By Michael Cohn

 

Microsoft has settled a class action lawsuit brought over allegations that the company overcharged Iowa consumers $329 million for Windows, Word, Excel, and Office software between May 18, 1994 and June 30, 2006.

 

The amount of the claim could have tripled under Iowa law. But the Redmond software giant did not disclose the terms of the settlement in its announcement Wednesday and neither did the class action law firm pursuing the claim.

 

“We can’t disclose the details on the settlement until the preliminary hearing on April 20,” said Lawrence T. Hofman, a partner in the Minneapolis-based firm Zelle Hofman Voelbel Mason & Gette. Rick Hagstrom, another partner at the firm, pursued the suit as co-counsel with Roxanne Conlin, of Roxanne Conlin & Associates in Des Moines, who was lead counsel for the class.

 

The Iowa settlement represents the next to last case that a variety of states have been pursuing against Microsoft over allegations of overcharging. The company has been in a variety of legal entanglements in recent years, including antitrust claims that are still being pursued in the European Union.


 

During the trial, the plaintiffs also relied on a long-running United States Department of Justice antitrust case, which has since been settled, that found Microsoft held an illegal monopoly on Intel-based PC operating systems prior to June 1999.

 

Mr. Hofman said the next hearing in the Iowa case will occur in Des Moines in front of the same judge, Scott Rosenberg, who has been presiding since the trial started last November. Mr. Hofman’s firm has been pursuing the case since 2001.

 

The suit was initially filed in 2000 by a Des Moines businessman, Joe Comes, and received class action certification in 2003. The plaintiffs argued that Microsoft’s monopoly status allowed the company to overcharge an average of $42.49 for copies of Windows and $10.55 for copies of Word.

 

Shares of Microsoft rose $0.42 to $29.45 in recent trading.

 

Counting Down the States

Mr. Hofman said Iowa was the last of the states pursuing such cases against Microsoft to be resolved, aside from Mississippi, where a class action suit is still going forward. “All the other states which have viable causes of action against Microsoft have already settled,” said Mr. Hofman.

 

In addition to Iowa, his firm has been involved in class actions against Microsoft in Minnesota, Wisconsin, and California, but it is not currently involved in the Mississippi case. In most of the other states, he said, the settlement involved consumers receiving coupons that were valid for Microsoft and other products.

 

Whatever the ultimate terms of the settlement turn out to be, Microsoft said it will provide half of any of the unclaimed proceeds to the Iowa Department of Education so it can bridge the “digital and technical divide” in Iowa schools by purchasing computer hardware and software.

 

“In general we’re pleased with the settlement,” said Microsoft spokesperson Jack Evans. “Six percent of the unclaimed funds will go to schools in Iowa for technology purchases. We were able to resolve this on reasonable terms in Iowa.

 

“For our company, this means we are moving forward, putting the last of these very old cases about old and long-resolved allegations behind us so that we can focus on the future and the next generation of products and innovations that will enrich the lives of people in Iowa and around the world,” he added. 

He noted that after the settlement with the U.S. Justice Department, approximately 200 cases were filed against Microsoft. He pointed out that while the DOJ case had alleged that Microsoft had put too many features into Windows and thereby thwarted competition, the class action suits often relied on the same DOJ case to assert the opposite claim: that Microsoft had overcharged for its software.

There were about 100 cases that were consolidated in Maryland, 16 that were dismissed, and 40 cases proceeded. In 17 of the cases, Microsoft reached a final settlement and in 19 states the company had individual settlements.

The settlement covers purchases of MS-DOS, Windows 95, Windows 98, Windows 98 Second Edition, Windows Millennium Edition, Windows for Workgroups, Windows NT Workstation, Windows 2000, Windows XP, Word, Excel, and Office.