Microsoft Settles With Lindows

It’s all over. The Microsoft vs. Lindows saga reached a stunning conclusion with the joint announcement of a
worldwide settlement Monday. The agreement involves the Lindows name itself as well as the
usage of copyrighted Windows Media files that are currently shipping with their Linux distribution.

Microsoft will pay $20 million to Lindows to give up the
Lindows name and assign all related Web domains that it owns to Microsoft, according to the registration
statement Lindows filed with the Securities and Exchange Commission.

Under the terms of the settlement, Microsoft will pay $15 million initially, “by wire transfer pursuant
to instructions to be provided by Lindows,” the Confidential Settlement Agreement and Mutual
Release of Claims statement stated. Microsoft will then make the remaining payment of $5 million
within seven days of the “execution and confirmation by Lindows of the Domain Name Assignment.”

“This case was centered on the fundamentals of international trademark law and our necessary efforts to protect
the Windows trademark against infringement,” said Tom Burt, corporate vice president and deputy general counsel
for Microsoft, in a statement. “This settlement addresses those concerns, and we are pleased that Lindows will
now compete in the marketplace with a name distinctly its own.”

The continuing saga of Lindows and Microsoft began two months after Lindows
launched in late 2001
by MP3.com founder Michael Robertson. In February of this year the company changed its name in the
Netherlands, Belgium and Luxembourg to Lin–s (pronounced Lindash).

However, an Amsterdam court later ruled that Lindows, even as Lindash, was in
violation of an earlier court order to not
infringe on the Microsoft trademark.
In April, the company changed its name to Linspire, though the various legal actions were still
ongoing.

In the United States, the tug of war was pending an appeal over the terms of reference for the case,
specifically whether or not Windows should be considered a
generic term.

Today’s settlement spells out in very specific terms what domain names are covered by the deal:
“‘Lindoz’ or ‘lindows.com’ or ‘lindowsinc.com or ‘lin—s.com’ or any other term including ‘-indows’ or ‘indoz,’
including use in or as a trademark, logo, trade name, or corporate
name or portion thereof in any way and in any channel of distribution, throughout the world.”

For the next four years according to the settlement agreement, “Lindows may use www.lindows.com and www.lindowsinc.com
solely for the purpose of redirecting traffic to other Web sites. After four years from the effective date of
this settlement agreement, Lindows will assign the www.lindowsinc.com and www.lindows.com domain names to Microsoft.”

Also covered by this deal is a copyright infringement issue over the use of
certain Windows Media files in the Lindows/Linspire Linux distribution. Essentially the deal identifies
four Microsoft Windows Media Files that will need to removed from Lindows/Linspire within the next 90 days.
According to the agreement, Lindows must never makes use of the Windows Media Files in any of its future
products at any time.

“We are pleased to resolve this litigation on terms that make business sense for all parties,” said Michael
Robertson, CEO of Lindows Inc. “Over the next few months, Lindows will cease using the term Lindows and transition
to Linspire globally as our company name and primary identifier for our operating system product.”

Linspire/Lindows is in the process of a planned IPO of over 4 million shares that are expected to be offered
between 9 and $11 dollars a share.