Microsoft to Pay Sun to Settle Lawsuit Over Use of Java Code

Microsoft Corp. and rival Sun Microsystems Inc. on Tuesday settled a bitter, 3-year-old lawsuit, with Microsoft agreeing to pay its rival $20 million for limited use of its Java technology.

Sun’s lawsuit, filed in October 1997, alleged that the world’s largest software company violated terms of its licensing agreement for Java by improperly modifying the technology so it would work only with its Windows computer operating system.

The settlement lets Microsoft, the maker of the Windows operating system, use Sun’s Java in current products and those now in a testing phase for the next seven years. Both companies claimed victory out of the settlement.

Java is a “write-once, run-anywhere” computer language that enables programs to run on a variety of operating systems and devices. Microsoft critics charged that the company altered Java to try to maintain the dominance of Windows.

A previous five-year license and distribution agreement struck in March 1996 was terminated, the companies said.

Microsoft’s stock rose more than $1 to $61.88 in after-hours trading, after closing up 44 cents at $60.56 on Nasdaq. Sun shares rose almost $1 to $32.44, from its close of $31.56, up $1.06, on Nasdaq.

“Both sides have had rulings lately for and against them,” Microsoft spokesman Jim Cullinan said. “This was going to be costly litigation, and both parties looked and said, ‘What can we do to bring this to an end?’ ”

“We’re very pleased with this. It protects our customers and current products, since they are not impacted by the settlement. This affirms our right to independently develop technologies,” Cullinan said.

Sun Chief Executive Scott G. McNealy, who has repeatedly called for the breakup of Microsoft and scorned its products as inferior, said, “It’s pretty simple: This is a victory for our licensees and consumers.”

Sun is a perennial foe of Microsoft and has helped the U.S. government in its antitrust case, still pending, against the company.