20 July 2004 Microsoft has agreed to pay $20 million to the Linux operating system distributor Lindows, settling a long-running dispute over the alleged infringement of its ‘Windows’ trademark.

The software giant has been pursuing Lindows in a vigorous trademark dispute since 2001, after Lindows released a distribution of Linux with the WINE Windows emulator built-in, which can run Windows applications on Linux.

Microsoft has sued Lindows in law courts around the world, claiming that Lindows was abusing its Windows trademark. In certain territories, Microsoft succeeded in forcing Lindows to change its name, first to Lin-dash and later to Linspire.

Lindows claimed that that the term ‘windows’ is a generic expression for work interfaces on a computer screen and should consequently not be afforded trademark protection. The company argued that the ruling should be based on the term’s usage before 1985, when Microsoft spent billions to turn Windows into a brand.

The case was expected to be heard in the US courts later this year, but Microsoft surprised observers by announcing that it will pay a settlement fee.

However, the deal does not represent a humiliating back down by Microsoft. Under the terms of the settlement, Lindows will be obliged to change its name before the middle of September in return for the $15 million payment. Lindows will also receive a further $5 million by February 2005 if it surrenders the rights to certain web site domain names, including www.lindows.com.