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California Purchasers of Microsoft Software Recover $1.1 Billion [05/16/2006]
On July 18, 2003, the court granted preliminary approval to the parties' proposed $1.1 billion settlement of several consolidated California class actions again Microsoft Corporation alleging that Microsoft violated California's antitrust and unfair competition laws. The proposed settlement benefits consumers and businesses who purchased Microsoft operating system, productivity suite, spreadsheet or word processing software between February 18, 1995, and December 15, 2001, for use in the state of California. The settlement, which covers some 50 million separate software licenses, will be paid out to 13 million eligible California businesses and consumers. To recover under the settlement, class members must mail a claim form postmarked no later than January 8th, 2005.

The settlement proceeds will be distributed to class members in the form of vouchers, estimated at $5 to $29 each per user, that may be used to buy any manufacturer's desktop, laptop and tablet computers, any software used with those computer products and specified peripheral devices for use with computers. Two-thirds of any unclaimed settlement proceeds will be donated to California's most needy public schools in the form of Microsoft educational and productivity software as well as vouchers for the purchase of computer equipment, professional development services and non-Microsoft software. Microsoft retains the other one-third of any unclaimed settlement proceeds.

The parties have released some of the voucher amounts: $26 for each copy of Excel purchased during the period in question, $16 per copy of the Microsoft Windows operating system, and $5 per copy of Microsoft's word-processing program Word or the now-discontinued program Works.

An earlier proposed national settlement of all the private antitrust class actions against Microsoft was disapproved by a different court a year ago because the settlement was ruled to be too beneficial to Microsoft. Schools would have received Microsoft software which, opponents of the settlement argued, simply seeded those schools as future Microsoft markets.

Microsoft said the California settlement resolves the biggest chunk of the state antitrust litigation pending against it. Although groups of consumers in 16 states and the District of Columbia still have litigation pending, the California lawsuit represented an estimated 40 percent of the PCs at issue in all the state litigation.

The California class action is separate from the antitrust action against Microsoft by the federal government and several states. Although the court in that case approved the parties' settlement, the states of Massachusetts and West Virginia remain dissatisfied with the outcome and are continuing litigation.

Legal fees and the costs of administering the settlement will be paid separately, so those expenses will not reduce the settlement amount.

The settlement will not be effective until the court grants it final approval. The court has scheduled a hearing on the matter for February 13, 2004.


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