Microsoft Under Fire for Role in Counterfeiting Case (Premium)

Microsoft’s role in the conviction of a software counterfeiter has many up in arms. It also has bloggers lining up along predictable partisan lines.

So what’s really happening here?

As I’m sure you heard, an “e-waste activist” named Eric Lundgren illegally created fake Microsoft restore discs and then sold them to individuals who believed they were buying the real thing. He was charged with violating Microsoft’s intellectual property rights by the U.S. government, tried in federal court, and sentenced to 15 months in federal prison and ordered to pay Microsoft $700,000 in damages.

There are many controversial aspects to this story. So Microsoft has helpfully posted a list of facts about the case. Key among them is that software giant did not bring this case to the government. Also, Lundgren admitted that he personally profited from the sale of the discs, and he pleaded guilty to the charges brought against him by the U.S. government.

But there are two sides to everything, and this case is a fascinating study in that truth of that adage.

On the one hand, the software that Lundgren duplicated was given away for free so many see that action has non-injurious.

However, Lundgren didn’t engage in this duplication for charitable purposes. He was selling the discs and making a profit from this effort, which involved creating discs of Microsoft software that looked official. Which, free or not, is a big part of the problem.

Stories like this make people stupid.

Over at Silicon Valley-friendly TechCrunch, for example, Microsoft’s explanation of its actions are just “spin.” Worse, it accuses Microsoft of lying to the court using incredibly hurt language—“Microsoft has continually misrepresented … [has] falsely claimed…”—to … do what? Have its lying put on the public record so some idiot from TechCrunch could take out his years of hating Microsoft for what it did to Linux in the early 2000s? You know it’s exactly that dumb.

But let’s not give the people on the Redmond side of the fence a pass. They are just as reliably predictable, lining up, as they must, behind their favorite company.

“Everyone needs to get off Microsoft’s back for Eric Lundgren’s jail sentence for counterfeiting,” the headline of a post on OnMSFT screeches in support of the home team. Please.

So what’s my take?

For all of its communication issues, Microsoft’s characterizations of Lungden and his activities is not a “misrepresentation,” as TechCrunch claims. But then the company is not as squeaky-clean as OnMSFT would like you to believe in that alternate universe where it must be right because Microsoft did it. After all, Microsoft could have declined to aid the government case by explaining that it was not interested in harming an individual that did it no harm. Microsoft did not do that.

Which is fine. Microsoft isn’t a human being, it’s a gigantic corporation that has far different issues to deal with than you or I. So Microsoft’s actions should be viewed under the correct lens, which could be considered a legal or corporate governance one.

Microsoft helped the U.S. government effort to convict Eric Lundgren because it had to. Lundgren’s central crime isn’t counterfeiting, it’s intellectual property infringement. (Look at the language of the original charge in the case.) As the owner of the infringed intellectual property, Microsoft, like every other IP owner, is obligated to defend that ownership in court. Confronted by the fact that this guy was making fake Windows restore discs and selling them, what else could Microsoft do? Show him the other cheek? Microsoft isn’t Jesus, folks. It’s a giant U.S-based corporation. Protecting its IP rights in court. As such entities do. Must do.

Point being, you can’t fault Microsoft for doing what it did. But you can fault Eric Lundgren for what he did. And while he is trying really hard to make it look like big, bad Microsoft is just coming down on him like a ton of bricks, the fact remains that he did what he did. And I can’t imagine, as he was duplicating all those discs in legally-gray China, that he didn’t know full well what he was doing and why.

Yes, we can and should debate whether the sentence was too strict. I happen to think it was, and that the U.S. government was perhaps overly-zealous in the prosecution of this case.

But this guy knew what he was getting into, and he didn’t do it for altruistic reasons. His motivation, as Microsoft claims “was to sell counterfeit software to generate income for himself.”

On that note, finally, Microsoft landed the communication.