Microsoft Settles Caldera Suit for About $155M

Microsoft Corp. last week paid at least $155 million to settle a private antitrust lawsuit brought by Caldera Inc.

The settlement isn't expected to influence separate antitrust settlement talks now under way between Microsoft and the U.S. Department of Justice.

The settlement value wasn't revealed, but Microsoft said it will cut into quarterly earnings by 3 cents per share. That puts the value of the deal at at least $155 million.

DOS Duel

Orem, Utah-based Caldera, a Linux and embedded systems developer, sued Microsoft in July 1996 for allegedly using its monopoly power in operating systems to unfairly squelch competition in the DOS market. The suit accused Microsoft of illegally tying its MS-DOS to Windows 3.1 and intentionally creating incompatibilities between Windows and DR-DOS, which Caldera now owns.

Microsoft, which consistently denied the charges, had tried unsuccessfully to get most of the case dismissed.

The settlement, signed three weeks before a trial was set to start, leaves several questions unanswered. Chief among them: Did Microsoft strong-arm PC makers into favoring its version of DOS?

"I have mixed emotions," said Bryan Sparks, CEO of Lineo Inc., a Caldera spin-off. "We came up with a number that if [Microsoft] met, we would settle.

And in a single day, they [did]."

Microsoft wouldn't have settled had it not feared evidence Caldera planned to present, a Caldera spokesman claimed.

Not so, responded a Microsoft spokesman. "There's uncertainty in any legal case. We would have been comfortable moving ahead, but we always look for a way to come to a fair settlement," he said.

The deal is unlikely to affect settlement talks in the federal government's antitrust case against Microsoft, said Mark Schechter, a lawyer at Howrey & Simon in Washington.

That's because the U.S. Department of Justice is looking for a resolution that would "limit Microsoft's ability to engage in conduct designed to maintain its monopoly position," said Schechter. The Caldera settlement, which was strictly monetary, "doesn't do that," he said.

If damaging evidence had surfaced during the Caldera trial, it could have given more ammunition to consumers separately suing Microsoft in a pile of class action lawsuits. At least 76 such suits - including two last week - have been filed since November.

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