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By purchasing the product you purchase the License which can be activated 3 times. Each activation is associated with the hardware, so 3 activations mean that you can activate the product on 3 different machines. If you activate the license on the same machine for the second time it’s still considered as one activation. So when you format your disk and install the product again you won’t increase your current activations. If you happen to run out of activations (new PC, hardware change, etc) – any old activation can be removed.