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Microsoft settles Minnesota antitrust case

Microsoft Corp. said Monday it has reached a settlement of a class-action antitrust lawsuit brought by Minnesota customers who claimed the software giant overcharged them.
/ Source: The Associated Press

Microsoft Corp. cleared another lawsuit from its legal docket Monday, settling a class-action case in Minnesota that accused it of overcharging in violation of state antitrust laws.

The settlement’s dollar amount wasn’t released. Some of its provisions will be resolved in binding arbitration, with the final settlement presented to the state court judge by July 1, said plaintiff’s attorney Richard Hagstrom.

He wouldn’t say if the dollar amount was among the issues to be arbitrated, and Microsoft spokeswoman Stacy Drake said the settlement would be made public when presented to the judge. (MSNBC is a Microsoft-NBC joint venture.)

Class-action antitrust cases against the software behemoth are still pending in Iowa, New Mexico, Vermont, Nebraska, and Massachusetts, while cases in New York, Ohio and Wisconsin have either been dismissed or denied class-action status, but the plaintiffs are appealing, said Drake.

Earlier this month, Microsoft settled with two major rivals. It agreed to pay $440 million to InterTrust Technologies Corp. to settle a 3-year-old patent infringement lawsuit over technology for protecting music, movies and other digital content against piracy. And it agreed to pay Sun Microsystems $1.6 billion to settle a private antitrust suit and resolve patent claims.

The Minnesota suit alleged that Microsoft had violated state antitrust law by overcharging for its Windows operating system and its Excel and Word programs. The company had denied overcharging, saying the prices on its products had dropped.

The case was the first state-level class action suit against Microsoft to go to trial. Settlement has been the norm in such cases against the world’s largest software company, said Mark Ostrau, co-chair of the antitrust group with the technology law firm Fenwick & West.

“These are all going to settle. It’s just a question of when,” he said. Microsoft might take a few cases — like the Minnesota one — to trial to show plaintiffs that it’s willing to fight.

The deal in the Minnesota case interrupted a jury trial that was expected to last several more weeks. Attorneys for the plaintiffs had said they were seeking as much as $505 million — and Minnesota law would have automatically tripled that, meaning Microsoft could have faced a potential payout of more than $1.5 billion, said Microsoft attorney David Tulchin.

Hagstrom, however, said tripling damages would have been up to the judge.

“From Microsoft’s perspective it’s a good thing for the company to move on and focus on making good software and making good products that have value for consumers,” Tulchin said.

Tulchin said negotiations had continued off and on during the trial, and resumed more intensely last week. The final agreement was reached Friday, and made public on Monday, when jurors were dismissed.

Microsoft had previously settled with nine states and Washington, D.C., paying out a total of $1.5 billion, including $1.1 billion in California alone. Cases in 16 other states were dismissed.

A case brought by the federal government ended with a settlement in 2001 that found that Microsoft used its operating system monopoly to strong-arm competitors. The trial judge ordered a breakup of Microsoft, but a federal court overruled the decision. It did, however, uphold the judgment that Microsoft held a monopoly with Windows.

The settlements are part of a pattern of Microsoft trying to clear the court cases pending against it, said Matt Rosoff, analyst with independent researchers Directions on Microsoft.

“I don’t think Microsoft was necessarily balking over the amount” of a potential settlement in the Minnesota case, Rosoff said. “They’ve got $53 billion in the bank, so it’s not a large burden to make some decent-sized payouts. What it doesn’t like is when a government body or somebody else tries to restrict their abilities for product design.”

The company still faces a stiff challenge across the Atlantic, however. Last month, the European Union slapped it with a $613 million fine for abusively wielding its Windows software monopoly and ordered sanctions, which Microsoft said it would appeal.