San Francisco (January 23, 2001) -- Microsoft has agreed to pay Sun Microsystems US $20 million as part of an agreement to settle a bitter, 3-year legal battle over its use of Sun's Java programming language.
In a statement Tuesday afternoon, Microsoft said it reached an agreement with Sun to settle both the October 1997 breach of contract lawsuit that Sun filed against Microsoft, as well a countersuit filed by Microsoft against Sun shortly afterwards.
Under terms of the settlement, the Java licensing agreement signed between the companies in 1996 is now terminated, Microsoft said. The license had been due to expire in 2 months.
Microsoft can continue to ship existing products that use Sun's technology -- based on the outdated Java version 1.1.4 -- as well as those currently in beta, for a period of 7 years. However, all future versions of those products must pass Sun's Java compatibility tests, Sun said in a separate statement. In return, Microsoft has agreed to pay Sun 0 million.
Microsoft has also agreed not to use Sun's Java compatibility trademark -- represented by a steaming coffee cup logo -- something that Microsoft was barred from doing by a 1998 court order imposed during the long-running dispute. Sun said the agreement would "protect the future integrity" of its Java technology.
"It's pretty simple: This is a victory for our licensees and consumers," Sun Chairman and Chief Executive Officer Scott McNealy said in the statement.
The settlement comes one day before the companies were due to meet in U.S. District Court for a case management hearing, where the judge overseeing the dispute had been expected to set a date for the case to come to trial.
The dispute dates back to a Java licensing agreement that Microsoft signed in 1996. In November the following year, Sun filed suit against Microsoft for breach of contract, accusing the company of distributing a version of Java that was not compatible with Sun's. Sun amended its complaint in May 1998 to include charges of unfair competition and copyright infringement.
Sun has argued in court that Microsoft viewed Java's "Write Once, Run Anywhere" capability as a threat to Windows, because Java reduced the incentive for software developers to write programs for the Microsoft operating system.
According to Sun, the version of Java distributed by Microsoft worked better with its Windows software. Such a move threatened Java's ability to provide a cross-platform development environment, Sun's lawyers said.
Microsoft has vehemently denied any wrongdoing and has maintained that it stuck to the letter of its licensing agreement with Sun. Any changes Microsoft made to Java merely allowed developers to take advantage of features specific to Windows, the company has argued.
The case has been watched closely, and Microsoft's dealings with Java were cited by U.S. District Court Judge Thomas Penfield Jackson in the U.S. government's antitrust case against Microsoft as evidence of the software giant's anticompetitive behavior.
Tom Burt, Microsoft's deputy general counsel for litigation, portrayed Tuesday's settlement as a positive outcome for Microsoft.
"Microsoft is very pleased with the successful conclusion of this litigation," Burt said in a statement. The agreement confirms Microsoft's ability to independently develop technology to compete with Sun's products, the company said.
Sun scored a victory in the case in November 1998, when Judge Ronald Whyte of the U.S. District Court in San Jose, California, ruled that Sun was likely to win its case based on the merits and issued a preliminary injunction in Sun's favor. The injunction forced Microsoft to modify the Java technology it had distributed in its operating system, Web browser, and development tools so that it passed Sun's tests.
A U.S. Appeals Court overturned the injunction the following year, questioning the grounds on which Whyte had based his decision. Whyte reinstated the injunction, but based his order on California's unfair competition statutes rather than on copyright law, as Sun had requested. The ruling was seen as a partial victory for Sun.
Since then, the two sides have been in and out of court arguing over numerous motions in the case. Judge Whyte abruptly cancelled Wednesday's case management hearing late Monday night or Tuesday morning, presumably because the companies were close to reaching a settlement.