Out-Law News 2 min. read
05 Apr 2004, 12:00 am
"This agreement launches a new relationship between Sun and Microsoft – a significant step forward that allows for cooperation while preserving customer choice," said Scott McNealy, chairman and CEO of Sun.
The long running dispute concerned the Java programming language, and in particular Sun's Java Virtual Machine (JVM), a piece of software that is needed for a computer to run software written in Java.
The Java language, developed by Sun in 1995, is popular with internet-based applications and allows programmers to develop applications compatible with many types of computers, regardless of the platform on which they run.
The dispute began when Microsoft decided to drop Sun's JVM from its Windows XP product. Sun sued, claiming that Microsoft had also forced developers to distribute products incompatible with Java. As a result, according to Sun, developers turned to Microsoft's competing .Net platform.
The complexity of the case and the bitter relations between the companies had led many to expect that the case would go to trial, so Friday's settlement came as something of a surprise.
The deal involves payments of $700 million to Sun by Microsoft to resolve pending antitrust issues and $900 million to resolve patent issues. In addition, Sun and Microsoft have agreed to pay royalties for use of each other's technology, with Microsoft making an up-front payment of $350 million and Sun making payments when this technology is incorporated into its server products.
The agreements signed on Friday also include:
A Technical Collaboration Agreement: This will provide both companies with access to aspects of each other's server-based technology and will enable them to use this information to develop new server software products that will work better together.
Microsoft Communications Protocol Program: Sun has agreed to sign a license for the Windows desktop operating system communications protocols.
Microsoft Support for Java: The companies have agreed that Microsoft may continue to provide product support for the Microsoft Java Virtual Machine that customers have deployed in Microsoft's products.
Windows Certification for Sun Server: Sun and Microsoft announced Windows certification for Sun's Xeon servers. In addition, the Windows certification process for Sun's Opteron-based servers is moving forward.
Future Collaboration for Java and .NET: Sun and Microsoft have agreed that they will work together to improve technical collaboration between their Java and .NET technologies.
Patents and Intellectual Property: The parties have agreed to a broad covenant not to sue with respect to all past patent infringement claims they may have against each other. The agreement also provides for potential future extensions of this type of covenant. The two companies have also agreed to embark on negotiations for a patent cross-license agreement between them.
Legal Settlements: The two companies are settling and terminating their lawsuit in the US. Sun is also satisfied that the agreements satisfy the objectives it was pursuing in the EU actions pending against Microsoft.
A European Commission investigation into Microsoft recently concluded that Microsoft has breached European competition law by leveraging its near monopoly in the market for PC operating systems onto the markets for work group server operating systems and for media players. Sun was one of the major instigators of the initial investigation.
Microsoft has asked for a stay in complying with the remedies proposed by the Commission, and a hearing on that point is expected in the European Courts shortly. Commentators suggest that the Sun settlement has improved Microsoft's chances of settling the dispute with the Commission, although Microsoft denied that the issues were connected.