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Lindows to Get $20 Million from Microsoft, Will Change Company Name to Linspire

Microsoft on Friday agreed to pay $20 million to Lindows Inc. to get the San Diego-based desktop Linux OS vendor to stop using a name that Microsoft contends infringes upon its Windows trademark.

Lindows will transition to the name Linspire for both its company and products. In April, the company had begun renaming its products to Linspire as Microsoft won some legal rulings in Europe.

In a joint statement Monday, the companies declined to disclose the settlement terms. But Lindows, which is preparing for an initial public offering, submitted an amended S-1 filing with the Securities and Exchange Commission the same day that laid out the agreement.

According to the SEC document, Microsoft will pay Lindows $15 million by Aug. 15 and $5 million by Feb. 1, 2005. Lindows agreed under the settlement to change its corporate name to Linspire by Sept. 14 and handed over control of several URLs to Microsoft. Lindows will retain control of its main URLs, lindows.com and lindowsinc.com, in order to redirect users to its new URL until July 2008.

The 62-employee Lindows should come out of the process debt-free, according to the figures in the SEC filing. While the company's accumulated deficit amounts to $13.5 million, Lindows executives expect to get $20 million from Microsoft and between $39.6 million and $48.4 million from the IPO.

About the Author

Scott Bekker is editor in chief of Redmond Channel Partner magazine.

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