Judge Paul H. Alvarado of the Superior Court of California for San Francisco County said last week that claims submitted through the MSfreePC site will not be recognized. Alvarado instructed a court-appointed company responsible for processing California residents' claims to reject those made through the site and indicated that only claims applications submitted via standard paperwork will be accepted.
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The MSfreePC site offered individuals qualified for benefits based on Microsoft's $1.1 billion California class-action settlement the ability to swap the vouchers they are eligible to receive from the software giant for Lindows products. The Microsoft vouchers can be used to buy hardware or software products from any manufacturer and typically range in value from $5 to $29. The site also promised a free personal computer to the first 10,000 people who bought $100 worth of Lindows products via MSfreePC.
Neither Lindows nor Microsoft could be immediately reached for comment on the ruling. However, a message posted on the Lindows site said consumers who have already processed their claims through MSfreePC will be permitted to keep any the software that they had received.
In November 2003, Microsoft asked the court to reject any claims filed via MSfreePC, saying the Lindows site violated the terms of Microsoft's settlement by using so-called digital signatures to process submissions. (Digital signatures are online validation agreements used to verify individuals' identities.) Lindows argued in response that Microsoft only opposed the site because it hoped to escape paying as much of the settlement as possible by making the claims process "arduous and time-consuming" for Californians.
Microsoft contended in its legal filings that the matter of digital signatures was hashed out in previous discussions between its attorneys and counsel representing California's class-action members and was written into the settlement itself. The software maker also said it needed traditional paper-based verification in order to help eliminate fraudulent claims and to keep other software vendors from attempting to cash in on the settlement.
A Microsoft representative said the company was pleased with the judge's decision and that the software maker remains committed to honoring the terms of its settlement with California. The representative said the company believes the settlement process is more "straightforward and clear" without the Lindows site.
Microsoft executives have repeatedly referred to MSfreePC as a marketing tool used by Lindows to promote its own products and said the site could have misled consumers into believing that there was an alternate claims process that differs from the original settlement. Microsoft and California established another site, operated by the court-appointed claims admnistrator, to offer claims submission information to the public.
Reached via telephone, Lindows CEO Michael Robertson said the judge's ruling was detrimental to California residents. Lindows estimates that roughly 15,000 people have already used MSfreePC to file their claims against Microsoft.
"This is more of a setback for consumers than anyone, and it's a shame that large class-action settlements remain paper-based," Robertson said. "Microsoft trumpeted--to anyone who would listen--about how much they were paying in this case, and it's clear that these claims were disingenuous, since they're now making such obvious ploys to pay as little as possible."
Robertson restated his belief that Microsoft is being hypocritical in criticizing the validity of digital signatures, which it uses to market some of its own products. He said consumers who already processed their claims through MSfreePC would be permitted to keep any of the software they had received, at a loss of an estimated $1 million in revenue to Lindows.
"Judges and attorneys should be insistent that the 25 million consumers in California have access to an online claims process," Robertson said in the statement. "Microsoft's claim that digital signatures are valid when used to sell their software--but not when it costs them money--is pure hypocrisy. Their true intentions are not to remedy their abusive pricing policies but simply to escape financial redress to Californians."
Under the terms of the settlement, California residents have until March 2004 to file any claims, at which point two-thirds of any leftover amount from the $1.1 billion settlement will be awarded to California schools.
Microsoft is also pursuing Lindows in a lawsuit that claims that the company's name infringes on the trademark for Microsoft's Windows operating system.
