Be, Microsoft Settle Suit

The settlement calls for Microsoft to pay Be, which is in the process of dissolving, more than $23 million, despite Microsoft's insistence that it did nothing wrong.

Be Inc.s settlement of an antitrust lawsuit with Microsoft Corp. last week is a far cry from the tough talk the dissolving company made in court and in filings regarding its case against Microsoft.

Last Friday, Be and Microsoft announced a settlement of the Mountain View, Calif., operating system companys lawsuit against Microsoft, whereby Microsoft will pay Be more than $23 million and attorneys fees while Microsoft admitted to no wrongdoing, the settlement said. Beyond that, the terms of the settlement are confidential, the companies said.

Be filed suit against Microsoft in February 2002 in the U.S. District Court of Northern California claiming Microsoft violated federal and state antitrust laws. The case was shifted to the U.S. District Court for the District of Maryland and landed in the Baltimore court of U.S. District Judge J. Frederick Motz.

Be claimed that Microsofts licensing agreements with PC makers hampered Bes relationships with computer manufacturers to the point that the manufacturers passed on adopting Be. However, Microsoft refuted those claims and said Bes fate is the result of other factors including technological and business factors that did not involve Microsoft.

Be, which offered an alternative PC operating system, filed suit against Microsoft in February 2002, claiming Microsoft drove Be out of business "through a series of illegal exclusionary and anticompetitive acts designed to maintain its monopoly in the Intel-compatible PC operating system market and created exclusive dealing arrangements with PC OEMs [original equipment manufacturers] prohibiting the sale of PCs with multiple preinstalled operating systems," according to a Be document describing the lawsuit when filed.

During a hearing before Motz last January in Baltimore, Microsoft attorney Mike Shepard, said: "This is a claim that needs to be dismissed because here we have Be not offering a peep to Microsoft or to a court or to its shareholders for three years. Then they see [U.S. District] Judge Jacksons opinion and say, Woo-hoo, maybe we can pile on here!"

"This court rejected Microsofts claim that Sun [Microsystems Inc.] has no reason to get a must-carry provision because Sun should have gone on to create its own distribution channel," said Be attorney Steve Susman during that same hearing. "If Sun is allowed to force Microsoft to ship Java, Be should be allowed to require Bes OS to ship with the Windows operating system."

Susman argued that pre-installation of the Be OS by OEMs was the only strategy by which Be could effectively distribute its operating system and Microsoft killed that option through exclusive deals with OEMs.

In addition, Susman said, Microsofts "pollution of Internet standards" prevented Be from getting access to developers and was intended to foreclose the development of technologies that might be competitive to Windows.

Yet, under the settlement announced Friday, a stipulated order of dismissal will be submitted to the U.S. District Court in Maryland, Microsoft said.

In a statement, Microsoft Senior Vice President and General Counsel Brad Smith said: "While we believe we would have ultimately prevailed in this case, Microsoft is very pleased to settle this lawsuit. This settlement is another step in Microsofts efforts to resolve legal conflicts so we can focus on the future and continue building great software."

This is the second private lawsuit Microsoft has settled this year. Microsoft reached a settlement agreement with AOL Time Warner in May to settle a lawsuit filed by Netscape. That settlement was in the amount of $750 million.

Meanwhile, Be is in the process of finalizing the dissolution plan the company put into motion in November 2001, and Be will distribute its net worth to shareholders who were with the company as of March 15, 2002, Be officials said.