Microsoft Corp. and Lindows.com Inc. settled a legal dispute over whether the name of the small Linux software developer’s operating system was too similar to Windows, Microsoft’s flagship product, the companies said Monday.
Lindows will operate as Linspire, a name adopted in April for most of its products sold globally. The San Diego, Calif.-based company on Monday also announced terms for a $48 million public offering that has been in the works for months. The company has applied for a Nasdaq listing under the symbol “LINE."
Terms of the Microsoft-Lindows settlement were not disclosed. Both parties said the deal “resolves all claims in this litigation, both in the United States and internationally.”
“We are pleased to resolve this litigation on terms that make business sense for all parties,” Michael Robertson, Chief Executive of Lindows, said in a statement.
Previously, Lindows had promised to change the name of its products outside the United States to Linspire while keeping its original name for the company and for domestic products.
Now, Robertson said, his company will “transition to Linspire globally as our company name and primary identifier for our operating system product.”
Lindows launched as an alternative desktop system in 2001 and is based on Linux, which can be copied and modified freely while running on the same hardware as Windows, which runs on more than 90 percent of the world’s personal computers.
Microsoft, which said “Lindows” sounded too similar to its flagship product “Windows,” filed suit against the company in late 2001. (MSNBC is a Microsoft - NBC joint venture.)
Microsoft and Lindows had been locked in legal battles, both in federal court in Seattle and overseas, over the smaller company’s name.
A jury trial was set to begin earlier this year, but was postponed while Microsoft appealed a ruling that would have instructed a jury to consider whether the word “windows” was a generic term before Microsoft launched its first version of Windows in 1985.
Legal experts said that would have made it difficult for Microsoft to win its trademark case and force Lindows to change its name.
Meanwhile, Lindows, facing numerous lawsuits from Microsoft in overseas markets, began to change its product name in some places, in part to save on the rising cost of litigation.
Lindows, hoping to attract investors, announced a public offering in April.
The company on Monday filed to sell 4.4 million shares for between $9 and $11 each in an initial public offering, and said it expects to raise as much as $48.4 million.
Underwriters Roth Capital Partners, JMP Securities, Merriman Curhan Ford & Co., and Kaufman Brothers LP have the option to buy an additional 660,000 shares to cover over-allotments.
Assuming the offering prices at $10 a share, the mid-point of the expected range, the company will have an initial market capitalization of $206.6 million.
Lindows lost $1.6 million on revenue of $1.0 million in the first quarter of 2004 after losing $4.1 million on revenue of $2.1 million in all of 2003, according to the prospectus.
The company expects net proceeds from the offering, about $39.2 million, to be used for product development and marketing, according to the filing with the U.S. Securities and Exchange Commission.
