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I’m talking about the fuss that Scott Dunn and Brian Livingston kicked up in yesterday’s version of the Windows Secrets newsletter, in which Dunn breathlessly proclaimed the existence of an “upgrade hack” in Windows Vista that “allows end users to purchase the ‘upgrade edition’ and install it on any PC — with no need to purchase the more expensive ‘full edition.’”

The story sucked in Computerworld’s Eric Lai as well, who parroted the newsletter’s argument that Microsoft is “[giving] its tacit blessing for consumers to exploit a technical loophole that allows them to upgrade to Vista with Service Pack 1, even if they don’t own the necessary prior editions of Windows.”

Uh, no, they’re not. I wrote about this way back in February 2007, when the same sources issued the same breathless reports. Nothing has changed since then. If you qualify for an upgrade license, this technique allows you to do a clean install, legally. If you don’t qualify for an upgrade license, then doing a clean install with this technique is technically possible but violates the terms of the license agreement. Tha distinction seems to be lost on the folks who are dredging up this old story. So allow me to explain, again.

Microsoft, like much of the rest of the software industry, sells its products to retail customers in three distinct packages:

* Full packaged product (FPP) is intended for installation on computers that have not previously had a licensed copy of the software. It’s typically the most expensive way to purchase a product.
* Upgrade packages offer a discount to owners of a previous edition of a given product. In virtually all cases, the license terms require that you stop using the previous edition.
* OEM products offer the steepest discounts of all and are intended to be installed on new or refurbished computers.

In every case, the terms of sale are included in a license agreement, and that agreement is what ultimately matters, not the technical details of installation. Dunn’s article even quotes from the Vista license agreement, which says “To use upgrade software, you must first be licensed for the software that is eligible for the upgrade.”

In previous Windows editions, customers were required to supply media (a CD or floppy disk) from a “previous qualifying edition” before they could install an upgrade version of Windows. That added a silly hassle factor to the installation process and did nothing to ensure that the installer was following the license terms. If you couldn’t find a Windows 98 or Windows 2000 CD, you couldn’t complete the installation. But if you did present the correct media, there was no way to verify that it actually represented a license for the machine in question.

With Vista, Microsoft replaced that hassle with a different one. Each copy of Vista comes with a product key. FPP versions can be used for clean installs; upgrade editions can only be installed over an existing copy of Windows. But here, too, there’s no attempt to check whether the copy is properly licensed.