Microsoft is suing the UK electrical retailer Comet for allegedly creating and selling more than 94,000 counterfeit Windows recovery CDs.
Microsoft is suing UK retailer Comet over claims it sold thousands of counterfeit Windows recovery disks. Photo credit: Tomylees/Flickr
The software giant took its case to the UK High Court on Wednesday, claiming Comet had made money from sales of sets of knock-off Windows Vista and Windows XP recovery disks.
"As detailed in the complaint filed today, Comet produced and sold thousands of counterfeit Windows CDs to unsuspecting customers in the United Kingdom," Microsoft associate general counsel David Finn said in a statement.
According to Microsoft, Comet produced the fakes in a Hampshire factory and sold them across its outlets. The retailer, which is in the process of being sold by European parent group Kesa to investment firm OpCapita, has almost 250 high street and out-of-town stores across the UK.
Finn described the alleged counterfeiting as "unfair" to Comet's customers and said Microsoft expected better from its retailers. Microsoft has previously cracked down on smaller UK resellers that sold PCs with illegal copies of Windows preinstalled.
In response, Comet said it supplied buyers with the disks because manufacturers rarely bundle them with their PCs any more, and that it made them "on behalf of its customers".
"Comet firmly believes that it acted in the very best interests of its customers," the retailer said in a statement. "It believes its customers had been adversely affected by the decision to stop supplying recovery disks with each new Microsoft Operating System-based computer. Accordingly, Comet is satisfied that it has a good defence to the claim and will defend its position vigorously."
Windows recovery disks are used for fresh re-installations of the operating system, which comes preinstalled on almost every PC sold. However, PC manufacturers have in recent years increasingly moved away from bundling such disks with their computers, instead putting the software onto special hard drive partitions in the expectation that customers will make their own recovery disks.
Iain Connor, an intellectual property specialist at law firm Pinsent Masons, described the legal position as "narrowly drawn". He said anyone reproducing Microsoft's software on disks is clearly infringing on its copyright, but noted the law allows third parties to make copies on behalf of buyers as long as there is no extra economic benefit.
"Comet is trying to deliver a customer need, but if they are charging separately rather than just making back-up copies for their customers, they are depriving Microsoft of the opportunity to make money and they are cashing in when they shouldn't," Connor said in a statement.
"On the facts, Comet will struggle to mount the back-up copy defence by saying they are just protecting their customers' investment in the software, because the disks are being sold separately," he added. "If the disks had been bundled with the PC at the point of sale, I think they would be on much stronger ground. I think they are in trouble".
Get the latest technology news and analysis, blogs and reviews delivered directly to your inbox with ZDNet UK's newsletters.
Talkback
And there was me thinking that the couterfeit bit would be if they sold the PC with an invalid windows license sticker on the base; the disc itself is a vanilla copy of windows without a license key. What exactly are microsoft beefing about?
Microsoft certainly do know how to alienate, screw or disregard their own customers, don't they? As Comet say, they are doing this on behalf of their customers. It is reasonable to make a charge for this service, after all it is a service and a welcome one.
I wonder, absent a recovery disk, how many genuine users are faced with the considerably higher cost of purchasing a new copy of Windows when things go wrong; or a manufacturer's recovery disk, if available.
I don't know very many people who do actually do make their own recovery disks when they buy a new computer or, as I do, make an image of the whole disk once the extended installation/update process is completed and my choice of software, security etc. has been installed.
Microsoft doing this to comet doesn't make any sense at all. Comet are struggling and Microsoft are kicking them into the ground. Not the sort of thing we want to see in a recession.
Microsoft are also giving the impression to Comets Customers that Microsoft believe that the customers that lost their recovery partition DESERVE to have a computer that they cannot use.
This is so silly, I can't believe it.
I worked for DSG warranty support and I personally took a call from a UK director at Microsoft (a lady) who ordered us to provide a copy of the recovery media for that machine. The customer had wiped the hidden partition themselves, not realising that recovery disks were not provided.
Being fully aware of DSG's procedures in such cases, our stand was to not supply recovery disks and to refer them to microsoft to order a full OEM copy of windows. This policy was in fact dictated to us by Microsoft.
In this particular case, Microsoft could see that the customer had a license for windows, therefore was entitled to a copy of windows. They could also see that it wouldn't be right for the customer to have a pc that they couldn't use just because of their own dictated policy.
They could see it wasn't right, but they didn't want to send an OEM disk to the customer.
So, they ORDERED us to do the very same thing that they are now suing comet for.
This is plain stupid. I hope a judge makes referrals to Europe over this and that Microsoft end up with the biggest fine they have ever had. Microsofts attitude on this is out of order. If they didn't want this to happen, they should not have dicated such an unfair policy to all of it's PC distibutors. Microsoft CAUSED this problem, and now they want to sue another company for the very problem they themselves caused.
This is a crazy lawsuit but this happens every day with large corporations. They spend half of the day suing and counter-suing each other. It's a tremendous waste of money and resources and it's inspired by nothing more than base greed.
Not only did Microsoft used to supply CDs with Windows on them they would also supply a replacement CD as required under copyright laws because you never actually "own" a copy of Windows you are merely granted a license to use it! Microsoft used to charge around £13 for a CD/DVD as I remember although it was a few years ago. I think they later made it the responsibility of the OEM, eg DELL or IBM to supply replacement media. Anyone know if that is still the case? The other point in question is the replacement of hard drives. Many laptops are come with drives that are easy to replace, does fitting a new drive (even one supplied by the OEM) remove the backup software? In most cases it does, I have never know an OEM supply a full working copy of software pre-installed on a replacement drive.
The story here isn't the fact that Comet manufactured and sold a Windows 7 OEM Install Disk (Recovery Disk) without a Licence Key and sold it for £14.99.
Its the fact 94,000 of Comet's Customers of Windows PCs needed to restore their installation of Windows 7 and were desperate enough to pay Comet £14.99, on top of the cost of the PC, as all else had failed.
Out of the box, without the most recent updates applied, rogue anti-virus software can easily bypass out-of-date installs of Java Runtime, and other exploits. Most Anti-virus is trialled, again of little value without the most upto date virus definitions, often a paid subscription extra.
You can see how unsuspecting customers found their Windows Machines infected, without the ability to use the hard disk based restore process. Head to the wrong type of website, and Windows is very vunerable 'out of the box', whatever the hype about being the most secure OS.
The Windows update process is 'clunky' and while it works - 'update fatigue' can soon hit the user after several reboots, along with updates to Firefox, Adobe Flash, Adobe Reader etc.
Windows XP,Vista,7 lack a common update process. Microsoft Update rather than Windows Update, covers MS Products, but third party software all use their own separate update processes. Updating Windows and other third party related software takes time and effort, and most users can't be bothered.
Comet had a duty to its customers (they want them to continue shopping with them afterall), that Microsoft had clearly wiped its hands of. And yes, this is partly customer incompetence, for failing to 'Image' their computer using tools such as Paragon HDM 2011, and Acronis True Image or other inbuilt tools.
To mitigate Comet, legitimate retail Windows 7 install disks can be freely downloaded direct from digitalriver, publicised on several Windows 7 related sites.
As long as the licence key isn't included, or a means of bypassing this, surely its beneficial to Microsoft for customers to be quickly up and running, with their Windows machines.
Microsoft should force creation of the recovery disks before a user is able to log in and use Windows as part of the set-up process, if they have such a problem with media recovery disks being sold.
Seems to me, that other factors are at work here. Were Comet planning on selling a OS Free PC or Linux based PC sometime soon? Probably.
@Adamjarvis
I'd hesitate to label the average PC user as "incompetent" just because they don't know how to "image" their PC. I suspect that outside of the hardcore techy/coder/linux user groups who probably don't even use Windows, most people don't know what this means.
As a worried PC owner without a backup disc or the first clue how to "image" a PC (or what to do once you have one or if it goes wrong), could I ask if you could write a quick guide? Your post implies it's very simple so I think this is a reasonable request
GREED, that's all what this is about, I once had an OEM copy of Windows XP, because I installed it and activated it to many times the licence key became invalid, I phoned up Microsoft and was told to buy a new OS. My original OS was legit, for that to be blocked by Microsoft due to too many activations and being told by Microsoft to go out and buy a new one was a true insult, it still is an insult. Considering you had bought a legit Windows OS in the 1st place, it shouldn't matter how many times you activated it on either OEM or retail edition, just as long as it's a legit OS.... Many people are also on a tight budget, we are all not rich, the price of these OS is really through the roof these days. Shame of Microsoft, not only for kicking up a storm over back up CD's which are rarely available anywhere, but getting laid in to a chain that has having financial problems.
If Comet was truly providing the discs as restore media for the PCs, then I see no wrong in what they did. Time will tell as more details of this arise.
Personally I am 50/50 on vendors making the customer burn the recovery media. Most users do not know that they need to do this when they purchase a new PC. So when the hard drive goes faulty, they are out of luck and need to purchase new media at an increased cost. And as most Windows users probably know, the Windows operating system needs to be re-installed occasionally, it's just the nature of the beast. So there's a high chance that some sort of recovery media will be needed in a PC's lifetime.
Thankfully I bypass all of this drama and use open source GNU/Linux. I can download and burn as many copies of the installation media as I wish and never have to worry about these silly issues.
When you buy a PC with an OEM copy of Windows, you're not paying the full cost of a Windows licence; you're paying a reduced amount because it's not transferrable to a PC from another supplier and it's up to the OEM to cover the cost of a physical disc. If Comet had created the recovery discs and given them away, that would be one thing; but selling them without paying Microsoft for the right to produce and sell them is like HMV burning its own music CDs and not paying the labels for them - legally, piracy.
M
> is like HMV burning its own music CDs and not paying the labels for them
Isn't a recovery disc just a way of restoring what you already have, and distinct from a full installation disc? Which would make it nothing like a music CD, IMHO.
@Mary Branscombe
So Comet can send the 94,000 irate customers, complaining that their Windows PC is not fit for purpose, at the front of the store (in front of all the other customers), round to your house then?
You're really not looking at this from a practical point of view, of getting that customer up and running again with their Windows and their data, for as little cost to Comet/Microsoft. (cost in terms of brand/monetary value)
These 94,000 customers have gone and looked for a solution to most likely malware infected/Rogue anti-virus infected Windows PC, that has no means of Recovery via the usual routes. They wouldn't be buying it otherwise, or knocking on Comet's door for help.
Even with the disk, they still have several hours of pain attempting to recover their PCs. It helps, but its no Magic Wand. Its a time consuming process reinstalling Windows and getting it back to where you once were, with all your data intact. The data and system files are so intertwined making the process, so much more difficult. Taking a preventive 'System Image' beforehand means an hour or two recovering rather than days, yes - days - and not always with 100% success.
Comet's Customers are buying a disk in desperation in the hope of recovering their data, (and yes, Comet are exploiting them by charging £14.99, but plenty of Companies do in this predicament, they aren't unique here).
What do you expect Comet to do? Comet have come up with a solution that protects their Brand, and that of Microsoft. God forbid, had Comet said, sorry not our problem.
Look at Apple, you get a flash recovery memory card to recover the Macbook. The data much more separated from the OS, so you can distinguish between the two. (as with Linux)
A lot of goodwill out there has kept MS at the top of its tree far too long. I'd have long given up on Windows, if it hadn't been for Linux based support tools (both commerical and free) which allow imaging of Windows Machines, by getting 'underneath' Windows, so to speak.
It's saved literally months of time wasted.
->but selling them without paying Microsoft for the right to produce and sell them is like HMV burning its own music CDs and not paying the labels for them - legally, piracy.
Not really the same, its more like HMV getting a third party to produce Album CDs, to meet a demand. Say, because the original Album is now out of print/press and the original CDs sold have been found to have a Printing Defect. HMV then use these manufactured Albums to exchange scratched/defective copies of CDs that the customer brought back, or could prove ownership. They then charge a fee related to the production of said Album, as they sold the original albums in good faith. They are just forfilling a Customer need, which supports/provides goodwill to the producers of the Original Album.
In the Customer's eyes they aren't counterfeit, because the Recovery Disks carry out the intended tasks and the Customers already own the licence. Afterall, there is no dispute here that the customers own a legal OEM Version of Windows on their PC.
From my experience even with recovery discs you are unlikely to restore a machine to its original state, I have seen this happen even with professional backup software. The most likely scenario is that the hard disc failed for some reason on the computers Comet sold, they did not go into the specifics of the situation. Other than the that it could could be down to customers literally not being aware that a Restore function exists, many OEMs use different Function keys or some option buried in Cmos/boot screens that may have become locked because of admin passwords etc that have been lost. There is also the possibility that some customers unwittingly lock their hard drives with an ATA password which is extremely difficult to recover from as no recovery disc will work until the hard drive is unlocked or a new one fitted.
On balance I think that Comet did the right thing by their customers and I hope it costs MS a packet in settlement!
Also note the story we did yesterday on the new reset and refresh features in Windows 8. They will have a big impact on this recovery disk conundrum, as it appears (correct me if I'm wrong) that such disks will no longer be necessary: http://www.zdnet.co.uk/news/desktop-os/2012/01/05/windows-8-to-get-one-step-refresh-40094748/
I was stung by this when I purchased a factory refurb Toshiba laptop from Comet for my daughter's birthday present - when I unboxed it on her birthday (30 days after I had received it) there was no OS image present, no recovery partition...and no OS install CD. And as it was after 30 days Comet refused to rectify the issue and I was forced into buying the recovery CD (pretty sure it was more like £30) as some of the Toshiba laptop drivers were not available on their website!!!! Not impressed by Comet at all that time.
I'm sorry but your wrong. It's a file stored on the partitioned disk (part of the HDD). Used to recover your PC. It's also used to create recovery disks (this is a tool within Windows on most machines). What Microsoft are stating is that fact that Comet are selling recovery disks to users that never created them on startup for their own profit when the material belongs to Microsoft.
I remember when I bought a laptop from Comet and they never supplied me with a recovery disk. When I called up they wanted around £25 not including P&P. Such a terrible service!
If I purchase a machine, and the software is on it, I want to own that software as long as I own that machine. That means EVEN if i make hardware/AND SOFTWARE upgrades. Why should I as a consumer be forced to pay again every time I upgrade; the same goes for annual licensing. This is just a cash cow for these giant MNCs, and the end consumer ALWAYS picks up the tab. I think the current licensing legislation for software needs to be examined for fairness to all end users. If the software is good enough and fit enough for purpose it wouldn't constantly need patches or updates, and we wouldn't need to worry about REINSTALLATION would we!? And if anyone offers to make that process simpler for me and I choose to purchase their service (even if it wasn't strictly legal) then I am sorry Microsoft, I have no sympathy for you not being able to extract more money from me.
@TechnoGeek
->I'm sorry you are wrong...
(I wasn't sure if your comment is aimed at David Meyer's Article or the Comments below)
Not sure what your suggesting? Would you prefer Comet turn you away.
The ins and outs of whether its Windows OEM Install Disk or a specific set of Recovery Disks which restore the factory image of the particular Windows PC, is immaterial really.
The end result of restoring an otherwise bricked machine to working is the required outcome for the user, preferably with their data intact. The bricked machine itself is licenced. Microsoft have already being paid for the copy of Windows. Comet haven't been selling unlicenced PCs.
(I presume here, I've no facts to back this up-maybe MB knows): Microsoft also manages to keep all the money paid for OEM Licences of machines which fail before their time, due to faulty chipsets, manufacturing methods - I haven't read that Microsoft had to contribute to the Nvidia class action fund, but maybe they did.
Its Companies such as Comet that have to clear up the mess left by these type of problems, selling these products in good faith, for example with Vista to find that MS products 'Vista Capable' aren't actually powerful enough to run Vista Aero, causing Customer returns.
There is certainly an element of exploiting the predicament the user has found themselves in, which could be argued isn't that different from the position a user finds themselves with ransomware methods such as Rogue Anti-virus.
To the user in this predicament with no means of restore, with their data sitting in limbo, £14.99, £30 - even £100 is a cheap price pay (from their point of view) to get things back to how they were, they might not admit it - but if there was little alternative and that data was important - they'd pay it, learn from it - and move on.
Seems to me, Microsoft have only just realised that there are plenty of people in this predicament due to advances in Malware. It's a cash cow, and they want their share of revenue from 'customer misery'. By that I mean it seems they want all of it.
Haven't created your backup media? You need to go directly to Microsoft, do not pass Go, and pay your 'fine' directly to MS. The Get of Jail Free card is remembering to make those Recovery Disks yourself as soon as you get your new PC, but who does?
Maybe Microsoft thought there wasn't actually a problem, maybe not many people went the official route of phoning MS for replacement media so they weren't getting the feedback.
Companies like Comet were mitigating the problem for them by offering a solution, like many smaller computer companies do but as a matter of 'goodwill' or in-house support using images from other similar machines to repair the bricked machine.
In the past MS probably turned a blind eye, but these are legitimate revenue sources in today's world and Microsoft obviously feels they are rightly theirs. Its a dangerous route if this is the case, its a fine line between damaging the 'Brand' and gaining revenue this way. When Customers are down, they tend to remember that extra kick, rather than a helping hand.
The quickest way for Windows demise is if all the Techies/Companies out there suddenly decided to no longer offer Microsoft Products any 'Goodwill' and charged the true cost of supporting its Products as a protest, or alternatively leave users to fend for themselves, by giving them the MS Helpline number.
Mary,
"but selling them without paying Microsoft for the right to produce and sell them is like HMV burning its own music CDs and not paying the labels for them - legally, piracy."
But did Comet actually sell the discs, or simply bundle them with PCs that already had a Windows license "attached" to them? Based on Comet's statements, they bundled the discs with PCs and provided them to their customers as reinstallation media for the PCs they sold. But Microsoft claims they sold the discs for profit. Each party seems to be talking about a completely different practice. So which is it?
As a side note, larger PC vendors like Dell and HP will gladly sell you copies of reinstallation media. Is Microsoft going after them next?
It's wars like this that make me thankful that we have open source software :)
Re: David Finn claim "Comet's actions were unfair to customers."
This is just yet another example of how disconnected the world inhabited by over paid intellectual property lawyers is from the real world. I suggest as part of the court hearing Comet get Finn to perform a full recovery of a Windows PC using only the materials included in the box.
The laugh about this case is that Comet could of totally legitimately provided an in-store recovery/re-install service, charging their customers £14.99 per machine and Microsoft wouldn't of gained a penny...
The disks they provide are only burned copies of the recovery image which each customer gets the option to do themselves, so paying £14.99 for a 'pre-burnt' copy of this recovery media is not in my opinion piracy or counterfeit....you simply put our own blanks in and out come 'recovery media'....so just because comet did this for the customers up front how is this illegal?
The only recovery option I have ever used that worked completely was Acronis' True Image.
I have never got a recovery option on a laptop to restore all the user data, and certainly never all the apps working as well (ie not giving constant license issues).
I have tried the Microsod offerings and they all fail at some point and you end up wiping it. Symantec Ghost I found slow and cumbersome and it failed even on Windows XP! There are others "imaging" solutions available at various prices.
If you work for a medium to large corporation you may find your IT dept (if its not been outsourced) may have imaging software they may be able to provide you with a backup image of your laptop if its a work provided one. Could be handy.
Acronis On a promo here for £30
http://www.acronis.co.uk/promo/atih2012/?source=uk_googleATI_b&c=17217760192&k=acronis%20true%20image&gclid=COKkr4vu2K0CFUhrfAodU0zAnA
The bottom line is always backup your data!