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Lindows Wins One in the Netherlands - MS Ordered to Pay Court Costs
Thursday, June 03 2004 @ 03:28 AM EDT

I thought you might enjoy reading the ruling from the Netherlands, in which Microsoft is told to pay Lindows the costs of their latest legal scuffle and Lindows is told it need not stop using its corporate name. There is an email to Bill Gates and Steve Ballmer from Lindows CEO Michael Robertson, in which he tells them he doesn't want the court costs. He just wants to be left alone so he can grow his business:

"But truth be told, I don't want Microsoft's money, I just want a chance to compete and grow my company. If you can think back to when you started Microsoft, sure there were big companies like IBM, but they didn't use the ruthless tactics that Microsoft now employs. How could you have built your company in that kind of environment?

"No, I don't want your money, I just want to compete without Microsoft terrorizing us and everyone in the PC business who works with us."

Info on the US trademark case is here.

The ruling is the court telling Microsoft, "Enough, already. I gave you relief and now you're asking for too much." Lindows had made changes to adapt to the prior ruling, the court noted, and it wasn't obligated to change its name worldwide, at least not unless Microsoft wins the US case, which so far doesn't look like a shoe-in. Here is the heart of the ruling:

"This limited use of its trade name - which Lindows has an interest in simply because it is its company's name in the US - cannot, as Lindows rightly argues, be considered contrary to the judgment and/or the settlement agreement. The court agrees with Lindows that not every use of the trade name Lindows infringes the trademark Windows. Indeed, this will only be the case where use of that sign without due cause takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the trade mark, as article 13A (1) (d) Benelux Trademark Act provides, and provided that the use is not unlawful in any other way. The text of the settlement agreement as parties' supplement to the judgment does not change this, since "use" in that context can only be interpreted as infringing use, if one takes into account the contents and meaning of the judgment, the wording of the agreement and the intention of the parties. Under the present circumstances - where the use of the name Lindows as trade name is very limited and is always accompanied by the addition that Lindows is not affiliated with Windows in any way, while the use of the trade name Lindows at this point in time is still legal outside the Benelux - the court comes to the conclusion that under these circumstances this use is neither contravenes the judgment nor the settlement agreement. Moreover, awarding Microsoft's claim would have the factual consequence that Lindows would need to adapt its trade name also outside the Benelux, which, under the present circumstances, it is not obliged to do."

Mr. Robertson has given me permission to reproduce his email in full:

**********************************

---Original Message---
Subject: Bill - I don't want your $1,158
To: billg@microsoft.com
Cc: steveb@microsoft.com

Bill,

As you were probably informed over the weekend, your legal team lost the latest court battle against Lindows, Inc. in the windows trademark case. This time we were in a Dutch courtroom, where the Judge ruled against Microsoft on all counts. Here's a link to the English translation of the ruling. The ruling states that we can continue to use Lindows as we are now using it, but most telling was the Judge's monetary finding. In a case that Microsoft initiated and asked the Judge to fine us 100,000 euros per day, the Judge ruled the opposite direction and told Microsoft to pay us $1,158.

But truth be told, I don't want Microsoft's money, I just want a chance to compete and grow my company. If you can think back to when you started Microsoft, sure there were big companies like IBM, but they didn't use the ruthless tactics that Microsoft now employs. How could you have built your company in that kind of environment?

No, I don't want your money, I just want to compete without Microsoft terrorizing us and everyone in the PC business who works with us. It's tough building a business when hardware partners are told they will lose access to Microsoft tier 1 support if they help us. Resellers get squeamish when they get lawsuit threats from Microsoft. Retailers are hesitant when there is veiled innuendo that they may not be eligible for the MDF "market development funds" that you provide to them, which are key to their profitability. And of course, Lindows is bothered by your legal strategy to bury us with lawsuits.

I understand that Lindows is the most obvious target of Microsoft's actions, since we challenge Microsoft's power base - the desktop. I think we'd have a lot more than 350 OEMs if so many weren't intimidated by Microsoft. We'd probably have more stores carrying our computers with our one-click easy operating system if they didn't fear retaliation just for talking with us.

Of course, I'm keenly aware of how Microsoft has vanquished so many competitors in the past. To the portion of that success which can be attributed to healthy competition, you have my respect. But some portion has been built on dirty tactics, and I'm asking you to rethink using that strategy with desktop Linux and my company, Lindows.

Occasionally we hear from Microsoft employees who follow Lindows, and their reaction surprises me. (Hundreds of Microsoft employees receive the weekly Michael's Minute.) The first thing they usually do is apologize for the corporate behavior of lawsuits, bogus reports, and other underhanded tactics. They know the corporate mantra is "we like competition," but behind the scenes try to kill it. But they TRULY do want competition. They believe they can compete. They know that having Netscape around made them build Internet Explorer, but since Netscape was wiped out, Internet Explorer has stagnated. Bill - I encourage you to poll your employees and ask them yourself. I'm confident that they'll say they want to compete head-to-head with Linux in an wholesome manner.

Do you believe that Microsoft can compete with Linux? Do you believe in your employees? Do you believe in your products? I encourage you to consider abandoning the litigation and terror strategy. No more backing of lawsuits for trademark, patent or copyright issues against Linux. No more threatening of companies that add Linux to their product line-up. Just straight up competition against Linux. Your employees will thank you, and it will usher in an era of healthy competition in the PC business.

-- Michael

*****************************

SR/MB
Judgment 27 May 2004

DISTRICT COURT AMSTERDAM
PRELIMINARY INJUNCTION COURT IN SUMMARY PROCEEDINGS
COURT RULING

In action no. KG 04/930 SR between:

company under foreign law MICROSOFT CORPORATION,
domiciled in Redmond (Washington, United States of America),
P l a i n t i f f by virtue of a writ of summons (reduced short-term) dated 6 May 2004,
counsel A. P. Meijboom LL M,

v e r s u s:

company under foreign law LINDOWS, INC.,
domiciled in San Diego (California, United States of America),
D e f e n d a n t,
counsel Th. C. J. A. van Engelen LL M.

COURSE OF THE LEGAL PROCEEDINGS

Plaintiff, hereinafter called Microsoft, has stated and claimed in accordance with the writ of summons, which is attached as a photo copy to the present ruling, at the court session held on 11 May 2004, following a change in the claim in accordance with the deed, which is also attached to the present ruling as a photo copy. Defendant, hereinafter called Lindows, has concluded its defence with refusal of the injunction claimed. After further discussions the parties have submitted documents for a ruling.

PRINCIPLES OF THE RULING

1. The following facts form the basis for the present judgment.

a. Microsoft is the largest software supplier in the world. They are the owners of the brand name “WINDOWS” for an operating system which is registered worldwide. Microsoft has owned the rights to Benelux brands 495.863 and 524.556 for “WINDOWS” for software, among other things, since 1991, respectively 1993.

b. As well as WINDOWS, there are other operating systems in existence such as Unix, MS-Dos, OS/2, MacOS and Linux. WINDOWS has a market share of more than 95% in the Netherlands. The other operating systems share the remainder.

c. Linux is a so-called ‘open source’ operating system: the source code is publicly accessible, in contrast to WINDOWS, which has a secret source code.

d. Lindows is an American software company founded in 2001 under the name Lindows.com by Michael Robertson. Lindows.com has been offering an operating system on the Dutch market under the name “LindowsOS” since February 2002. Lindows.com aimed at, among other things, developing the operating system LindowsOS in such a way that it is suitable for use with Linux as well as WINDOWS software. This objective has now been realized. Robertson has admitted in an interview that the name “Lindows” is a combination of “Linux” and “Windows”.

e. Lindows.com offered all visitors to its website, www.lindows.com, its Lindows program, either by means of downloading these programs or by ordering a CD-ROM containing the Lindows program. In addition, they offered visitors of the website the opportunity to purchase a computer with the Lindows program already installed, the so-called 'pre-installed' software.

f. Microsoft instigated legal proceedings against Lindows.com in the United States because they consider Lindows.com to be in breach of their "WINDOWS" (brand) rights.

g. In its ruling issued on 29 January 2004, the preliminary injunction court ordered Lindows.com, among other things,

- to halt, and continue to halt, the violation of the Benelux brand 495.863 WINDOWS registered by Microsoft by using the names “Lindows”, “Lindows.com” and/or “LindowsOS” in connection with the distribution (including, but not limited to import and sales) and advertisement by Lindows.com of its program;
- to render the Lindows.com website(s) at which it offers programs under the name of “Lindows”, “Lindows.com” and “LindowsOS”, including but not limited to the website at URL http://www.lindows.com, inaccessible for visitors from Belgium, the Netherlands and Luxembourg;
-not to execute and to render impossible orders of programs under the name of “Lindows”, "Lindows.com” and “LindowsOS” for delivery to any address in Belgium, the Netherlands or Luxembourg,

within a period of eight days following the date of the ruling.

The period as referred to in article 260 Netherlands Code of Civil Procedure was set at three months in the ruling.

h. The United States District Court in Seattle ruled on 10 February 2004 in the proceedings referred to under 1.f. that the jury must decide whether Windows is a generic concept prior to the introduction of Windows 1.0 by Microsoft in November 1985. Microsoft has appealed against this decision.

i. Lindows.com changed its name as listed in the articles of association from Lindows.com, Inc. to Lindows, Inc. on 4 March 2004, and its trading name from Lindows.com to Lindows.

j. Lindows offered “Lin---s” programs during the month of March 2004 on the website www.lin---s.com.

k. In his judgment issued on 2 April 2004, the American judge (Chief United States District Judge of the District Court in Seattle) dismissed the claim by Lindows to prohibit Microsoft from defending its brand outside the United States and to prohibit them from executing the judgment issued on 29 January 2004.

l. Lindows launched a new name for its programs on 14 April 2004 – Linspire – and shortly thereafter they deployed a website www.linspire.com. to which users from the Benelux are automatically steered.

Microsoft and Lindows arrived at an agreement on 19 April 2004 regarding a “settlement agreement” which was signed and returned to Microsoft by the American counsel of Lindows on 27 April 2004. The agreement stipulates among other things that the judgment issued on 29 January 2004 will remain in force in full between the parties, that Microsoft relinquishes claims on periodic penalty payments which may already have been forfeited, that Lindows will also halt the use of the name Lin---s, that the following announcement by Lindows on the website “important notice! Visitors from the Netherlands, Belgium, and Luxembourg are not permitted to access the Lindows.com website or purchase Lindows products” will suffice to render the website inaccessible for visitors from the Benelux, and that Lindows will no longer sell or supply Lindows products (Lindows and Lin---s) to buyers in the Benelux. The following was added to the judgment: "Lindows shall also not use any other name that is similar to the Benelux WINDOWS trademarks, (...) and the Court Order is deemed to also cover the use (...) of these names with regard to the distribution and advertising of software products in the Benelux."

The court in Amsterdam has been declared competent in article 5.2 of the agreement to rule in any disputes between the parties resulting from the agreement.

m. Lindows’ counsel has confirmed to Microsoft’s counsel in an e-mail message, dated 6 May 2004 and at their request, that an amendment to the settlement agreement was proposed on behalf of Lindows, following unconditional agreement on the settlement agreement, to the effect that the use of Lindows as a trade name was to be permitted, except on the packaging of the product. According to the same e-mail message, Microsoft had not wanted to agree to this, as in their opinion any use of the Lindows trade name violates the Windows brand, an opinion which is not shared by Lindows, as is also evident from the message.

2. Microsoft primarily demands, following a change in their claim:

-that Lindows be ordered to comply with the settlement agreement within a period of three days after the date of the judgment, and in particular not to use the name of “Lindows” (including but not limited to use in Lindows,Inc.) as a brand, trade name or otherwise in connection with the distribution (including but not limited to import and sales) and advertisement by Lindows of their program in the Benelux, under penalty of a periodic penalty payment of € 100,000 per day for each breach of the prohibition; subsidiary:

-that Lindows be ordered not to use the name “lindows” or any other name which corresponds to the Windows brand (including but not limited to Lindows.com, LindowsOS, Lindows.com.Inc and Lindows,Inc.) as a brand, trade name or otherwise, in the context referred to above (under primary), also under penalty of a periodic penalty payment of € 100,000.

3. Microsoft bases its claim on the following, in summary.

Based on the judgment issued on 29 January 2004 and the settlement agreement, Lindows is not permitted to use a name corresponding to Lindows in the Benelux, for instance Lindows, Inc., not even if the name is used only as a trade name. The order laid down in the judgment is not limited to the name Lindows as a brand name but also covers use of the trade name which may also violate the brand rights. Lindows is acting in breach of the order laid down in the judgment. They are in fact still using the terms "Lindows", "Lindows.com", "Lindows.com, Inc." and "Lindows,Inc.". Lindows is therefore benefiting unjustifiably from the reputation of the Windows brands. Lindows has acted in breach of the judgment in not rendering their website www.lindows.com inaccessible for visitors from the Benelux. In the beginning they quickly introduced another name which infringes Microsoft’s rights (Lin---s), and subsequently they changed their name from Lindows.com to Lindows.Inc., a name which resembles Windows even more. The new website www.linspire.com still uses the name of Lindows. Lindows must comply with the agreement and the ruling and therefore finally halt the use of the trade name Lindows in the Benelux. In as far as they are not already obliged to do so based on the judgment and the agreement, the use of Lindows as a trade name must be prohibited on the basis of article 13A section 1 d of the Benelux Trademark Act (BMW). The provision in article 13 A section 7 sub a (which stipulates that the owner of the brand cannot oppose use by a third party of their name and address in commercial transactions) does not protect Lindows, as this article is regulating legislation, which applies only to natural persons and also only “in as far as there is question of honest use in trade and industry”, which is not the case on this occasion. Moreover, it is not necessary to use the name within the Benelux, in order to protect the name of Lindows outside the Benelux, in particular in the United States. The imposition of a considerable periodic penalty payment should be imposed on Lindows, as the recent past shows that the periodic penalty payment imposed in the judgment issued on 29 January has not prevented Lindows from breaching the judgment, according to Microsoft.

4. Lindows has defended itself against the claim, which defence will be discussed later, in as far as this is necessary, at the judgment of the dispute.

Judgment of the dispute.

5. Microsoft has primarily demanded that Lindows be ordered to comply with the settlement agreement. But this demand is too wideranging and may result in execution disputes, which is not deemed to be in the interest of the parties. Microsoft also demands in particular that Lindows be ordered not to use the name of Lindows (or any other name corresponding to the Windows brand) as a brand, trade name or otherwise in connection with the distribution and advertising of its program. Part of the claim has already been granted in the judgment dated 29 January 2004, which can still be executed. This means that the dispute is now limited to the question as to whether Lindows can be prohibited from using their trade name Lindows in a manner such as they presently wish to do. According to Microsoft, this use constitutes a violation of their brand rights with respect to Windows and contravenes the settlement agreement.

6. The settlement agreement stipulates that the judgment dated 29 January 2004 between the parties applies in full. In view of the wording of the judgment and the agreement, we may assume, as Microsoft has accurately stated, that the use of the Lindows trade name is not permitted in principle. Moreover, permitted use of the name Lindows or Lindows, Inc. as a trade name in the United States is not disputed by the parties, unless the court decides otherwise.

7. Lindows has primarily stated that it has complied with the judgment as much as possible. For instance, it has changed its name to Linspire - even worldwide, which was strictly speaking not necessary. Parties agree that the name Linspire does not violate the Windows brand rights.

8. Lindows has admitted that it uses the name Lindows, Inc and the trade name Lindows, but that it is of the opinion that it does contravene the prior judgment and/or the settlement agreement. According to Lindows there is no infringement of the trademark Windows as referred to in the judgment and the settlement agreement. Lindows argues that the use is limited to the 'small print', i.e. on the pages of the Linspire website and in the printed manuals - which are used world-wide and are enclosed in the packaging of the software, invisible from the outside (not in the software itself). The use - which Microsoft did not contest - is as follows: "Linspire is a trademark of Lindows, Inc, a US Corporation. Copyright © 2004 Lindows, Inc." Furthermore the trade name is used in licenses and other legal documents. In every instance the trade name is supplemented by the following phrase: "Lindows, Inc are not endorsed by or affiliated with Microsoft Corporation in any way." This limited use of its trade name - which Lindows has an interest in simply because it is its company's name in the US - cannot, as Lindows rightly argues, be considered contrary to the judgment and/or the settlement agreement. The court agrees with Lindows that not every use of the trade name Lindows infringes the trademark Windows. Indeed, this will only be the case where use of that sign without due cause takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the trade mark, as article 13A (1) (d) Benelux Trademark Act provides, and provided that the use is not unlawful in any other way. The text of the settlement agreement as parties' supplement to the judgment does not change this, since "use" in that context can only be interpreted as infringing use, if one takes into account the contents and meaning of the judgment, the wording of the agreement and the intention of the parties. Under the present circumstances - where the use of the name Lindows as trade name is very limited and is always accompanied by the addition that Lindows is not affiliated with Windows in any way, while the use of the trade name Lindows at this point in time is still legal outside the Benelux - the court comes to the conclusion that under these circumstances this use is neither contravenes the judgment nor the settlement agreement. Moreover, awarding Microsoft's claim would have the factual consequence that Lindows would need to adapt its trade name also outside the Benelux, which, under the present circumstances, it is not obliged to do.

9. From the foregoing it follows that the use by Lindows of its trade name in the way described also does not - as Microsoft has claimed on a subsidiary basis - directly infringes article 13A (1) (d) Benelux Trademark Act.

10. The conclusion is that the claim by Microsoft will be dismissed, while Microsoft, as the party whom the court has ruled against, will be ordered to pay the costs of the legal action.

RULING IN SUMMARY PROCEEDINGS

The preliminary injunction court:

1. Dismisses the injunction demanded.

2. Orders Microsoft to pay the costs of the legal action, so far estimated to amount to € 241 for standing charges and € 703 for the fee for counsel on the part of Lindows.

3. Declares the ruling relating to the costs to have immediate effect.

Ruling by Sj A Rullmann LL M, vice-president of the court in Amsterdam, and issued at the public session held on Thursday 27 May 2004, in the presence of the clerk to the court.

Coll.:


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