Activation is sometimes done offline by entering the key, or with software like Windows 7, online activation is required to prevent multiple people using the same key.
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While the installation is largely automatic, the user must proceed through multiple screens to acknowledge software license terms, specify partition settings for the hard disk, enter the "product key", select international settings, a time zone, and also configure network settings.
In one form, product activation refers to a method invented by Ric Richardson and patented (US 5,490,216) by Uniloc where a software application hashes hardware serial numbers and an ID number specific to the product's license (a product key) to generate a unique installation ID.