Microsoft pays Lindows $20 million to settle trademark dispute

Microsoft and Lindows.com Inc have settled their long-running trademark dispute over the use of the mark LINDOWS in conjunction with an open source operating system that was alleged to have a similar look and feel to Microsoft's WINDOWS-marked product. In return for $20 million and a four-year royalty-free licence to include Windows Media software with its operating systems, Lindows has agreed to stop using the LINDOWS mark in conjunction with its software products, website and corporate name. Lindows will change its trademark and trade name in the United States to LINSPIRE, as it had already done in the rest of the world (see Lindows loses battle, but WINDOWS war not over).

Microsoft originally sued Lindows for trademark infringement in the United States and several European jurisdictions. While Microsoft was largely successful in its foreign litigation, in February of this year, the US District Court for the Western District of Washington ruled that, in determining the validity of the WINDOWS mark, the jury should consider whether the mark was generic before Microsoft launched its Windows 1.0 product in 1985, regardless of whether it is not considered generic today.

A jury verdict invalidating the WINDOWS trademark would have led to widespread use of the mark, which would have been devastating for Microsoft. The US Court of Appeals for the Ninth Circuit declined to consider Microsoft's appeal of the district court ruling in May, which cleared the way for a trial to begin (see Microsoft has another 'paneful' experience in WINDOWS dispute). The parties finally settled the matter in mid-July.

Under the settlement agreement, Lindows will permanently change its corporate name and stop all use of the LINDOWS mark on its products by September 15. Lindows may continue to use two domain names containing the LINDOWS mark (ie, 'lindows.com' and 'lindowsinc.com') for four years, but only to redirect visitors to its new websites. After four years, these domain names must be transferred to Microsoft. Lindows also agreed (i) to abandon any trademark application for the LINDOWS mark, and (ii) to withdraw any litigation based thereon, including cases pending in Canada, France and Spain.

Lara Holzman and Sarah Hsia, Alston & Bird LLP, New York

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