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Microsoft Settles North Carolina Anti-Trust Suit

In the latest chapter of the Microsoft anti-trust saga, the company Thursday said it has settled out of court with the state of North Carolina.

The case, which received preliminary approval from the North Carolina Business Court last Thursday, will be paid out in the form of vouchers worth up to $89 million. The coupons may be used to buy any manufacturer's desktop, laptop and tablet computers, any software available for sale to the general public and used with those computer products, and specified peripheral devices for use with computers.

"We are pleased to learn that the court has given preliminary approval to the participation of the North Carolina public schools in the cy pres provisions of the proposed settlement in Salvatore v. Microsoft Corporation, et al. and Rankin & Huwe v. Microsoft Corporation, et al.," Dr. Bob Bellamy, associate state superintendent and chief technical officer of North Carolina Schools said in a statement.

The Redmond, Wash.-based software giant has been fastidiously working on closing the legal books with the nine states and the District of Columbia that have filed class-action suits in an ongoing anti-trust case regarding the Windows operating system. Microsoft officials said they are still working on a resolution for Arizona, Iowa, Minnesota, New Mexico and Wisconsin.

North Carolina's settlement means Microsoft's preliminary settlement with Tennessee, and the Dakotas is a combined aggregate amount of $72.8 million. All told, Microsoft will shell out a total of $1.55 billion to settle the 10 cases out of court.

"We're pleased by the opportunity to help schools all across North Carolina get the computers and software they need," Microsoft general counsel Brad Smith said in a statement. "This settlement allows us to focus on the future and building great software, and avoids the cost and uncertainty of litigation."

Under the terms of the settlement agreement, Microsoft will provide one- half of the value of the "unissued vouchers" - i.e., one-half of the difference between $89 million and the value of vouchers issued to class members - to North Carolina's public schools in the form of vouchers that may be used by schools to purchase a broad range of hardware products, Microsoft and non-Microsoft software, and professional development services. In the event any vouchers issued to class members are not redeemed, Microsoft will provide one-half of the value of those unredeemed vouchers to the North Carolina Department of Public Instruction.

It is estimated that approximately 1,000 schools, just under half of all K-12 schools in North Carolina, will be eligible to receive assistance. This represents nearly 45 percent of all North Carolina students.

"Depending upon the degree to which the class members exercise their options under the settlement, the cy pres fund could be substantial," Dr. Bellamy said. "Whatever the ultimate size of the cy pres fund, we are committed to using those funds to enhance the technology resources available to the neediest North Carolina public schools and look forward to receiving those funds as soon as possible."

Consumers who, between Dec. 9, 1995, and Dec. 31, 2002, and while residing in North Carolina, indirectly purchased certain Microsoft operating system, productivity suite, spreadsheet or word processing software for use in North Carolina and not for resale will be eligible to apply for the vouchers.

In the area of compliance, Microsoft officials say they are doing everything required of them, despite some negative feedback from the European Union over its protocol licenses. Government officials in Brussels have said the limited success of the settlement measure in the States would prompt some more thought for a different measure in Europe.

In the U.S., there has been a decided lack of interest in buying into Microsoft's protocols, whether because of a pricing or policy issue.

"What the consent decree requires us to do, is we have to offer licenses to our protocols on reasonable and non-discriminatory terms," Smith told internetnews.com earlier this week. "That doesn't mean we have the duty to extort or enforce people to get them to sign



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