Right of First Sale and the Microsoft Tax

There’s been a lot of talk today about the end of the Microsoft tax.

If you bought a desktop PC from Dell, you got — and paid for — a copy of Windows, whether you wanted it or not. This is commonly referred to as “The Microsoft Tax”.

It was NEVER a tax – it was a REBATE!

Yes. A rebate. If you buy a PC and don’t need Windows you’re basically given a copy of Windows for only $50. A new copy of Windows Vista Home Basic is about $200. What you do is when your new PC comes you put your copy of Vista on Craigslist for $150 (and settle for $100).

You’ve just received your Microsoft rebate of $50. Thanks Microsoft for helping subsidize Linux!

Is this illegal? Is it piracy? NO. You’re not using the version of Windows they gave you. You never signed any license agreement saying you wouldn’t sell it. Even the media is still sealed. It’s a perfectly legit copy of Windows that you’re not going to use.

It’s called the first-sale doctrine:

The first-sale doctrine is a limitation upon copyright that was recognized by the U.S. Supreme Court in 1908 and subsequently codified in the Copyright Act of 1976, 17 U.S.C. § 109. The doctrine of first sale allows the purchaser to transfer (i.e. sell or give away) a particular, lawfully made copy of the protected work without permission once it has been obtained. That means the distribution rights of a copyright holder end on that particular copy once the copy is sold.

The trick is to NOT sign the license:

The first-sale doctrine as it relates to computer software is an area of legal confusion. Software publishers claim the first-sale doctrine does not apply because software is licensed, not sold, under the terms of an End User License Agreement (EULA). The courts have issued contrary decisions regarding the first-sale rights of consumers. Bauer & Cie. v. O’Donnell and Bobbs-Merrill Co. v. Straus are two US Supreme Court cases that deal with copyright holders trying to enforce terms beyond the scope of copyright and patent, by calling it a license.


  1. Media? Apparently you haven’t bought a new PC recently. They don’t include install media any more…they just put Windows install info in a hidden partition on the drive. Even for the manufacturers that do give you media, the media is locked down to only work with that manufacturer’s PCs. It’s not the same as a retail copy of Windows, and is virtually worthless in resale.

  2. burtonator

    Hm…… yeah… it actually HAS been about 2-3 years.

    I wonder if you can request media….. The last laptop I purchased which wasn’t a Mac was a Dell about 3-4 years ago….. I sware it seems like yesterday so excuse my naive perspective :)

  3. SlashChick has the right of it. I have a less than one month old (Canadian) Dell desktop and Windows Vista is hidden in a recovery partition. There is physical media, but it is also integrated into a recover DVD. It has been many years since I received a copy of Windows on its own CD with a computer.

    Burtonator, Microsoft probably encouraged/required/priced $ in these changes because the very rights you describe exist.






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