Not quite true, you can make a registry key entry on a fresh install of Windows 7 to enable the activation with the upgrade key. Of course you should only do this if you legitimately had a previous OS on that machine.
Here are the salient steps: Full article here
Workaround 3: Clean Install and Activate Windows 7 with MediaBootInstall Registry Hack
After booting up, ensure that no Windows Updates pending task which requires a system reboot to finish installing.
Tip: Normally, an orange-colored shield icon will be displayed next to Shutdown button in the Start Menu Power Button or at notification tray area if a restart is required.
If reboot is required, restart the computer to allow any pending updates is installed.
Run Registry Editor (RegEdit).
Navigate to the following registry key:
HKEY_LOCAL_MACHINE\SOFTWARE\Microsoft\Windows\CurrentVersion\Setup\OOBE
In the right pane, change the value data for MediaBootInstall from 1 to 0.
Alternatively, just download and execute MediaBootInstall.reg to merge the value into registry.
Open an elevated command prompt as administrator.
Run the command below to reset Windows 7 activation status:
slmgr -rearm
Reboot the computer.
Run the Activate Windows utility (accessible from bottom section of Control Panel -> System and Security -> System, or type Activate Windows into Start Search), type in the upgrade product key and activate Windows.
http://www.mydigitallife.info/clean-install-windows-7-with-upgrade-media-and-product-key-on-formatted-or-empty-blank-hard-drive/