Former StarWorks head found guilty of copyright and trademark infringementThe debate surrounding software licensing on second-hand PCs heated up again last week when Theresa Milosevic, former director of used PC retailer StarWorks, was found guilty of infringing copyright and trademark rights.
As the sole director of StarWorks, Milosevic has been held personally liable for copyright and trademark infringements against the software giant.
The news was greeted with mixed responses from second-hand PC resellers nationwide, with many angry at Microsoft's attitude towards its market segment.
Peter McLean, Microsoft business development manager for OEM, explained the company's official position, with respect to second-hand systems. "When resellers are purchasing used PCs, they have to be absolutely diligent. They have to make sure that every machine running on an operating system comes with the original media, the manual and the licence," he said.
"What many people don't realise is that the operating system comes with the machine it gets loaded onto originally. The licence is then tied to that PC. It becomes part of the value of the computer, but it is only valid if it comes with the appropriate material."
However, as many second-hand resellers were quick to point out, this view of the world is unrealistic, to say the very least.
Bill Bowman, joint owner of second-hand PC reseller Second Byte, pointed out that although the software had been legally purchased in the first instance, the original media, manuals and certificates had often been misplaced when a PC was put up for resale.
"Microsoft really needs to make it easier for second-hand PC resellers," Bowman said.
Like many in the industry, Bowman feels threatened by the lists of ongoing legal actions Microsoft sends out to its channel partners each month. "You feel bad even if you haven't done anything wrong," he said.
According to Microsoft's McLean, second-hand resellers are able to obtain OEM-style copies of Microsoft operating systems and are welcome to provide them with used machines.
"Under the terms of the OEM contract, they can obtain OEM copies and load them on to second-hand machines as long as they provide appropriate support services to their customers," McLean said.
OEM copies of the software can be obtained from major distributors, and are significantly more cheaply than their off-the-shelf counterparts.
However, Microsoft is not going far enough, according to many used PC resellers, because even at a reduced price the purchase of a new operating system can significantly add to the price of a second-hand computer.
One reseller who refused to be named told ARN that Microsoft's proposal was preposterous, as it failed to cover many major sources of used PCs - ex-government stock.
"The licences that come with ex-govie PCs are null and void because they had been sold to the government," he said. "Sure you can go out and buy an OEM version for about $110, but when you are only selling the computer for $200, it is just not worth it."
John Ferrett, co-director of Brisbane-based dealer The Computer Market, rejects the notion that resellers are unaware of their obligations when it comes to software licensing, calling a channel company's failure to comply with appropriate regulations "negligent".
"We make sure our computers are sold with no operating system or with the media, manuals and licence strapped to the top," Ferrett said.
The StarWorks saga began in May 1999 when Milosevic faced court as director of second-hand PC trading company Passions, which operated under the trading name of StarWorks Promotions and Marketing.
Microsoft initially took action against the company for the illegal supply of unlicensed operating systems. It was alleged StarWorks had supplied second-hand PCs ready loaded with copies of Microsoft software in both Australia and New Zealand, an activity which is in breach of Microsoft's licensing agreements.
The Federal Court last week declared Milosevic guilty of infringing the copyright and trademark rights of Microsoft. As the sole director of StarWorks, Milosevic has been held personally liable for the copyright and trademark infringements.
According to Microsoft, the Federal Court is also holding her personally responsible for the "misleading and deceptive conduct" committed by her company in breach of the Trade Practices Act.
While Microsoft's McLean said the company was doing as much as it could to keep its channel partners informed about their copyright obligations, he conceded more could be done. He said Microsoft was currently reviewing the nature of its relationship with second-hand PC resellers and was in the process of revamping its approach accordingly.