Microsoft 2009 Annual Report Download - page 67

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PAGE 67
We are subject to a Consent Decree and Final Judgment (“Final Judgments”) that resolved lawsuits brought by
the U.S. Department of Justice, 18 states, and the District of Columbia in two separate actions. The Final Judgments
imposed various constraints on our Windows operating system businesses. Originally, the Final Judgments were
scheduled to expire in November 2007. In 2006, we voluntarily agreed to extend certain elements of the Final
Judgments to November 2009. The U.S. Department of Justice and other states advised the Court that they would
not seek any extension of the Final Judgments to which they are party. In January 2008, the court issued a decision
granting the states’ motion to extend these additional provisions of the Final Judgments until November 2009. On
April 16, 2009, we agreed with the Department of Justice and the states, respectively, to extend the Final Judgments
to May 2011, and submitted to the U.S. District Court for the District of Columbia joint motions for this extension. In
April 2009, the Court entered an order approving the extension.
In other ongoing investigations, various foreign governments and several state attorneys general have requested
information from us concerning competition, privacy, and security issues.
ANTITRUST, UNFAIR COMPETITION, AND OVERCHARGE CLASS ACTIONS
A large number of antitrust and unfair competition class action lawsuits have been filed against us in various state,
federal, and Canadian courts on behalf of various classes of direct and indirect purchasers of our PC operating
system and certain other software products. We obtained dismissals of damages claims of indirect purchasers under
federal law and in 15 states. Courts refused to certify classes in two additional states. We have reached agreements
to settle all claims that have been made to date in 19 states and the District of Columbia.
Under the settlements, generally class members can obtain vouchers that entitle them to be reimbursed for
purchases of a wide variety of platform-neutral computer hardware and software. The total value of vouchers that we
may issue varies by state. We will make available to certain schools a percentage of those vouchers that are not
issued or claimed (one-half to two-thirds depending on the state). The total value of vouchers we ultimately issue will
depend on the number of class members who make claims and are issued vouchers. The maximum value of
vouchers to be issued is approximately $2.7 billion. The actual costs of these settlements will be less than that
maximum amount, depending on the number of class members and schools that are issued and redeem vouchers.
The settlements in all states except Arizona have received final court approval. Cases in Canada have not been
settled. We estimate the total cost to resolve all of the overcharge class action cases will range between $1.8 billion
and $2.0 billion. The actual cost depends on factors such as the claim rate, the quantity and mix of products for
which claims are made, the number of eligible class members who ultimately use the vouchers, the nature of
hardware and software that is acquired using the vouchers, and the cost of administering the claims. At June 30,
2009, we have recorded a liability related to these claims of approximately $800 million, which reflects our estimated
exposure of $1.8 billion less payments made to date of approximately $1.0 billion mostly for vouchers, legal fees,
and administrative expenses.
OTHER ANTITRUST LITIGATION AND CLAIMS
In November 2004, Novell, Inc. filed a complaint in U.S. District Court, asserting antitrust and unfair competition
claims against us related to Novell’s ownership of WordPerfect and other productivity applications during the period
between June 1994 and March 1996. This case was transferred to Maryland. In June 2005, the trial court granted
our motion to dismiss four of nine claims of the complaint. Both parties appealed, and in October 2007, the court of
appeals affirmed the decision of the trial court, and remanded the case to that court for further proceedings. Fact
discovery has closed and summary judgment motions are expected to be filed in the fall.