$1.1 billion Microsoft antitrust settlement to be distributed

By Anna Molin, Bay City News Service

July 26, 2006

California businesses and consumers who two years ago settled a $1.1 billion antitrust class action lawsuit against Microsoft will finally receive their shares starting next month, Townsend and Townsend and Crew LLP, the law firm representing the plaintiffs, announced today.

Hundreds of millions of dollars await some 720,000 Californians including more than 4,500 businesses that bought overpriced Microsoft software between 1995 and 2001 and filed claims before January 2005. The bulk of the $1.1 billion, nearly 80 percent, will go to businesses that purchased mass quantities of Microsoft computers with Windows operating systems and other Microsoft applications installed.

Many of those businesses have, however, agreed to donate two-thirds of their settlements to California public schools.

Townsend and Townsend and Crew LLP partner Richard Grossman said today schools could receive between $400 million to $600 million from the settlement "at a time when they definitely need it."

The vouchers, which range from less than $100 to hundreds of thousands of dollars, can be redeemed for cash when buying computer hardware and software products during the next four years.

"We filed this case in 1999 because we saw an opportunity to use our expertise in technology and antitrust law to obtain justice for the millions of California consumers and businesses that were overcharged for their software as a result of Microsoft's illegal monopoly," Grossman said.

"We are delighted that our seven-year legal battle is finally paying off for California's businesses, consumers and schools."

Proceeds from the settlement were withheld during years of appeals battles involving a single class member who declined to make a claim for his share but objected to the donation of any portion of his unclaimed benefits to the public schools, according to the law firm.

After having his appeal rejected by both the state Court of Appeals and the state Supreme Court, the class member failed to meet the appeal deadline to the U.S. Supreme Court last week, which cleared the way for the distribution of settlement proceeds.

Individuals nationwide began suing the Redmond, Wash.-based, computer software giant in 1999 after a U.S. District Court judge in Washington ruled that Microsoft's monopoly hurt consumers and stifled competition in an antitrust lawsuit filed by the U.S. Justice Department and 20 other states, including California.

Local governments, including the Bay Area counties of Santa Clara, San Francisco, San Mateo and Contra Costa, also jumped on the class action bandwagon in 2004 hoping to recover financial compensation akin to the $2 billion awarded to Sun Microsystems earlier that year.

The state and local governments settled for $70 million last summer and could expect to see money coming in early 2007 unless the case is appealed, said Grossman, whose firm handled that suit as well.

A Microsoft spokesperson could not immediately be reached for comment.

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