Be, Microsoft Strike Accord

Be Inc.'s settlement with Microsoft Corp. this month is a far cry from the tough talk the dissolving company made in court.

Be Inc.s settlement with Microsoft Corp. this month is a far cry from the tough talk the dissolving company made in court and in filings regarding its antitrust case against the Redmond, Wash., software company.

Be, of Mountain View, Calif., and Microsoft announced a settlement whereby Microsoft would pay Be more than $23 million and attorney fees while Microsoft admitted to no wrongdoing, according to officials from both companies. Other terms of the settlement are confidential.

Be sued 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 Microsofts licensing agreements with PC makers hampered Bes relationships with computer manufacturers to the point that the manufacturers passed on adopting Bes technology. Microsoft said Bes fate is the result of technological and business factors not involving Microsoft.

Be, which had offered an alternative PC operating system, claimed Microsoft drove Be out of business via "illegal exclusionary and anticompetitive acts designed to maintain its monopoly ... [and] created exclusive dealing arrangements with PC OEMs prohibiting the sale of PCs with multiple preinstalled operating systems," according to a Be filing.

"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 preinstallation of the Be operating system by OEMs was the only strategy by which Be could effectively distribute its operating system and that Microsoft killed that option through exclusive deals with OEMs.

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 is the second private lawsuit Microsoft has settled this year. The company reached a $750 million agreement with AOL Time Warner Inc. in May to settle a lawsuit filed by Netscape Communications Corp.

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