diff --git a/toolkit/mozapps/extensions/nsExtensionManager.js b/toolkit/mozapps/extensions/nsExtensionManager.js
index 3064a6517bdb..1da189aa2875 100644
--- a/toolkit/mozapps/extensions/nsExtensionManager.js
+++ b/toolkit/mozapps/extensions/nsExtensionManager.js
@@ -1678,7 +1678,7 @@ function safeInstallOperation(itemID, installLocation, file) {
           continue;
 
         zipReader.extract(entryName, target);
-        target.permissions |= FileUtils.PERMS_FILE;
+        target.permissions = FileUtils.PERMS_FILE;
       }
     }
     catch (e) {
diff --git a/toolkit/mozapps/extensions/test/unit/data/test_bug541420.xpi b/toolkit/mozapps/extensions/test/unit/data/test_bug541420.xpi
deleted file mode 100644
index d5d1e91da979..000000000000
Binary files a/toolkit/mozapps/extensions/test/unit/data/test_bug541420.xpi and /dev/null differ
diff --git a/toolkit/mozapps/extensions/test/unit/test_bug541420.js b/toolkit/mozapps/extensions/test/unit/test_bug541420.js
deleted file mode 100644
index 6cefe6fbf9a8..000000000000
--- a/toolkit/mozapps/extensions/test/unit/test_bug541420.js
+++ /dev/null
@@ -1,70 +0,0 @@
-/* ***** BEGIN LICENSE BLOCK *****
- * Version: MPL 1.1/GPL 2.0/LGPL 2.1
- *
- * The contents of this file are subject to the Mozilla Public License Version
- * 1.1 (the "License"); you may not use this file except in compliance with
- * the License. You may obtain a copy of the License at
- * http://www.mozilla.org/MPL/
- *
- * Software distributed under the License is distributed on an "AS IS" basis,
- * WITHOUT WARRANTY OF ANY KIND, either express or implied. See the License
- * for the specific language governing rights and limitations under the
- * License.
- *
- * The Original Code is mozilla.org code.
- *
- * The Initial Developer of the Original Code is
- * Mozilla Corporation.
- *
- * Portions created by the Initial Developer are Copyright (C) 2010
- * the Initial Developer. All Rights Reserved.
- *
- * Contributor(s):
- *   Dave Townsend <dtownsend@oxymoronical.com>
- *
- * Alternatively, the contents of this file may be used under the terms of
- * either the GNU General Public License Version 2 or later (the "GPL"), or
- * the GNU Lesser General Public License Version 2.1 or later (the "LGPL"),
- * in which case the provisions of the GPL or the LGPL are applicable instead
- * of those above. If you wish to allow use of your version of this file only
- * under the terms of either the GPL or the LGPL, and not to allow others to
- * use your version of this file under the terms of the MPL, indicate your
- * decision by deleting the provisions above and replace them with the notice
- * and other provisions required by the GPL or the LGPL. If you do not delete
- * the provisions above, a recipient may use your version of this file under
- * the terms of any one of the MPL, the GPL or the LGPL
- *
- * ***** END LICENSE BLOCK *****
- */
-
-function run_test() {
-  createAppInfo("xpcshell@tests.mozilla.org", "XPCShell", "1", "1");
-
-  startupEM();
-
-  gEM.installItemFromFile(do_get_file("data/test_bug541420.xpi"),
-                          NS_INSTALL_LOCATION_APPPROFILE);
-
-  restartEM();
-  do_check_neq(gEM.getItemForID("bug541420@tests.mozilla.org"), null);
-
-  var il = gEM.getInstallLocation("bug541420@tests.mozilla.org");
-  var file = il.getItemFile("bug541420@tests.mozilla.org", "binary");
-  do_check_true(file.exists());
-  do_check_true(file.isReadable());
-  do_check_true(file.isWritable());
-
-  // We don't understand executable permissions on Windows since we don't
-  // support NTFS permissions so we don't need to test there. OSX's isExecutable
-  // only tests if the file is an application so it is better to just check the
-  // raw permission bits
-  if (!("nsIWindowsRegKey" in Components.interfaces)) {
-    if ((file.permissions & 0111) == 0)
-      do_throw("File should have been executable, permissions were " + file.permissions.toString(8));
-  }
-
-  gEM.uninstallItem("bug541420@tests.mozilla.org");
-
-  restartEM();
-  do_check_eq(gEM.getItemForID("bug541420@tests.mozilla.org"), null);
-}