Novell wins $536m settlement from Microsoft

Novell, Inc. (Nasdaq: NOVL) a leading provider of information solutions for enterprises, has announced an agreement with Microsoft to settle its claim that Microsoft’s unfair business practices harmed the sales of its NetWare computer operating system in exchange for $536 million in cash. Back in the ’90’s Novell was the prominent networking company. Novell also announced that by the end of this week it will file an antitrust suit against Microsoft in the United States District Court in Utah seeking unspecified damages in connection with alleged harm to the company’s WordPerfect application software business in the mid-1990s.

Novell believes that its NetWare business was damaged by unfair business practices that gave Microsoft’s Windows a stranglehold on the operating system market. “We are pleased that we have been able to resolve a portion of our pending legal issues with Microsoft,” said Joseph A. LaSala, Jr., Novell’s senior vice president and general counsel. “This is a significant settlement, particularly since we were able to achieve our objectives without filing expensive litigation. While we have agreed to withdraw from the EU case, we think our involvement there has been useful, as it has assisted the European proceedings and facilitated a favourable settlement with Microsoft. With the EU case now on appeal, we are comfortable with our decision to withdraw from the proceeding. There is simply not much left for us to do.”

The deal has resolved the NetWare matter between the two companies, but they remain at odds over WordPerfect. Novell acquired WordPerfect for $855 million in 1994 with the intention to launch an office productivity suite to compete with Microsoft’s Office. The effort failed, and, two years later, Novell sold WordPerfect to the Canadian software firm Corel for $186 million. Novell says that WordPerfect was victimised by Microsoft’s unfair business practices.

The suit is based in part on facts proved by the United States Government in its successful antitrust case against Microsoft. In that suit, Microsoft was found to have unlawfully maintained a monopoly in the market for personal computer operating systems by eliminating competition in related markets.

“We regret that we cannot make a similar announcement regarding our antitrust claims associated with the WordPerfect business. We have had extensive discussions with Microsoft to resolve our differences, but despite our best efforts, we were unable to agree on acceptable terms. We intend to pursue our claims aggressively toward a goal of recovering fair and considerable value for the harm caused to Novell’s business,” LaSala concluded.

Having been out of the news headline for a long time, Novell are making the most of their current time in the spotlight. With the headlines they are getting currently, they have synchronized the release of their new Office software, called Novell Linux Desktop (NLD), which runs on SuSE Linux. Initially focused to business users it is charged on the basis of a price-per-seat at $50. Using broadband connections, this could, in time be offered to home users.