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Why does re-installing my application force the user to re-activate?

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The user only needs to re-activate following a re-install of your application (to the original folder) if the .cm file is replaced with a new one.  They do not normally need a new .cm file.

If you are using CMInstall then remember to specify the /K option which will keep any existing .cm file in the destination path instead of overwriting it.

If you are sending your user an upgrade for your software then you do not need to supply a new .cm file provided that you are using the API method or the standard Shell method.  If you are using Shell protection with Advanced Runtime Protection or you are protecting a .NET program then you will need to provide a new .cm file as well as the exe.

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