Wait, from what I understand is that if you upgrade a pirated Windows copy, Windows 10 will still not be genuine. Microsoft even said this when they announced the free upgrade.
Even then, I don't think they make it a legit Windows 10. They simply can't. Otherwise pretty much anyone who wants Windows 10 for free would just pirate Win 7 and then upgrade it.
Well... here is the deal, Windows 8.1 users that pirated a copy will be detected as non genuine, because they are activated via KMS, and taking in mind that method is offline and uses "fake" servers, it's easy for Microsoft to invalidate those activations.
Windows 7 by the other hand is a different story, Windows 7 has this OEM system for activation, that only retailers or OEMs could access... well, until someone released the methods for activating. For example, you don't need your COA sticker to reinstall Windows 7 over a laptop that already has a SLIC table in the BIOS, the only thing you need is reinstall, save your certificate (yes a certificate for OEMs so they can validate systems in mass) and a valid OEM serial key, do the appropiate steps, and vuala! Windows 7 activated without going online. Simple huh?
Also, there are loaders that activate Windows 7 emulating this exact behaviour, and guess what, the former I mention and this one activates and makes Windows pass as genuine... yes, genuine, I've seen that, just activate with a loader and go to the validation website from Microsoft, you will not get a non genuine advice never, NEVER. It's like an original OEM system install.
In short, pirates emulated the way OEMs used to activate Windows 7 for their mass production of PCs, therefore the desition from MS of removing that and allowing them only online activations via special servers from them... Windows 8.1 now has a more complicated system with a SLIC 2.2 table, that's why people that pirates it uses KMS activators, but those are, again, easily detected.
For Windows 7, it's another story, yes, in fact, you can always downgrade to Windows 7 if you use 8.1) activate and upgrade to Windows 10, will pass as genuine and activate, that activation will be tied to the motherboard ID info, stored on MS servers, so you can install Windows 10 on that machne as many times as you want. Microsoft desn't have a way to detect this, none, nada, because the "false" SLIC tables are loaded into memory, like a normal OEM system does. It's technically, genuine.
Personally, I'll preffer to buy Windows 10 a year after all this mess, because, if you don't know already, Start Menu and Cortana seems to have issues, and the latest update to fix that results on an endless boot loop. You can see why, this is a massive experiment to see what to change in Windows 10 and what not to. I would suggest returning back the ability to configure Windows Update as you like, we don't even have a week after release, and yet, the first "bugged" patch is doing its job...
Windows 10 Forced Updates Causing Endless Crash Loops - Forbes
Windows 10 Cumulative Update KB3081424 Fails to Install, Stuck in Reboot Loop - Softpedia
In case you wanna fix it:
Windows 10 Cumulative update KB3081424 fails to install, stuck at 30%: How to fix
Here they explain that you can install manually and avoid issues:
Windows 10 Cumulative Update KB3081424 Fails To Install For Some
Yeah, I'm waiting a year, totally worths it...