Microsoft settles California consumer claims for up to $1.1 billion

The agreement, which is yet to be approved by the California Superior Court, ends an antitrust, class action lawsuit filed in 1999 by Californian consumers, alleging that Microsoft overcharged by $40 for every copy of Windows 95 and 98 and abused its dominant position in the market for PC operating systems.

The case was scheduled for trial in San Francisco next month. Similar lawsuits against Microsoft are still pending in 16 states and the District of Columbia.

According to Microsoft and the consumers' attorneys, the settlement benefits Californian residents who bought Microsoft Windows operating system, spreadsheet or word processing software between 18th February 1995 and 15th December 2001.

These consumers will have the right to apply for vouchers worth between $5 and $29 to buy desktops, laptops and software, including non-Microsoft products. The amount of the refund will be set per software licence.

The maximum value of the settlement is $1.1 billion, however Microsoft will only have to pay this sum if all vouchers are claimed. Two-thirds of any unclaimed proceeds will be donated to Californian public schools in the form of Microsoft "educational and productivity software", as well as vouchers for any manufacturer's hardware and software.

Microsoft will keep the remaining third of any unclaimed proceeds. The company is also liable for the consumers' legal fees, but the sum has to be set by the court.

Microsoft has, according to media reports, agreed to notify all Californian computer users listed in its database about the vouchers by post or e-mail, and to create a web site to provide claim forms. The offer will also be publicised in Californian newspapers.

Californian state laws allow software end-users, such as consumers and businesses, to file suits over unfair competition. In most US states, however, only direct buyers of software licences, such as computer manufacturers, have the right to file such lawsuits.