Then when the sellers try to complain, eBay is limiting their feedback.
This has caused an uproar among the online community, with some charging that Microsoft is being heavy-handed and eBay is whitewashing criticism of the software giant.
"I was very upset because I knew I had a good deal, and they shut me down," said Dave Box, whose sale of Microsoft Office 97 Professional was removed in March without prior notice. "You just get the feeling that you are being almost slandered."
For about a year, Microsoft has worked with eBay and other auction houses to remove more than 35,000 software auctions.
Auctions are canceled under eBay's Verified Rights Owner (VeRO) program. eBay removes auctions after a company or an owner of intellectual property notifies eBay that an auction infringes a copyright. Microsoft joined VeRO in March 1999, and dozens of other software companies have also signed up.
Compared to eBay, Amazon.com takes a more proactive role in monitoring its auctions for objectionable content, including copyright infringement. Yahoo takes a more passive role. Microsoft says it works with all three online auction houses to monitor software sales.
Microsoft said the anti-piracy effort is important because it has found in test purchases that more than 90 percent of the software was pirated, executives say. That echoes a recent study by the Software and Information Industry Association (SIIA), which found that more than 90 percent of the software auctions it surveyed were offering pirated products.
Microsoft says it monitors the auctions, looking for red flags such as extraordinarily low prices, sellers offering large numbers of copies, and copies that are illegal to resell, such as copies of Windows 95 that comes installed in a new computer.
If the seller objects, they can appeal to eBay or Microsoft to get the auction reinstated, which can take weeks.
But of all the auctions Microsoft has had taken down, less than 0.5 percent have been reinstated, Microsoft attorney Tim Cranton said.
"We are being as precise as we can be with the takedown notices," said Cranton, who heads the company's piracy program. "It's a challenging circumstance when you have a particular area of auctions that are so predominantly illegal."
Box was able to get his auction re-listed after convincing Microsoft it was legitimate software, he said.
Box was among dozens of sellers who posted negative comments about Microsoft, only to find the feedback rating changed later by eBay under a new policy.
"I'd hazard the guess that eBay just 'bumped' all comments up a notch, so that negative became neutral and neutral become positive," said one Kuro5hin member. "This is even worse than the negative-to-neutral thing, because now people who were complaining are appearing to support (Microsoft)."
eBay denies manipulating the feedback, saying it was part of a systemwide change. Since March, customers can only leave feedback related specifically to auction transactions. When it made the change, eBay changed all comments not related to transactions to neutral. This affected not just Microsoft, but thousands of others.
eBay spokesman Kevin Pursglove said the company wanted the feedback system to be transaction-based to make it more relevant for buyers and sellers. He did acknowledge that eBay's VeRO partners were particularly affected by the old system because they got a lot of negative feedback after removing items.
Tyson Westby of Washington said his run-in with Microsoft led to eBay suspending his account after he tried to re-list an auction for five store-bought copies of Windows 98 that eBay had canceled at the software giant's request.
"Microsoft was acting like god," Westby said. "It cannot be legal."
Not only is it legal, experts say, it may be the best way for eBay to minimize the threat of lawsuits.
Yahoo is embroiled in a lawsuit with Sega, Nintendo and Electronic Arts, accused of doing too little to stop the sale of illegal copies of games on its site.
eBay must strike a balance between angering its customers and upsetting copyright holders, said Rich Gray, an attorney with Outside General Counsel of Silicon Valley.
"No matter what they do, one side or the other--perhaps both--is going to be unhappy with eBay," Gray said.
Illegal sales usually fall into two broad categories: software that has been mass copied off original software, or copies of software that have been purchased legally but are not allowed to be resold, such as previously installed software or software sold at an academic discount.
Previously installed software can be resold with the computer it was sold with, but it cannot be sold legally on its own. Academic software licenses prohibit the sale of the software to the highest bidder.
The latter category is what seems to have tripped up one college student who tried to sell an academic copy of Microsoft Visual C++ on eBay. Although the student said in the auction listing that only bids from those who could legally obtain academic software would be accepted, eBay canceled the auction under Microsoft's advisement.
The University of Alabama at Tuscaloosa student, who asked to remain anonymous, didn't try to contact Microsoft after the auction was canceled.
"I just read the email and gave up," the student said. "I've still got the software right here beside me."