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This year alone, Microsoft Corp. has shelled out in excess of $3 billion to settle legal disputes with hardened rivals, but ongoing litigation with the European Union and a slew of software firms will keep the companys lawyers busy for the foreseeable future.
Microsofts $536 million payout to Novell Inc. on Monday did not include the longstanding Novell antitrust claims associated with the WordPerfect business. Also outstanding are patent infringement and antitrust cases filed by Burst.com, RealNetworks Inc. and Eolas Technologies Inc.
Microsoft estimates it will incur additional expenses of up to $950 million for remaining antitrust claims—a strong hint that settlement talks with RealNetworks and Burst.com have started—but that figure does not include a $521 million patent infringement verdict won by Eolas for technology used in the Internet Explorer browser.
Microsoft spokesperson Jim Desler confirmed the $950 million estimate related to antitrust disputes only, but he declined to say if settlement talks had started with RealNetworks and Burst.com.
“We never discuss negotiations or settlements. I have no comment on who we are or arent talking to,” Desler said, pointing out that the record fine handed down by the European Commission in March has already been paid and is being held in escrow until Microsofts appeal is decided.
Seattle-based RealNetworks has accused Microsoft of “predatory action over a period of years” and is claiming about $1 billion in lost revenue and business. The case centers around Microsofts Windows Media Player, which is embedded in the Windows operating system.
The Burst.com case has a mix of antitrust and intellectual property claims. Burst filed suit in June 2002, accusing Microsoft of developing its own multimedia software for moving audio and video more quickly over the Internet after discussing the technology for months with Burst. The company is also claiming theft and anti-competitive behavior by Microsoft.
Desler said the outstanding antitrust cases also include consumer class action suits in Iowa and Nebraska and “two or three other states” in various stages of the legal process.
Analysts say they are not surprised by the rapid pace of big-money settlements coming out of Microsoft. “Microsoft has been moving quickly to bury the hatchet and settle these suits, even with the most bitter rivals,” said The Yankee Groups Laura DiDio.
“If you look at Microsofts strategy the last one-and-a-half to two years, it is settle, settle, settle. They have that $60 billion war chest sitting there and theyre willing to spend it to get rid of problem cases. If Microsoft could settle with hated competitors like Sun and Novell, they can settle anything with anyone,” DiDio said.
Rob Helm, director of research at Directions on Microsoft, said the strategy to settle the patent infringement cases could be traced back to last years hiring of former IBM executive Marshall Phelps as corporate vice president and deputy general counsel for intellectual property.
“Phelps was hired to get Microsofts IP house in order and were seeing the results of his work here,” Helm said. “I suspect theyre already in settlement talks with both RealNetworks and Burst. Its just a matter of finding the right dollar amount and the right patent swap.”
Yankee Groups DiDio agreed. “If you listen to the rhetoric coming out of Redmond, its clear they are moving away from fighting these cases and thinking in terms of concessions. Theyre publicly trying to be a kindler, gentler Microsoft.”