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Michael Robertson |
In the latest of a series of settlements with its rivals, Microsoft is to pay $20 million to protect its Windows trade mark in a potentially damaging infringement case.
On July 16, the software leader reached an agreement with US technology company Lindows Inc that will see Lindows change its corporate name to Linspire by September 14. Lindows will also stop using all Lindows marks, including those that appear in its Linspire operating system.
In exchange, Microsoft will pay Lindows $15 million by August 15. An additional $5 million will be paid on February 1 2005, when Lindows will transfer a number of domain names, including lindows.org, lindowsinc.net and lindowsinc.org to Microsoft.
"We are pleased to resolve this litigation on terms that make business sense for all parties," said Michael Robertson, chairman and CEO of Lindows, who was recently named as one of MIP's 50 most influential people in IP. According to a filing with the US Securities and Exchange Commission, Lindows has debts of $13.5 million.
Microsoft has been pursuing its case against Lindows across the world. The dispute began in December 2001, when Microsoft sued Lindows for trade mark infringement, claiming that the Lindows name infringed the Windows trade mark. Since its first action in the US, Microsoft has also filed suits in Finland, Sweden, the Netherlands, France, Spain and Canada. Such was the pressure that Lindows faced that in February it changed its name to Lin?-s (pronounced Lindash) in the Benelux countries, Finland and Sweden, and in April to Linspire across Europe.
There have been suggestions that Microsoft sought a settlement after events in the US case seemed to have turned against the company. In February, Seattle district court judge John Coughenour suggested that the mark's validity should be based on how generic the Windows mark was before the product's first release in 1985, a ruling that was affirmed by an appeal court.
But Microsoft dismissed such suggestions. "We remained confident in the merits of our case, but we are often interested in resolving disputes before they get to trial," said a company spokesperson.
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Microsoft's Seattle headquarters |
"I think the Windows trade mark is defensible," said Mark Shull, president and CEO of MarkMonitor, a trade mark identification and brand monitoring company. "In my opinion, they just decided that it wasn't worth the negative publicity of losing a case, even though I, and many IP attorneys that I have spoken to, think that they'd win on appeal. They probably just figured to spend $20 million, and be done [with Judge Coughenour]."
Jim Rosini, chair of the trade mark practice at Kenyon & Kenyon, said that part of the problem for Microsoft is its management of the Windows trade mark.
"For instance, you rarely see 'Windows-brand operating system', using the mark as an adjective. Instead it is used as a noun, as in 'Windows XP' or getting a Windows upgrade. You should never use a mark as a noun. If they keep doing that, Windows will become generic, just like Kleenex, aspirin, elevator and all the other words that used to be trade marks," he said.
Microsoft's spokesperson responded that the company does not comment on its legal strategies, but added: "We will continue to vigorously defend our trade marks whenever necessary - as we have in this case."
Meanwhile, Microsoft has said that it plans to increase its patent filings by more than 50% in the coming financial year.
Speaking at the annual Microsoft Financial Analyst Meeting, chairman Bill Gates said that Microsoft plans to apply for 3,000 patents in the year ending June 30 2005.
Such a figure would propel Microsoft alongside IBM as the leading patent filer at the US Patent and Trademark Office.
The New York Times reported that Gates said patents were a "very important part" of the company's "cycle of innovation".
