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SAN FRANCISCO -- Software buyers and needy schools in California have taken another step toward reaping the benefits of a $1.1 billion settlement with Microsoft, with a Superior Court judge here saying Tuesday he intends to grant preliminary approval.

Judge Paul Alvarado said in a hearing he was ready to preliminarily approve the deal, which stemmed from a suit over Microsoft pricing. However, the approval was held back because Microsoft and the plaintiffs, lawyers representing groups of California consumers, could not agree on the notices to computer users that are to appear in the media, in the mail, and online.

The plaintiffs want to include an "easy claim form" in the notice to be published in newspapers and magazines so software buyers can quickly file their claim. Microsoft wants claim forms to be available online or via a free telephone number, not as part of the notice. Microsoft's lawyers contend that could fuel fraud and complicate processing of claims.

Differing Over Claims

Under the settlement, individuals and businesses who bought Microsoft's operating system or productivity software for use in California between February 18, 1995, and December 15, 2001, can get vouchers worth between $5 and $29 depending on the product bought. These vouchers can be used to buy computer hardware or software, and not just Microsoft products. Claims valued up to $100, or for up to five product licenses, can be made without any documentation.

"Microsoft has asked the court to make it unnecessarily inconvenient for class members to make their claims," Richard Grossman, a partner at Townsend and Townsend and Crew, told the court. Class members are those who qualify for vouchers under the settlement.

Microsoft counsel Robert Rosenfeld argued that the settlement agreement precludes a claim form as part of the notice. "We did not negotiate that you could [file a claim] based on tearing a form out of a newspaper," he said.

Because they could not agree, Microsoft and the plaintiffs asked Judge Alvarado to decide on the public-notice issue. Alvarado said he would do so "in the next few days." The judge also told Microsoft and the plaintiffs to come to an agreement on longer versions of the notice that will be mailed to software buyers and posted online.

Both Sides Satisfied

After the notice issues get resolved and the judge signs the preliminary approval, plaintiffs will start advertising the settlement and collecting claims. Then, early next year, the settlement agreement will be up for final approval by the court, says Eugene Crew, lead counsel for the plaintiffs.

Although the firm differs with Microsoft regarding the claim procedure, the legal team remains pleased at the settlement, Crew says.

Microsoft is content with Tuesday's court proceedings, said Jim Desler, a Microsoft spokesperson.

"We are very pleased that the court has indicated its satisfaction with the settlement and its intention to grant preliminary approval," he says.

Microsoft estimates about 50 million product licenses are represented in the settlement. Plaintiffs say some 14 million people would qualify for at least one voucher. Under the settlement, two-thirds of any unclaimed vouchers will go to California's neediest schools.

The California settlement is the largest of five class-action cases Microsoft has settled so far, the most recent a similar deal with North Carolina earlier this week. In each of the cases the plaintiffs allege Microsoft overcharged for its software. Microsoft has not admitted guilt.