Sun Deal Signed, Litigation Ends

After years of antagonism, Sun Microsystems and Microsoft have settled all outstanding litigation and entered a technology-sharing agreement. The US$1.95 billion deal spares Microsoft bad trial publicity, solidifies its patent position, and may improve its standing in other antitrust cases. Sun no longer faces an expensive legal battle against an adversary with almost unlimited resources, and the cash infusion will help it transition from high-end hardware specialist to a more versatile company. Most important, the deal answers pleas from customers to improve interoperability, although the Java and .NET platforms will remain competitive, and the two companies will favor different OSs.

(For an overview of the two companies’ shared history, see the sidebar “Sun and Microsoft: A Timeline“.)

Key Elements of the Agreement

The agreement was announced by Sun CEO Scott McNealy and Microsoft CEO Steve Ballmer in a joint press conference on Apr. 5, 2004. Both executives cited the importance of respecting each other’s intellectual property, particularly patents, as the starting point for a deal.