The Microsoft OEM System Builder Licence allows dealers to include Microsoft OEM products with systems that they build, subject to certain terms and conditions. If you build and sell new, complete or bare-bones PCs or servers you qualify as a Systems Builder, and become eligible to pre-install Microsoft OEM operating systems software and application software under the terms of the OEM System Builder Licence. The right to distribute Microsoft OEM System Builder Software is governed by this licence and covers areas such as how the software can be distributed, how it must be supported, and placement of the COA bodytext. This licence is between the System Builder and Microsoft.

A System Builder is anyone who assembles, reassembles or installs software on a new or used computer system. The Microsoft OEM System Builder product is designed to make it easy for System Builders to acquire and distribute genuine Microsoft software with the systems they build and sell.

The Certificate of Authenticity (COA) on a piece of hardware helps you and your customers confirm that the operating system is correctly licensed and legally acquired. Without it, your customers will not have a legal licence to run their Windows software. Microsoft regularly update the COA and add new security features to maintain the reassurance it provides. A COA is not a software licence in itself, it is only a visual aid that helps assist in determining whether Microsoft software is genuine. COAs should never be purchased, sold or distributed by themselves without the software it authenticates.

The Facts about COAs

Certificate of Authenticity Features

Microsoft have encorporated new anti-piracy features to help you easily identify if the COA you have received is genuine. These include:

• A new porthole anti-piracy feature has been incorporated allowing the computer chassis to be visible through a clear hole. Individual paper fibers can be discerned within the porthole.
• An embedded metallic thread with recognizable letters spelling "Genuine" runs through the label.
• The technology strips running down the side of the Certificate of Authenticity have been eliminated providing a flatter profile enabling a more acceptable print surface for thermal printers.
• The surface of the label has been changed. It now features a less reflective, secure paper with a thermal print receptive laminate.

Other Anti-Piracy Features to Look For



Hologram CD-ROM - The face of the CD features a hologram-a three-dimensional image of objects-which displays the software program name and a specific program-related image on the CD. Beginning in late August 2004, the outer hologram edge of the CD will have a wavy effect. The inner hub section of the CD will have an inner-mirror band hologram. In addition, the hologram image for Windows XP Home and Windows XP Professional, which were previously different, will be the same.



Inner Mirror Band Hologram -
The inner mirror band hologram is located on the back side of the CD. It is etched and embedded into the surface of the CD during the manufacturing process. It is an optical band that wraps 180 degrees around the inner portion of the disc. The hologram, when tilted in the light, displays text that switches from Microsoft to Genuine and from Secure to Media.

The OEM System Builder Licence no longer grants you the right to distribute individual Windows® licenses with non-peripheral computer hardware components. This brings it in line with application or server software (such as Office or SBS). OEM may ONLY be distributed with a fully assembled computer system. You may NOT distribute them with non-peripheral hardware.

What is Non-peripheral Hardware?

A non-peripheral hardware component is one essential to running a PC. Examples of non-peripheral hardware are listed below:

• Memory
• Internal drives
• Mice
• Keyboards
• Power supplies/cords

Understanding the OEM Preinstallation Kit

System builders who distribute Windows® software on a fully assembled PC must preinstall the software on the PC's hard drive using the OEM pre-installation kit (OPK) included in the OEM System Builder Pack. Preinstallation using the OPK ensures customers can experience the intended Windows "Out of Box Experience" and that they receive the opportunity to accept the EULA (end-user licence agreement).

In addition to this, the OPK enables easy set up and use and will save you time versus manual installation. It enables you to add shortcuts and branding of your business to the operating system, enables you to test preinstalled PCs without interrupting the preinstallation process, and much more.

OEM on Used/Refurbished PCs

A used PC is a computer system that has had few or no hardware changes. The licence for OEM software on a used PC may not be transferred to a new or different PC. However, the entire used PC, including the software media, manuals, and Certificate of Authenticity, may be transferred to another end user along with the software licence rights.

A refurbished PC is a computer system that has had substantial hardware modifications that may require a new operating system licence - because the modifications have essentially created a "new" PC. Generally, you may upgrade or replace all of the hardware components on your customer's computer and the end user may maintain the licence for the original Microsoft® OEM operating system software, with the exception of an upgrade or replacement of the motherboard.

An upgrade of the motherboard is considered to result in a "new personal computer" to which Microsoft® OEM operating system software cannot be transferred. If the motherboard is upgraded or replaced, for reasons other than a defect, then a new computer has been created and the licence of new operating system software is required. If the motherboard is replaced because it is defective, you do NOT need to acquire a new operating system licence for the PC.

This licensing rule primarily relates to the end-user licence agreement (EULA) and the support of the software covered by that EULA. The EULA is a set of usage rights granted to the end-user by the PC manufacturer and relates only to rights for that software as installed on that particular PC. The System Builder is required to support the software on that individual PC. Understanding that end users, over time, upgrade their PC with different components, Microsoft needed to have one base component "left standing" that would still define that original PC. Since the motherboard contains the CPU and is the "heart and soul" of the PC, when the motherboard is replaced (for reasons other than defect) a new PC is essentially created. The original System Builder, therefore, can not be expected to support this new PC that they in effect, did not manufacture.

Transfer of OEM Licenses

The end user licence agreement (EULA) is granted to the end user by the System Builder and relates to the licence on the PC with which it was originally distributed. Because the System Builder is required to support the licence on that original PC, a System Builder can not support a licence that has been moved from a PC they manufactured to one that they did not. This is one of the key reasons why an OEM System Builder licence can't be transferred. To put it simply, OEM software is tied to the original computer system on which it was installed.

However, Microsoft do allow the transfer of the entire PC to another end user along with the software licence rights. When transferring the PC to the new end user the original software media, manuals (if applicable) and Certificate of Authenticity (COA) must be included. It is also advisable to include the original purchase invoice or receipt. The original end user cannot keep any copies of the software.

Understanding all the rules and regulations of OEM can be a daunting task and it is the form of licensing that we get most questions on. Microsoft have produced an extensive FAQ sheet which should answer any additional questions you may have regarding OEM licensing.