Microsoft Settles 'IE' Suit For $5M

Under an agreement reached with a now-defunct software company, Microsoft Corp. will be able to continue to use the name "Internet Explorer" for its browser software.

Microsoft agreed Wednesday to pay $5 million to SyNet Inc. after two days of testimony in a civil lawsuit filed by the Chicago-area company that claimed Microsoft stole the name. The agreement is subject to approval by a federal bankruptcy court judge.

Microsoft was in the awkward position of arguing that the name of its widely used browser was not a brand name, but merely two words that described a common computer function.

The software giant argued SyNet did not deserve trademark protection on the name because it wasn't the first to use it and because the words "Internet Explorer" are merely descriptive, like cola, and not a brand, like Coke.

After the settlement was announced, Microsoft said it was still confident of its legal position.

"We are confident we would have won this case on the merits, but we are pleased to put this issue behind us," Microsoft said in a statement. "We have said all along that we were open to resolving this issue without the need for expensive and time-consuming litigation.

"It appears the events in the courtroom helped us achieve a settlement which is in the best interest of all parties."

Microsoft attorney Thomas Burt would not elaborate on what courtroom events the statement referred to or on anything else that led to the settlement.

Under terms of the agreement, Microsoft will obtain SyNet's trademark rights to the name.

There was no answer at the office of SyNet's attorney and no immediate comment from the company.

The settlement was announced after an agreement earlier in the day apparently fell apart. The lawyers told the court early in Wednesday's session that a settlement had been reached, but then retracted that statement after a conference with SyNet's bankruptcy trustee.

SyNet says it began marketing its Internet Explorer in the fall of 1994, and that by the following summer it had obtained Illinois trademark registrations for the name.

Microsoft first publicly announced its Internet Explorer software in April 1995, but its attorney said the name had been in common use in the industry before SyNet used it.

SyNet got a boost last month when the U.S. Patent and Trademark office decided to begin registration of the name to the company.

Dhiren Rana, founder of SyNet, sued Microsoft in October 1995, and efforts to settle out of court were unsuccessful until Wednesday. Rana has an unlisted telephone and could not be reached for comment.

Microsoft also has been in a long-running battle with the federal government over Internet Explorer, but that fight is over the software itself, not the name.

The Justice Department has accused the company in an antitrust lawsuit of abusing its dominance in personal computer operatin software to force its Internet software on consumers and shut out competitors.