U to receive $5M from Microsoft

by Emily Kaiser

Microsoft will pay the University $5 million as part of a settlement approved Thursday to resolve a class-action lawsuit.

The University’s Institute of Technology will receive $2.5 million in cash and $2.5 million in computer-related vouchers.

The settlement requires Microsoft to pay up to $241.4 million to Minnesota consumers, including businesses and schools.

The lawsuit alleged that Microsoft overpriced its operating and Office software in violation of Minnesota anti-trust laws. The case was the first consumer class-action suit brought to trial against Microsoft.

The seven-week trial ended with the settlement in April, but was not disclosed until July 1.

“The University has been strapped for years now in terms of inadequate state support and we find very difficult budgetary challenges on the horizon,” University General Counsel Mark Rotenberg said. “This is very advantageous at this particular time, given our budgetary situation.”

Similar lawsuits that were settled without trial resulted in approximately one-third of the total payout Minnesota received, said Richard Hagstrom, lead trial counsel in the case.

“We could have settled for those numbers, but we didn’t think it was in the interest of Minnesota consumers,” Hagstrom said.

In addition to the $5 million given to the Institute of Technology, Minnesota consumers will have the opportunity to claim up to $174.5 million in vouchers for Microsoft software bought between May 1994 and May 2003.

Vouchers for consumers will range from $9 to $100 depending on the software purchased. Any claim less than $100 does not require a proof of purchase.

The vouchers may be used to buy computer software, hardware and equipment from the company of their choice. Claims can be made from August to February 2005, but vouchers might not be received until early next year, Hagstrom said.

Minnesota’s Department of Education will also benefit from the settlement, receiving half of the unclaimed vouchers.

“You’ve got kids in disadvantaged schools who can’t take advantage of the computer age,” said Daniel Hume, a plaintiff’s attorney in the case. “During negotiating, it seemed to be a good compromise that would benefit everybody and something Microsoft could live with.”

Microsoft admitted no wrongdoing in the settlement.

“We’re pleased by the opportunity to help schools all across Minnesota get the computers and software they need,” Microsoft General Counsel Brad Smith wrote in an e-mail statement.

The Institute of Technology currently has no specific plans for how it will spend the money, but will use it for “computer technology and infrastructure,” Rotenberg said.

“We will be convening a group led by our new provost, Tom Sullivan, to make decisions on how the money will be allocated,” Rotenberg said.

All individual colleges within the University, as well as institutions statewide, can make claims for software they have purchased.

“I would assume every college would be applying because they have purchased Microsoft products,” said H. Ted Davis, dean of the Institute of Technology.

Although the money returned to the consumers is important, the message it sends to Microsoft is also significant, Hume said.

“Hopefully Microsoft will think twice about behaving this way again,” Hume said.