Microsoft to pay up to $180 million to settle Iowa lawsuit

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DES MOINES, Iowa -- Microsoft Corp. agreed Wednesday to pay Iowans up to $180 million to settle a class-action lawsuit that claimed the company had a monopoly that cost the state's citizens millions of dollars extra for software products.

The $179.95 million settlement means individuals in Iowa who bought certain Microsoft products separately or preinstalled on computers between May 18, 1994, and June 30, 2006, will be eligible for cash. Government agencies and companies with multiple copies purchased between July 1, 2002, and June 30, 2006, can seek vouchers that will enable them to buy computer equipment and software. The amount that can be claimed will depend on which product and how many copies were purchased.

For each copy of Microsoft Windows or MS-DOS, customers can claim $16. Microsoft Excel is worth $25 a copy and Microsoft Office, $29 a copy.

For Word, Works and Home Essential software, consumers can claim $10 a copy, according to the agreement.

No proof of purchase will be required for online claims of up to $100 or for mail claims of up to $200. Claimants will be required to sign a legal document saying their claim is accurate. Lying can bring a charge of perjury.

Notification will be sent to the estimated 1 million class members on April 25, the date when they can begin claiming money. The claim period ends Dec. 14.

"Our hope is that as many Iowans that are eligible will in fact make claims under this program," said Des Moines attorney Roxanne Conlin.

Ms. Conlin and Rich Hagstrom, an attorney with Zelle, Hofmann, Voelbel, Mason & Gette LLP of Minneapolis, filed the Iowa lawsuit in 2000. They had sought more than $330 million. The case has been in litigation since and has gone to the Iowa Supreme Court three times for various legal issues.

The lawsuit claimed Microsoft engaged in illegal monopolization and anticompetitive conduct between 1994 and 2006 that caused customers to pay more for software than they would have if there had been competition.

Half of any unclaimed cash portion of the settlement and all of the unused vouchers will be given to Iowa schools to help buy computers, software and other equipment

Microsoft attorney Rich Wallis said class action cases frequently see significant amounts of money go unclaimed.

The Redmond, Wash.-based company also said it will contribute an additional $1 million to the state of Iowa to administer the program of purchasing equipment for schools.

Wallis said it's the company's intent that the state will not use the millions it will likely receive to replace current spending, but that the money will be in addition to any existing technology spending in schools.

The agreement stipulates that Microsoft also will give $1 million to the Iowa Legal Aid Society.

Judge Scott Rosenberg approved the settlement, which is considered preliminary until a final judgment is entered after an Aug. 31 hearing.

Ms. Conlin said plaintiffs' attorneys will seek $75.5 million in fees and costs. Microsoft plans to challenge that amount.

Ms. Conlin said 150 lawyers worked thousands of hours "with no guarantee of compensation."

She said the firms involved have $50 million invested in the case.

Ms. Conlin said the settlement amount represents the highest per person amount paid by Microsoft in any case.

Mr. Wallis said other cases, including one in California that surpassed $1 billion, had a higher face value than Iowa's.

Ms. Conlin said the Iowa case is the only one to have a cash component. In most states, the claimants received vouchers instead of cash.

Microsoft has faced 206 class-action lawsuits across the United States. The company said 108 were consolidated in a federal antitrust case and 96 remained in state courts.

Most were dismissed or settled before trial.

The Iowa case was one of last cases against the Redmond, Wash.-based software manufacturer to make it to court. Another is in Mississippi. A case in Michigan is on appeal.



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