fine. The judge said he disregarded Weadock’s testimony. “I don’t think anybody in that courtroom understood what a restore disk was,” Lundgren said.

A three-judge panel of the 11th Circuit deferred to Hurley in his judgment that Weadock was not credible and that “while experts on both sides may have identified differences in functionality in the discs, [Hurley] did not clearly err in finding them substantially equivalent.” The ruling was written by Judges William H. Pryor Jr., Beverly B. Martin and R. Lanier Anderson.

Randall Newman, Lundgren’s lawyer on the appeal, said there was no basis to seek a rehearing from the full 11th Circuit. Lundgren said an appeal to the Supreme Court would be a costly long shot.

But he said the court had set a precedent for Microsoft and other software-makers to pursue criminal cases against those seeking to extend the life span of computers. “I got in the way of their agenda,” Lundgren said, “this profit model that’s way more profitable than I could ever be.”

https://www.washingtonpost.com/news/true-crime/wp/2018/04/24/recycling-innovator-eric-lundgren-loses-appeal-on-computer-restore-discs-must-serve-15-month-prison-term/?noredirect=on&utm_term=.fa174992a425

(http://www.autoadmit.com/thread.php?thread_id=3987448&forum_id=2#36134427)

He’ll probably get off after 4

(http://www.autoadmit.com/thread.php?thread_id=3987448&forum_id=2#36135064)

whatever

(http://www.autoadmit.com/thread.php?thread_id=3987448&forum_id=2#36137456)

Lundgren went to great lengths to make sure the disks looked as authentic as possible. They were sold for profit.

US customs would not give a shit if these were generic CDs/DVDs -- that's how Lundgren was caught in the first place.

This practice of selling counterfeit disks cuts into Microsoft's business so of course they would have an incentive to stop it. And they are certainly entitled to do that.

(http://www.autoadmit.com/thread.php?thread_id=3987448&forum_id=2#36135029)

Putting the logo on is obviously illegal, but they made sure the disks looked authentic enough to fool customs.

Even without the logo, the CDs are copyrighted, but Customs likely wouldn't have cared.

(http://www.autoadmit.com/thread.php?thread_id=3987448&forum_id=2#36135044)

Lundgren also pleaded guilty to infringing Dell's trademark in trying to make the disks look as authentic as possible -- these were restore disks for Dell computers. It wasn't merely using the MS logo to indicate Microsoft software as you seem to believe. The disks were being sold for between $1 and $2 a pop. When you multiply that by hundreds of thousands of CDs, it adds up.

Also, you can download essentially all Microsoft install binaries (Windows, Office, etc.) off their website, but counterfeiting these disks and importing them them isn't any less illegal.

This practice of refurbishing reusing old computers is at odds with MS's goal to sell people on new software.

(http://www.autoadmit.com/thread.php?thread_id=3987448&forum_id=2#36138122)

Microsoft (or Dell or any of the OEMs) can be a bully, but Lundgren is hardly the sympathetic protagonist the articles make him out to be.

(http://www.autoadmit.com/thread.php?thread_id=3987448&forum_id=2#36138164)

The installation and damages part isn't hard to explain well.

In order to install and use Windows, you need two things: (1) the installation files and (2) a code to unlock Windows. The code is what's valuable to Microsoft. The defendant was only giving away the readily available files, not the critical and valuable code.

I don't see why the government wanted to fuck this guy on the value, and the judge is just a moron.

(http://www.autoadmit.com/thread.php?thread_id=3987448&forum_id=2#36137417)

Exactly. Lundgren could've provided download links to the files. No one would've cared. Lundgren probably could've even duplicated the restore CDs to sell -- it's technically illegal -- but I don't think anyone (US Customs or MS) would care or notice. I think this is what everyone here thinks is happening, that Lundgren merely duplicated CDs and got sent to jail. That's certainly how the OP article portrays the situation.

The problem is that Lundgren went to lengths to copy the exact visual appearance of OEM restore CDs, including MS and OEM (e.g., Dell) logos. They could be passed off as authentic disks, because resellers/refurbishers want to package the computers with an authentic disk. The appearance of authenticity itself has value, the convenience of having a restore disk on hand has value. The value is on the order of dollars, but when you sell hundreds of thousands of these, it adds up.

(http://www.autoadmit.com/thread.php?thread_id=3987448&forum_id=2#36144096)

That's what you get for having a fucking ancient judge.

(http://www.autoadmit.com/thread.php?thread_id=3987448&forum_id=2#36137446)

And it is old for judges. That's why he's eligible for senior status.

(http://www.autoadmit.com/thread.php?thread_id=3987448&forum_id=2#36139851)

the "law" is flame.

the mutability of the law is what i hated the most about it and why i never wanted to go into it.

(http://www.autoadmit.com/thread.php?thread_id=3987448&forum_id=2#36139504)