Sun, Microsoft Settle Java Lawsuit

Microsoft announced Tuesday plans to pay Sun Microsystems $20 million as part of an agreement to settle a bitter, three-year legal battle over its use of Sun's Java programming language.

In a statement Tuesday afternoon, Microsoft said the companies reached an agreement that settles both the October 1997 breach of contract lawsuit that Sun filed against Microsoft, as well as a countersuit filed by Microsoft against Sun shortly afterward.

Under terms of the settlement, the Java licensing agreement signed between the companies in 1996 is now terminated, Microsoft said. The license was due to expire in two months.

Microsoft can continue to ship products that use Sun's technology, as well as those currently in beta, providing that all future versions of those products pass Sun's Java compatibility tests, Sun said in a separate statement. In return, Microsoft has agreed to pay Sun $20 million.

Microsoft has also agreed not to use Sun's Java compatibility trademark--a steaming coffee cup logo--something a 1998 court order barred Microsoft from doing anyway. 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.

Settlement Long in Coming

The settlement comes one day before the companies were due to meet in U.S. District Court for a case-management hearing, where observers expected the judge to set a date for the oft-delayed case to come to trial.

The dispute dates back to a Java licensing agreement that Microsoft signed in 1996. In November of 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.

Java is a programming language that lets developers write applications that can run on any computer regardless of its operating system. Sun has argued in court that Microsoft viewed this "write once, run anywhere" capability as a threat to Windows.

According to Sun, the version of Java distributed by Microsoft worked better with Windows software, which 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.

The case has been watched closely, and Microsoft's dealings with Java were cited by the judge in the U.S. government's antitrust case against Microsoft as evidence of the software giant's anticompetitive behavior.

Microsoft Pleased, Too

The settlement is a good one for Microsoft, according to Tom Burt, the company's deputy general counsel for litigation.

"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 a district court judge ruled that Sun was likely to win its case and issued a preliminary injunction in Sun's favor. The injunction forced Microsoft to modify its Java-enabled operating systems, Web browsers, and development tools to pass Sun's tests.

A U.S. Appeals Court overturned the injunction, but the original judge later reinstated the injunction on new grounds. 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. The judge abruptly cancelled Wednesday's case management hearing late Monday night or Tuesday morning, presumably because the companies were close to reaching a settlement.