Some suspect companies such as EA to be using product activation to reduce second-hand sales of their games in order to increase sales of new copies. Product activation where there is no straightforward way to transfer the license to another person to activate on their computer has been widely criticised as making second-hand sales of products, particularly games, very difficult.If the company ceases to support a specific product (or declares bankruptcy), its purchased product may become unusable or incapable of being (re)installed unless an activation-free copy or final patch that removes or bypasses activation is released.For example, a company may refuse to reactivate software on an upgraded or new PC, even if the user may have a legal right to use the product under such circumstances.

It can enforce software license agreement restrictions that may be legally invalid.Some software might stop working or reduce functionality if it cannot connect to the central database. Some software even 'phones home', checking a central database (across the Internet or other means) to check whether the specific activation has been revoked. Software verifies activation every time it starts up, and sometimes while it is running. This ruling was subsequently overturned in 2011.

However, in September 2009, US District Judge William Smith 'vacated' the jury's verdict and ruled in favour of Microsoft. Despite independently developing its own technology, in April 2009 a jury found Microsoft to have willfully infringed Uniloc's patent. After its success, the product activation system was extended worldwide and incorporated into Windows XP and Office XP and all subsequent versions of Windows and Office. However, all copies of Office 2000 do not require activation after April 15, 2003. All retail copies sold in Australia, Brazil, China, France, and New Zealand, and some sold in Canada and the United States, required the user to activate the product via the Internet.

Microsoft then rolled out product activation in its flagship Microsoft Office 2000 product. It broadened that successful pilot with the release of Microsoft Publisher 98 in the Brazilian market. Microsoft Product Activation was introduced in the Brazilian version of Microsoft Office 97 Small Business Edition and Microsoft Word 97 sold in the Hungarian market.

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