Novell and Microsoft settle on $536m

Microsoft on Monday reached important legal settlements with rival Novell, and with a trade organisation that had backed the European Union's legal action against the company.

The software giant said it has reached a $536m settlement with rival Novell over legal claims between the two companies related to Novell's NetWare operating system.

As a result of the settlement, Novell said that it has agreed to withdraw from the EU's antitrust case against Microsoft.

Joseph A. LaSala Jr, Novell's general counsel, said that while Novell feels it has played a "useful" role in those proceedings, the company in comfortable to withdraw from the case, as the EU's decision to punish Microsoft is currently under appeal.

"There is simply not much left for us to do," LaSala said in a statement. "We are pleased that we have been able to resolve a portion of our pending legal issues with Microsoft."

In related news, Microsoft announced on Monday that it has reached an agreement with the Computer & Communications Industry Association, an IT industry group, regarding antitrust issues between the two organisations.

While Microsoft and Novell settled one suit, they could not come to agreement over another issue. Novell also on Monday announced plans to file an additional antitrust claim against Microsoft before the end of this week, seeking unspecified damages related to Novell's WordPerfect software business.

As in the NetWare case, the WordPerfect suit will focus on Microsoft's business practices in the mid-1990s, which Novell has charged as anti-competitive. Novell said the WordPerfect suit will be filed in the US District Court in Utah.

Microsoft's general counsel Brad Smith said in a statement: "We could not resolve claims related to WordPerfect in any manner we thought appropriate, and we are prepared to turn to the courts to resolve it."

Microsoft has settled two other major legal issues against it recently. In April, Microsoft signed a 10-year pact with Sun Microsystems that called for the software company to pay Sun $700m to resolve antitrust issues and $900m to resolve patent issues.

And in May 2003, the company paid $750m to AOL Time Warner as part of a wide-ranging settlement that also called for the companies to jointly cooperate on software distribution and digital media.

Microsoft said that the Novell settlement would result in a charge of $359m, or three cents a share, in its previously reported fiscal first-quarter results. The company said its revised quarterly earnings were $2.53bn, or 23 cents a share, down from $2.9bn, or 27 cents a share.

Overall, Microsoft said it could pay up to $950m in additional antitrust claims, including up to $200m above the amount mentioned in its most recent filing with the Securities and Exchange Commission.

Under terms of the CCIA deal, the organisation said that it will no longer seek a Supreme Court review of Microsoft's antitrust settlement with the US government, and pledged that it would not participate further as an intervener on behalf of the EU in Microsoft's appeal of the EU's ruling against it.

Microsoft said it will join the membership of CCIA, and will provide unspecified compensation to the CCIA for "certain legal-related expenditures" it has incurred over the past decade.

Matt Hines writes for CNET News.com.