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Sun Microsystems and Microsoft are to stop sueing each other for ten years, in a settlement which will see Sun trouser almost $2bn.

The bitter rivals have signed a technology collaboration pact to get their products to work better together; and they have settled all outstanding litigation. They have also come to terms on patents and "other issues".

Microsoft is to pay $700m to Sun to settle anti-trust issues and $900m to resolve patent issues. It is also making an up-front payment of $350m to Sun to cover patent royalties for server products. Sun and Microsoft will pay royalties from here on in for use of each other's technology. Oh, and Microsoft will be nice to Java, in future.

This is a huge win for Sun, which today announced that it is firing 3,300 staff to bring costs under control. Remember, just a week or so ago, the company issued a statement applauding the EC's Microsoft anti-trust ruling. But today, CEO Scott McNealy is magnanimous in victory. Here is the canned quote, bereft of a single soundbite, which goes to show just how important this deal is to the company.

"This agreement will be of significant benefit to both Sun and Microsoft customers. It will stimulate new products, delivering great new choices for customers who want to combine server products from multiple vendors and achieve seamless computing in a heterogeneous computing environment. We look forward to this opportunity - it provides a framework for cooperation between Sun and Microsoft going forward."

Steve Ballmer, Microsoft's CEO, makes a better fist of it - just:

"Our companies will continue to compete hard, but this agreement creates a new basis for cooperation that will benefit the customers of both companies. This agreement recognizes that cutting edge R&D and intellectual property protection are the foundation for the growth and success of our industry. This is a positive step forward for both Sun and Microsoft, but the real winners are the customers and developers who rely on our products and innovations."

Now for the agreement details:

Technical Collaboration The Technical Collaboration Agreement will provide both companies with access to aspects of each other's server-based technology and will enable them to use this information to develop new server software products that will work better together. The cooperation will initially center on Windows Server and Windows Client, but will eventually include other important areas, including email and database software. For example, one of the important elements of large scale computing environments is software to manage user identities, authentication and authorization. As a result of this agreement, Sun and Microsoft engineers will cooperate to allow identity information to be easily shared between Microsoft Active Directory and the Sun Java System Identity Server, resulting in less complex and more secure computing environments.

Microsoft Communications Protocol Program Sun has agreed to sign a license for the Windows desktop operating system communications protocols under Microsoft's Communications Protocol Program, established pursuant to Microsoft's consent decree and final judgment with the U.S. Department of Justice and 18 state attorneys general.

Microsoft Support for Java The companies have agreed that Microsoft may continue to provide product support for the Microsoft Java Virtual Machine that customers have deployed in Microsoft's products.

Windows Certification for Sun Server: Sun and Microsoft today are announcing Windows certification for Sun's Xeon servers. In addition, the Windows certification process for Sun's Opteron-based servers is moving forward.

Future Collaboration for Java and .NET Sun and Microsoft have agreed that they will work together to improve technical collaboration between their Java and .NET technologies.

Patents and Intellectual Property: The parties have agreed to a broad covenant not to sue with respect to all past patent infringement claims they may have against each other. The agreement also provides for potential future extensions of this type of covenant. The two companies have also agreed to embark on negotiations for a patent cross-license agreement between them.

Legal Settlements: The two companies are settling and terminating their lawsuit in the United States. Sun is also satisfied that the agreements announced today satisfy the objectives it was pursuing in the EU actions pending against Microsoft. ®

Related stories

Sun waves goodbye to 3,300 staff
MS gets EU fine, orders for server info and WMP-free Windows version
Sun welcomes EC Microsoft ruling
Microsoft, Sun, IBM and the war for government desktops
MS says how it will ship Sun Java for XP, Longhorn

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