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Background

I've been through the Windows 8.1 EULA and the EULA for computer manufacturers. I've also seen this question where an answer says that Windows is sold as a software service.

The EULA states this about ownership: "How can I use the software? The software is licensed, not sold. Under this agreement, we grant you the right to install and run one copy on the computer on which you acquired the software (the licensed computer), for use by one person at a time"

The EULA states this about transfer: "Can I transfer the software to another user? You may transfer the software directly to another user, only with the licensed computer. The transfer must include the software, proof of purchase, and, if provided with the computer, an authentic Windows label including the product key."

My question spans three scenarios:

  • Scenario 1: I have a desktop computer on which I've installed only Linux. I purchased a new laptop for price P. It cost me P because it had Windows 8.1 pre-installed and I could register Windows online. There are other laptops that cost less than P, because they are sold without any operating system. Windows EULA allows me to take a backup of the operating system onto a pen drive. I registered Windows and took a backup on a pen drive. Now within a few days, if the laptop gets crushed under a truck, I've lost function of the hardware, but I still have a backup of the software. Since I paid for the software, can't I install it on my desktop PC, register it online and use it?

  • Scenario 2: The laptop does not get crushed under a truck. After a few years of using the laptop, I choose to sell the laptop to a company that purchases old devices to recycle them. The company only cares about the hardware. They are going to pull apart the entire laptop and send the parts for recycling. Can I delete everything on the hard disk, hand over the laptop to the company and use the Windows backup to install it on my desktop PC?

  • Scenario 3: I sell the laptop to someone who dislikes Windows. They'd rather use Linux. So I install only Linux on the laptop and explicitly tell the person that although this laptop came bundled with Windows, I'm going to use Windows for myself on my desktop PC, and he'd have to only use Linux on the laptop.

This is for a situation where Windows installed on the desktop would be used solely for personal use. No commercial use at all. If I wanted, I could take some of the RAM or some other hardware from the laptop and use it with any other laptop, because I purchased the hardware and I own it. So given that I have also purchased a license to the software, if the laptop gets destroyed, shouldn't I have the right to utilize the fact that I paid for the software, and be able to use the software as a single installation on my desktop? This is by nature of the software being safe from physical destruction, and the fact that I'm not misusing the software.

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    This strongly needs a location tag. Many jurisdiction have ruled that many, even most, EULAs are partially or fully invalid. Mar 21 at 21:32
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    If you lease a car, you're paying for it; it's on your driveway, you have the key, you can drive it. Do you own it? Can you sell it? Can you let just anyone drive it?
    – marcelm
    Mar 22 at 11:50
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    @marcelm: while the answer to your questions is no, if OP buys a car, they can not only drive it, they can also sell it or let others drive it. They still cannot make physical copies of patented parts of the car. In Germany (and I'd expect Dutch law to be similar via continental European legal system and/or EU single market), a software license acquired with a one-time payment and which is not temporally limited is legally a sales contract. That would be the case for a windows license acquired together with the hardware. In contrast, Microsoft 365 (monthly/annual term) would be a lease. Mar 22 at 14:53
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    Important technical note concerning scenario 2 and 3: The Operating System is not contained exclusively on the hard disk, for major manufacturers who sell Windows preloaded, there's a portion of it also placed in the BIOS/firmware. Therefore after "delete everything on the hard disk", portions of the licensed OS are still being transferred to the new owner of the laptop.
    – Ben Voigt
    Mar 22 at 16:17
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    Licensing software strongly implies lack of ownership. If you owned the software then you wouldn't need a license to use it.
    – OrangeDog
    Mar 23 at 10:22

5 Answers 5

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General

The legal discussion hinges on the question whether the concept of copyright exhaustion applies to software. (The linked article also discusses the Court of Justice of the European Union ruling mentioned below in the EU part of this answer.)

Copyright exhaustion, in simple terms, allows certain uses (like the ones in your scenarios) of copyrighted (books) or patented (e.g. devices) items for which the copyright or patent holder has the right to first sale. If and when that principle applies, the original seller cannot control further sales or other uses of that particular specimen. Their copyright is "exhausted" with the first sale.

Situation in India

I want to emphasize that I have exactly zero experience regarding India in any way. All I did was that I went to the google.

It appears that the Indian Supreme Court recently ruled in Engineering Analysis Centre for Excellence Pvt. Ltd. v. CIT that the typical EULAs are valid. In particular, copyright exhaustion does not apply and the EULA can restrict re-selling and similar actions.

The case is discussed in this article, including relevant quotes.

This would make everything illegal which is forbidden by an EULA. As I read the EULA, creating a backup copy is allowed, as is restoring Windows from it, obviously; whether that has to happen on the same computer is unclear to me and may depend on the license type (OEM vs. standalone), although I have two remarks:

  1. Microsoft is the copyright owner; if they provide you with a license (for example because you called them after you re-installed Windows from a backup copy, and the internet license process didn't work) without you making false claims it is their prerogative. You are good.
  2. What constitutes a different computer? The SSD? The case? The mouse? We do have a case of the Ship of Theseus, or here for a funnier take: How much can you change before it becomes a different machine? The answer: Call Microsoft and find out.

Situation in the EU

The situation in the EU is fundamentally different from the one depicted with a misguided metaphor in the accepted answer.

In Europe, all of your scenarios are legal.

In July 2012, the European Court of Justice ruled in favor of the company usedSoft who is a license reseller.

(I'm writing this text on a machine with a Windows license that cost me, together with a Microsoft Office Professional license, 30 Euros, from this store.)

The title of the Court's press release couldn't be clearer:

An author of software cannot oppose the resale of his ‘used’ licences allowing the use of his programs downloaded from the internet

Not only can you re-install the software, provided it is the only installation, on the same or a different computer; you can even sell it. You can even sell OEM and bulk licenses.

The full text of the decision can be found here. The court stressed that it doesn't make a difference whether the software was originally provided on a physical carrier like a DVD or as a download. Crucially, the seller is obligated to continue providing downloads and updates for the re-sold licensed software as if it were still owned by the first buyer. There is no legal difference between software provided on a physical medium or as a download. To quote the decision:

80 Since the copyright holder cannot object to the resale of a copy of a computer program for which that rightholder’s distribution right is exhausted under Article 4(2) of Directive 2009/24, it must be concluded that a second acquirer of that copy and any subsequent acquirer are ‘lawful acquirers’ of it within the meaning of Article 5(1) of Directive 2009/24.

81 Consequently, in the event of a resale of the copy of the computer program by the first acquirer, the new acquirer will be able, in accordance with Article 5(1) of Directive 2009/24, to download onto his computer the copy sold to him by the first acquirer. Such a download must be regarded as a reproduction of a computer program that is necessary to enable the new acquirer to use the program in accordance with its intended purpose.

The court also examines the problem of how to prevent abuse of this permission for online copies (as opposed to physical media) and finds no substantial obstacles here.

"79 As Oracle rightly observes, ascertaining whether such a copy has been made unusable may prove difficult. However, a copyright holder who distributes copies of a computer program on a material medium such as a CD‑ROM or DVD is faced with the same problem, since it is only with great difficulty that he can make sure that the original acquirer has not made copies of the program which he will continue to use after selling his material medium. To solve that problem, it is permissible for the distributor — whether ‘classic’ or ‘digital’ — to make use of technical protective measures such as product keys.

It seems noteworthy to me that the general question of how to prevent illegal copies is only loosely related to the question of reselling anyway. Even if it were illegal to resell, the seller's problem with illegal copies would not disappear. (It might be somewhat easier to enforce by "dongling" it to a specific hardware and not allow any re-installation whatsoever, but mainstream software producers don't appear to do that, generally.)

Lastly it is noteworthy that the original seller may strong-arm the original buyer into signing an EULA that expressly forbids reselling; those restrictions are simply null and void in the EU.1


1 The German EULA of Microsoft Windows does not forbid reselling. The EULA for MS Office has restrictions concerning transfer to third parties in point 3 but notes that those are not applicable if the software was bought in the EU or EFTA and the transfer is inside that region.

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    As I understand it, the OP is referring to software that was supplied pre-installed on purchased hardware, under an OEM license. This is not the same as either "originally provided on a physical carrier like a DVD or as a download". I do not know enough to say if that makes a difference, but does seem to impact your answer.
    – User65535
    Mar 22 at 11:20
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    @User65535 I don't think so. The key is whether you have "lawfully acquired" the license, of which there is no doubt. Many of the licenses sold second-hand are from corporations shredding hardware where the software came pre-installed. The key takeaway is that the license cannot be lawfully tied to a particular hardware. (The hardware fingerprint is used to have a smooth automatic re-validation on the same hardware. If you install it on different hardware you may need to get manual approval, but that's a purely technical matter.) Mar 22 at 11:39
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    @User65535: I really know this for Germany only, but expect legislation throughout the EU to be very similar: the key differentiation is between sale (one-time payment) vs. lease (payments recurring over time). There is a further distinction wrt. mass/bulk contracts vs. software written specifically for a client. If a license for a standard software is sold, one cannot forbid the owner to resell ( this is the situation in the question). The medium (download, hard disk, DVD) doesn't matter at all. Mar 22 at 13:14
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    You say that you can re-install the software on a different computer "provided it is the only installation". What if it isn't? What if the installation on the old computer has not been removed, or has been only incompletely removed? What if the technical method of the installation on the old computer makes it impossible to completely remove, without destroying the old computer?
    – Ben Voigt
    Mar 22 at 16:20
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    Anecdotally re: Ship of Theseus - I completely upgraded all the parts in my computer (well, I reformatted the old OS drive as a backup, but it wasn't installed on initial boot); I did have to call MS, but they didn't give me any hassle about it. Mar 22 at 21:14
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How does licensing a software not imply ownership?

Because it doesn’t.

Don't I own a Windows operating system once I pay for it?

No

Scenarios 1 - 3: each and every one of these is a breach of the license and unlawful.

A license is different from ownership

Perhaps the most understandable analogy is a theme park.

The theme park is owned by someone, let’s call them D.

They sell you a day-ticket which is a license to access their property subject to certain conditions: access at certain times, to certain areas/rides and with restrictions on certain kinds of behavior.

You can do only what D allows and nothing else. You certainly don’t own the theme park.

Now, replace D with Microsoft and theme park with Windows and you have the same situation.

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  • Comments are not for extended discussion; this conversation has been moved to chat.
    – Dale M
    Mar 21 at 21:34
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    I'll repeat my comment that somebody (I assume you) deleted and I'll ask to let it stand because this answer is lacking, and that should be visible. It is lacking because (1) it lacks references, making it close to useless; (2) it does not make it clear to which jurisdiction it applies (the U.S., presumably) and is entirely and utterly wrong in the EU+EFTA, and presumably other jurisdictions; and (3) the theme park metaphor is wrong and misleading (the IT equivalent to that would be using a cloud service or internet cafe which is a completely different matter, obviously). Mar 22 at 14:14
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Under standard contract law, all the negative replies listed here would be correct. HOWEVER- having in the past contacted Microsoft service about OS transfer under MS licensing, so long as the license is a full license, and not an OEM license (equipment manufacturers license is MUCH more restricted than full license, that's why it doesn't add as much cost to new hardware as a full version does), you can extract the license code from the registration, make your backup install copy, wipe the original HDD, restore the hardware chipset to factory wipe (there are instructions online, Microsoft will help find them) to remove any POST key, and at that point there is no active version of the OS. You can then install and activate the OS on another system, but you will likely have to contact MS service directly to clear the license for full Windows activation. Once done, that copy is exclusive to the now active system, and should be fine.

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    In all three cases in the question Windows will be an OEM version and so it would break the EULA to do them.
    – mmmmmm
    Mar 21 at 21:56
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    @mmmmmm: The problem with OEM-installed versions is that there is no contract between Microsoft and the end user. There are two contracts, Microsoft-OEM and vendor-end user (where OEM might be the vendor, like Dell). And since the end user doesn't copy Windows, there's no need for a EULA via copyright law.
    – MSalters
    Mar 22 at 10:08
  • @MSalters: But the end user has to activate Windows and get updates from Windows, so there has to be some contract between Windows and the end user.
    – Nav
    Mar 22 at 10:18
  • @Nav no, not unless the OEM user purchased his OEM license directly from Microsoft (which used to be possible, I believe they no longer offer this). You have a contract with your hardware supplier, who has a contract with Microsoft to provide you, their customer, with certain services.
    – jwenting
    Mar 22 at 12:01
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    Well in that case, I see no reason to go for Windows ever again. All the software I need is available via Linux for free, and without these silly restrictions that Windows has. Linux is also now as user friendly as Windows...and not as prone to viruses. It's also a lot more customizable. With laptops like Framework coming up, laws may need to keep up. But perhaps Framework would just use the Windows Retail license.
    – Nav
    Mar 22 at 16:14
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Software is not a physical thing. It is not possible to "own" it, you can only own rights to it. You can own a copyright to the software, or you can own a license to the software. Obviously, when you "buy" software, you're not buying the copyright outright, you're buying a license. "License" is a synonym for "permission". You are buying a permission to use the software. And that permission is subject to the conditions that come with it.

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    One can own a non-physical thing. One can own an option, or an easement, or other rights. One can own a copy of a piece of software, just as one can own a copy of an e-book. However, commercial software companies take care not to sell copies of software, as that would grant rights they do not wish to grant. Mar 21 at 23:25
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    @DavidSiegel With physical things, there is the physical object, and rights to it. With non-physical things, there is just the rights to it. Options and easements are both rights one can own. Mar 21 at 23:46
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    Yes. There are various non-physical things one can own. Some but not all of them are rights. I used options and easements as examples. This was to counteract your statement "Software is not a physical thing. It is not possible to "own" it, you can only own rights to it" Mar 21 at 23:54
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    The term "software", like the term "book", is ambiguous: "1984" is a great book. I have a book in my bookshelf with "1984" on the cover I bought recently. It is a copy of the original. "MS Word" is great software. I have software with the name "MS Word" running right now. It is a copy of the original. I own the book in my bookshelf but I don't own "1984". I don't own MS Word; do I own the software running on my computer? Does it make a difference that it has very little "physicality"? Why? Can a book seller invent a license stipulating that I only read at home? Or that I can't sell the book? Mar 22 at 10:22
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    A modern car, or a modern television, contains an awful lot of software - I doubt anyone would try to argue that the user doesn't own the entire vehicle (if bought outright, obviously!) Mar 22 at 16:07
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The license is very clear. If you buy for example a Dell PC with a Windows license, what will happen is that Dell bought say a million OEM licenses from Microsoft at a very good price, and Dell has therefore a license to install Windows on one million computers that are sold to end users or companies. The licenses that Dell installs are specific to both Dell, and to that particular Dell computer.

So if you sell the computer or give it away as a present, you sell it or give it away together with the license, so the next person can use Windows on the same computer. The license does not allow you to install the Windows software on a different computer. And that's about it.

Now if we go through your three different scenarios... In scenario 1, your computer was crushed, very bad luck... You are actually allowed to make a backup copy of the license in US law - but you are not allowed to install that backup on any other computer, only on the one that the Windows license belonged to. The license does not allow you to install the Windows software on a different computer. On the positive side, if you are insured, the insurance company has to pay for your loss, which is one PC and one license.

In the second case, where you sell your PC to a recycler, if the recycler takes it just for the parts and not to make a working computer, the license has lost its value. The license does not allow you to install the Windows software on a different computer.

In scenario 3, if the buyer isn't interested in Windows, the license doesn't force him to install it or keep it installed anywhere. However, you can't install the software on another computer. The license does not allow you to install the Windows software on a different computer.

That's the point in the end: The license allows you to use Windows on ONE particular computer. Not on any other computer. No argument of yours can get around that.

You can buy Windows with a different license, that gives you more freedom what you can and can't do it. Windows with such a license is a lot more expensive. You got a license at the lowest possible price, which gives you fewer rights.

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    You are saying this as if it were universally true. But none of this is true in Europe. Mar 22 at 22:46
  • So how much is a Windows license in Europe? There are two possibilities: Either very few people do this, whether it's legal or illegal. Or lots of people do it, and then the company will stop selling cheap licenses.
    – gnasher729
    Mar 23 at 8:53
  • Here they sell Win10 professional starting at 5 Euros with phone activation and 10 Euros with online activation. I suppose that not many Windows end users actually buy computers without pre-installed Windows. Downloading the boot medium and booting from that medium and then installing Windows is enough of a hassle and hurdle that most end users don't do it. Apparently there are enough bulk licenses around that supply exceeds demand. As I said in my answer, I bought Win+Office pro for 30 Euros. Mar 23 at 9:07
  • Oh, and there are even cheaper offers on ebay or elsewhere. But of course, as always, they may be awesome deals or they may be scams. And saving 50% amounts to only a few dollars,so why not simply go to a reputable store. Mar 23 at 9:18

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