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Microsoft Settles Feud With Wang Software Giant Buys Stake In Wang To Conclude Lawsuit Seattle Times

Thu., April 13, 1995

For the second time in 10 months, software giant Microsoft Corp. has settled a patent-infringement charge against it by buying a stake in the accuser.

Microsoft and Wang Laboratories, a Lowell, Mass., company that was in bankruptcy proceedings two years ago, said Wednesday that Microsoft will buy $90 million of convertible preferred stock that equals about 10 percent of Wang’s common stock.

For that and other considerations, Wang will drop a 2-year-old lawsuit contending Microsoft infringed on two Wang patents covering object management and the handling of compound documents.

In anticipation of the settlement, Wang stock soared this year from a 52-week low of $9.125 at the end of 1994. The stock closed at $15.875, up $1.56, Wednesday.

The Wang case is reminiscent of Microsoft’s dealings with Stac Electronics, a San Diego company whose software allows for disk compression. Last June, after a federal judge issued a ruling costly to Microsoft, the Redmond, Wash., company agreed to an $83 million settlement. Part of the settlement was a $40 million stake in Stac equal to about 15 percent of Stac’s common stock.

Microsoft and Wang said the cooperative agreement, giving Microsoft a license to Wang’s portfolio of software patents, ends litigation between the two. Microsoft agreed to incorporate as standard features in its Windows software Wang’s desktop imaging and object controls. Also, image controls will be included in the Visual Basic development tool.

Wang and Microsoft also agreed to work on other software development. Wang software allows images of scanned documents, whether text or graphics, to be embedded in e-mail, word processing and databases. Wang’s structured work-flow technology oversees the routing and delivery of that data and documents.

The Wang technologies will not be included in Microsoft’s new operating system, Windows 95, scheduled to be available in August. But it will be added when required desktop technologies are completed, and it will be sent to customers who already own Windows 95.

Microsoft’s $90 million investment - Wang’s current market value is about $460 million - will buy convertible stock paying 4.5 percent a year. Microsoft will have the right to convert the stock into common stock at $23 a share, above Wang’s all-time trading high of $21.875.

At Wang’s recent stock low, the company was worth only about $293 million. By contrast, Microsoft, the 10th largest publicly held corporation in the United States, is worth $42 billion, nearly 100 times larger.

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