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What I want to do is bundle XML Notepad (as is, no modifications) with the installation of our commercial product. Instead of telling the customer "go to http://www.microsoft.com/en-us/download/details.aspx?id=7973 and download XML Notepad".

Any one who can offer insight on how to derive the legality of this from the license?

Mohrn
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    Consider: if you're distributing it, you'll be expected to provide support for it. Meaning if your customers have any problems with it, they'll call you instead of calling MS or searching the MSDN forums. Telling them "Oh, that's not ours, check with MS" may not go over well. – TMN Jul 24 '14 at 17:09

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The License

The relevant part:

(A) Copyright Grant- Subject to the terms of this license, including the license conditions and limitations in section 3, each contributor grants you a non-exclusive, worldwide, royalty-free copyright license to reproduce its contribution, prepare derivative works of its contribution, and distribute its contribution or any derivative works that you create.

I'm no lawyer but I'd say you were ok.

Holloway
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