Microsoft, California Reach $1.1 Billion Settlement

Settlement resolves all of the antitrust and unfair competition class-action lawsuits filed against the company in the state.

In settling to avoid a trial in a key class-action lawsuit Friday, Microsoft Corp. will help bridge the digital divide in Californias school system, as part of its settlement will go to schools in underprivileged areas.

Microsoft announced a settlement worth up to $1.1 billion with the San Francisco law firm of Townsend and Townsend and Crew LLP, lead counsel for two certified classes of California consumers.

Tom Burt, Microsofts deputy general counsel, said the California settlement resolves all of the antitrust and unfair competition class-action lawsuits filed against the company in the state.

Microsoft was scheduled to take its case to trial Feb. 24 in San Francisco. Instead, consumers who purchased Microsoft products between Feb. 18, 1995, and Dec. 15, 2001, who feel they have been harmed by Microsoft can file claims for vouchers that will have a value of between $5 and $29, depending on the product purchased, Burt said.

After the settlement is finalized, consumers will have four months to get the vouchers and then four years to use them, Burt said.

He added that any unclaimed funds will go to the state of Californias education system or returned to Microsoft. Two-thirds of the unclaimed funds will go to addressing the digital divide.

Burt said Microsofts donation could be used by schools to get Microsoft software or to acquire software, hardware and services from any technology provider, including Microsoft competitors.

"This settlement contains more assurances that the schools will be able to use the vouchers," said Brad Smith, Microsofts general counsel.

Microsoft officials said the company once faced more than 100 cases filed in 36 states. "And weve now only got cases pending in 16 states and the District of Columbia," Smith said.

Smith said the California cases "by far represented the largest number of suits" against the company.

Burt said the potential size of the California claim is about 50 million licenses, based on sales in the region.

"This is one of the largest settlements ever reached under the antitrust or unfair competition laws of California," said the plaintiffs lead counsel, Eugene Crew, in a statement.

The plaintiffs co-lead counsel, Richard Grossman, also in a statement, added: "This settlement represents a significant portion of the amount that Californians paid to Microsoft for its operating system and key applications software over a seven-year period. It is a tremendous result for Californias businesses and consumers, and will also benefit our schools at a time when that help is desperately needed."

"Coming at a time when California is in the middle of a significant budget crisis, these funds and software will help to ensure that Californias schoolchildren get technology they can use," said Jack OConnell, state superintendent of public instruction, in a statement. "This settlement is an innovative way to help our most needy schools shrink the digital divide and will help deliver on my departments commitment to getting technology infrastructure into our schools to enhance the learning process."