Microsoft Settles Lindows Case for $20 Million

Microsoft and Lindows announced yesterday that they have settled Microsoft's trademark-infringement lawsuit against the Linux maker. Microsoft agreed to pay Lindows $20 million, and Lindows agreed to change its corporate name to Linspire by mid-September, turn over any Lindows-related domain names to Microsoft, and cease using the Lindows name. Lindows also will get a royalty-free license to use Microsoft's Windows Media formats for 4 years. Executives from both companies issued statements about the agreement.
  
"This case was centered on the fundamentals of international trademark law and our necessary efforts to protect the Windows trademark against infringement," Tom Burt, Microsoft's corporate vice president and deputy general counsel, said. "This settlement addresses those concerns, and we are pleased that Lindows will now compete in the marketplace with a name distinctly its own."
  
"We are pleased to resolve this litigation on terms that make business sense for all parties," Lindows CEO Michael Robertson said. "Over the next few months, Lindows will cease using the term Lindows and transition to Linspire globally as our company name and primary identifier for our operating system product."
  
Created in July 2001, Lindows is the brainchild of Robertson, who also founded MP3.com. The company clearly chose the Lindows name to rile Microsoft, which owns a trademark on the name Windows. And predictably, Microsoft sued Lindows in December 2001, charging that the Lindows name violated the trademark. But things didn't go well for Microsoft in the US courts; a federal judge questioned the validity of the Windows trademark and set a trial date. Microsoft did, however, win injunctions against Lindows in Europe, and the Linux company had to change its name to Linspire in certain European markets as a result. The company will now use that name worldwide.
  
Although Lindows has been losing money since its inception, the company hopes that the combination of Microsoft's $20 million payout and an expected $39 million gain from a pending initial public offering (IPO), which Lindows filed yesterday, will help the company move forward. Certainly, the $59 million will be enough money to pay off the company's $13 million debt.