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E-waste recycler hit with 15-month prison sentence for selling Windows restore discs

Microsoft Logo at Ignite
Microsoft Logo at Ignite (Image credit: Windows Central)

Eric Lundgren, a prominent e-waste recycler, has been sentenced to 15 months in prison and hit with a $50,000 fine for producing thousands of Windows restore discs, The Washington Post reports. The sentence comes as an appeals court upheld a previous decision, ruling that his infringement cost Microsoft $700,000.

From The Washington Post:

The appeals court upheld a federal district judge's ruling that the disks made by Eric Lundgren to restore Microsoft operating systems had a value of $25 apiece, even though they could be downloaded free and could be used only on computers with a valid Microsoft license. The U.S. Court of Appeals for the 11th Circuit initially granted Lundgren an emergency stay of his prison sentence, shortly before he was to surrender, but then affirmed his original 15-month sentence and $50,000 fine without hearing oral argument in a ruling issued April 11.

In all, Lundgren had produced 28,000 restore discs and planned to sell them for 25 cents apiece to computer refurbishers. The idea was that refurbishers could then provide the discs to people buying computers so that they wouldn't have to go through the hassle of creating their own restore discs.

Ultimately, the discs were seized by U.S. customs officers in 2012 and were never sold. Lundgren and a Florida broker he was dealing with, Robert Wolff, were charged with conspiracy to traffic in counterfeit goods and criminal copyright infringement as part of a government sting, The Washington Post reports.

Restore CDs are typically provided for free with computers that are loaded with a licensed version of Windows, and the software can be downloaded for free. The license itself is ultimately what costs money, and users would need a valid license to use the restore discs. Through Lundgren pleaded guilty, he argued that the discs had no value. The court ultimately ruled that the value of the discs came in at $25 apiece.

In a statement to The Verge, Microsoft said:

Microsoft actively supports efforts to address e-waste and has worked with responsible e-recyclers to recycle more than 11 million kilograms of e-waste since 2006. Unlike most e-recyclers, Mr. Lundgren sought out counterfeit software which he disguised as legitimate and sold to other refurbishers. This counterfeit software exposes people who purchase recycled PCs to malware and other forms of cybercrime, which puts their security at risk and ultimately hurts the market for recycled products.

Lundgren told The Washington Post that he's been given a couple of weeks to get his affairs in order before surrendering. However, he worries that the case has set a precedent for companies to pursue those like him who are seeking to extend the life of older computers.

"I am going to prison, and I've accepted it," Lundgren told The Washington Post. "What I'm not okay with is people not understanding why I'm going to prison. Hopefully my story can shine some light on the e-waste epidemic we have in the United States, how wasteful we are. At what point do people stand up and say something? I didn't say something, I just did it."

Dan Thorp-Lancaster is the Editor in Chief for Windows Central. He began working with Windows Central as a news writer in 2014 and is obsessed with tech of all sorts. You can follow Dan on Twitter @DthorpL and Instagram @heyitsdtl. Got a hot tip? Send it to daniel.thorp-lancaster@futurenet.com.

25 Comments
  • Hack the planet!
  • This is kinda bull$#!+. I get that he did basically break the law and distribute software he didn't own...but the software is useless without the license. I wanted to come up with a clever analogy for this, but I couldn't even think of one. That's how benign an action it was...kinda like collecting discarded AOL CDs and selling them for 25 cents? <- Best I've got.
  • From what I got from the article the software he was sharing was a pirated version of it and not the official one from Microsoft.com
  • The article I read on another site went into it a bit more. Something about getting restore discs from discarded Windows machines or some mumbo jumbo. So I'm not really sure TBH. Still...It's not like he was selling unlocked copies or anything. What he was distributing was useless without a license from Microsoft.
  • What you guys don't realize is that NOBODY OWNS the software, except M$. The license is the only thing a customer "owns". This situation is unfortunate for this guy who did nothing wrong. M$ should be raked over the coals for this. C'mon green weenies, where are you? We FINALLY need you for something useful. In my opinion, he should have just preinstalled linux on all the machines. Push open source! It is the only "Green" tech out there. Just think about all the waste of having a fake trial like this. The lights, the paper printed, the energy, the gas to power the cars to go to the courts, everything. NOT GREEN! Here is the license agreement for my workstation: CentOS End User License Agreement
    Please note CentOS is Open Source software. The Distribution is released as General Public License (GPL).
    CentOS comes with no guarantees or warranties of any sorts, either written or implied. You don't need a lawyer and a couple days to read and understand it and you don't have to worry about going to jail if you don't.
  • Windows is worth $25 a pop the courts have decided? Cripes, that's news. So we're all to expect a nice discount on the next copy we buy? Grand!
  • This. Is. So. Bullshit. "This counterfeit software exposes people who purchase recycled PCs to malware and other forms of cybercrime, which puts their security at risk and ultimately hurts the market for recycled products." Did he put malware in those discs?
  • You never know. That's the problem with his discs. You don't know if he modified the software or If he really got it directly from Microsoft or some random torrent.
  • Caveat Emptor! You don't know, regardless. There have been at least two instances where disks from a manufacturer contained malware. Also, Sony had preinstalled rootkits on 22 million CDs back in 2005 so you really don't know, ever! M$ software contains crapware anyway, any of which could be infected with malware.
  • He sent the disk to China to get copied, so who knows
  • What makes software "counterfeit" or not is the official license. It doesn't matter if the binaries come from a disc, download, usb stick or the tooth fairy. What matters is the legit license key purchased from legal seller. The court has this completely wrong. As long you on your physical media you don't indicate that the disc or whatever is "official" media (ie, manufactured) I don't see how they got to this conclusion.
  • Look up how the US Judicial system works. Those who actually make the verdict (the Jury) are actively prevented from having any real knowledge of the subject. They have to rely on the prosecuting and defending lawyers to provide them with any and all relevant information, and, well, we all know Microsoft can afford better lawyers. Considering the punishment the judge gave off the verdict at hand, I would say the judge wanted to make a statement. And if you don't think every judge is working off anything other than preconceived notions and what the lawyers feed them... get some jury duty experience. So no, it shouldn't be surprising that the court has this totally wrong. In fact, I would have been far MORE surprised if the court ruled in this guy's favor, at least considering the information presented in the articles i've seen about the case. Obviously I don't know ever detail of the case, I'm not a lawyer, etc, yes there are arguments to be made both ways, standard disclaimers yadda yadda, but usually, if a major power like a government or Fortune 500 company decides to go after you... you stand very little chance of walking away, even if you did nothing wrong.
  • Licensed or not, can be executed or not is prob not the point. I don't think he's authorized to resell those.
    Everyone can buy a branded desktop from retail, code a PC game and stuff it inside an arcade cabinet (yes, nowadays arcade games runs on Windows), but you cannot do that. Why not? I bought the machine and the OS, I code the game, I can put my box anywhere I want, no?
    No, you need a difference OS license. I sold the whole thing to someone else and he put it in the store for commercial use.
    It's still a no. David did it years ago, how come he's not caught? Well, he's lucky, or maybe he's game just not as famous as your's. You are free to bust him now if you want. Can we install free Unity, Unreal, Visual Studio in company's PC for personal use? I'm not gonna tell, my colleagues won't tell, no one will ever know. You cannot, company will have to buy a license for you. I code my iOS app / game in my free time, I want to compile it and sell it in the store, can I just borrow company's Mac? No. Anyway, profit or not, disk's legit or not is prob not the issue.
    He's not authorized. Doujin in Japan is popular, but it's not legal. You are just lucky you didn't get caught, lucky that people (right now) don't feel like suing you. The right's holder can sue you as he pleases.
  • If it is legal for the new owner of used PC to run Windows based on the original purchaser's license then it is a moot point how Windows got reinstalled. The newer Windows PC licenses are tied to the CPU so it does not even require entering a CD-Key or Windows activation code to "license" windows over the internet. If he is a certified refurbisher of PCs and is reselling the PC with a CPU that was once used to run Windows then there is no way he can "divorce" the CPU from the OS because M$ will not do it. So while your examples seem to be technically correct they do not apply to this guy's situation. Maybe he could have just marked up the price of his machines by $.25 and included the disk and avoided the life changing event of losing 15 months of his life.
  • Strange case indeed
  • Bad move Microsoft. The 25 cents the guy was asking was about burning the discs probably, not your software. And if your software is available for download for free, then he is just making accessing your software easier. How the F did the court decide distributing a FREE software cost Microsoft $700,000?! It's FREE! Honestly I think we need to make this into bad PR for Microsoft so they know "winning" these cases is actually a loss when you calculate the bottom line.
  • And how about "intent"? I don't know if the law provides for that but for $.25, that barely covers the cost of the disk, let alone the manufacturing process of putting the data on them. The guy clearly did not intend to defraud or even profit from the manufacturer of the disks. The more I think about this case the more I am sad for the guy who is going to be sent up for 15 months and I am also ticked off that M$ railroaded this guy. I am already not a fan of M$, after being certified MCSE (2000, 2003, 2008), MCSA. and even MCT. The reason I fell out of love with M$ is that they have these complicated licensing schemes for admins to decipher and understand without the benefit of having a law degree; they are purposely confusing and convaluded, and then there is the cloud movement. You can't do anything without the cloud in some cases, so if your ISP is down (like Comcast happens a lot) then you can't use your "cloud" stuff. I live in an area which is prone to hurricanes and even tornadoes, but also green weenies who do not allow trees to be trimmed back far enough to not lose power on a regular basis. Even a slight breeze some days knocks out power and internet. I got so bad that I have a generator at my house but even then, my ISP is usually down. I can't even play my Xbox because it has to sign into the cloud before I can play the DVD on my machine. Asinine! I run linux with no cloud/license issues and it made me more self sufficient. Bottom line is I don't think this guy did anything wrong. He was actually doing what we need to do with proper use of old equipment to delay this stuff from going to a landfill. I can probably argue that the very fact that he is repurposing old machines that he is costing M$ money
  • Well, he tried to make money off of software that isn't allowed to be commercially distributed. But alas, the whole case seems a bit out of proportions. IMO in the US, he's glad not to be fined with billions...
  • Wow, now I regret throwing away all those old Windows recovery CDs from my old computers. If I knew that Microsoft values them at $25 each, I would have sent them in for a refund.
  • Or what about the Aussie guy in the mid 2000's who tried to get a refund from Toshiba for his Windows installation that he was never going to use. Took Toshy six months with MS to give him a $5 refund in the end.
  • 1. Microsoft already got money from customer (old, ancient Windows machine, licensed) purchased.
    2. Microsoft customers (not all) throwing away old computer to purchase new machine (new license, Microsoft got new money). Customers have no idea if they get refund to old license, well, Microsoft didn't say anything.
    3. Now Microsoft want to squeeze every juice out of that old licenses if they cought any persons selling that. It's a win-win for Microsoft. Money🎶 Money🎶 Money🎶 Moneyyy🎵 You're fired!
  • Honestly, the OEM licensing these days are tied to the CPU serial number and activated online so if there is a COA on these computer cases then they have that ability, You don't even enter a CD-Key any longer, and that is as of about 10 years now. A restore disk does just that, RESTORES the OS to the hardware. Now, the only caveat I can think of here is if the OS license is not transferable with the used equipment. If the original owner is the only one entitled to "restore" the OS or otherwise have to buy a new license from M$ then they have a point, albeit a crappy one. Again, if things like this don't make people want to move to open source (linux), nothing will. With everything going to the cloud these days, compatibility with software isn't as much of an issue. I use linux for as much as I can. I do admit that I have to keep an old windows virtual machine around for some things but that is quickly changing and I am powering that windows VM less and less. This year I did my taxes online instead of depending on TurboTax and that is one more thign I do in linux. I install linux on old hardware and it runs faster than it ever did with Windows and I don't have to waste a couple hours uninstalled all the crap-ware from the OS. The best thing about linux is the FREE licensing model, unless you wish to pay for support which you are free to do.
  • I haven't read any other sources but I'm willing to bet the value is based on liability should the defendant put any type of harmful material on the CDs. It's not to said the disc or software cost $25, but perhaps the average expense to support someone else's problem.
  • I'd like to see what these discs looked like. If a rational but non savvy user would think they were official Microsoft pressed discs, I'd see this as legit consumer protection and brand protection. But it'd still sit better if it were just a cease and desist.
  • I would hope that this guy is smart enough to appeal this ridiculous decision. How in the world do they find space in the crowded jails for this guy while real criminals walk the streets?