^OK. Though I knew that OEM activation is different, I don't have any idea better than that

.(except that they are bound to the specific motherboard. All my previous installs were OEM editions. Since motherboard upgrades are the norm of the day, I have since changed to the retail version for Windows 7)
But here is my doubt. Will the OEM activation as mentioned hold good and show the newly installed pirated Windows 7 as genuine, if he does away with the originally installed Windows XP or Vista and installs Windows 7? In this case it is an upgrade in OS level.
( True, when Windows Vista flopped, customers started downgrading to XP and manufacturers obliged, but now it is the other way. People are rushing to computer assemblers of doubtful integrity asking for an upgrade to Windows 7 )
Here is an explanation in detail:
If a model comes with any version of Windows by default (here I am talking about manufacturers like Dell/HP and not any third-party "vendor); then the manufacturer has a certain area in the system BIOS reserved to indicate that. This region is called the SLIC Table. Windows 7 requires version 2.1 of this table in the BIOS.
If Win 7 finds SLIC Table ver.2.1 in the BIOS and the manufacturer provides and OEM certificate (this is a file on the computer), then any version of OEM Windows can be activated offline with the OEM product keys. Computers that were manufactured before August 2009 (this is just a rough date), had SLIC version 2.0 that could be used to activate XP and Vista only. So, if your laptop came with Windows by default and has SLIC 2.0 (meaning your laptop is at least 1.5 years old or so), then you cannot activate Windows 7 offline.
Since this laptop is new and assuming that this laptop came with Windows (any version), it is 99.99% certain that it had SLIC 2.1 in the BIOS (manufacturers do this for mass production). Being backwards compatible 2.1 can activate Win 7 and Vista (I presume it also activates XP, I'm not sure though).
So end of the day, if the laptop has SLIC 2.1 but originally came with Vista and not Win 7; and then this "vendor" installed Win 7 and activated it offline then there is no way to know if the Win 7 installation was genuine or not. It will pass all of Microsoft's tests. The only way to find out is search for that Windows 7 sticker somewhere on the laptop or media (DVD) and the check the Windows "Certificate of Authenticity".
So far this has been a foolproof way of circumventing Windows protection. How this could be done is beyond the scope of this thread and not appropriate to discuss on the message board.