CONSENT DECREE

The US Government and Microsoft Corporation (Microsoft) entered into an agreement outlined by this Consent Decree (sometimes referred to as the Final Judgment) after the Civil Trial of 1994.  The Civil Trial was mostly concerned with Microsoft's licensing practices, in particular their Per Processor licensing practice, which charged OEMs (Original Equipment Managers) a licensing fee for a Microsoft operating system (OS), whether or not the OEM installed Microsoft's, or another company's OS.
The Consent Decree covers Microsoft Products including MS-DOS, Windows 93, Windows 95, and any successor versions of these products.  It does not cover Windows NT workstations or servers.
An outline of the main points of the Consent Decree follows:

  • Microsoft may enter into License agreements of only up to one year in duration.
  • Microsoft may allow the OEM to renew the license under the same conditions as the existing license, but may not impose a penalty if the OEM chooses not to renew.  This does not cover the case where the OEM chooses not to renew their license under the same conditions, but later enters into a new license agreement with separate conditions, such as higher royalties.
  • Microsoft's license agreements cannot restrict or prohibit OEMs licensing, sale, or distribution of other, non-Microsoft products.
  • Microsoft cannot enter into Per-Processor licensing agreements.
  • Microsoft cannot enter into a license agreement where the terms of the agreement are conditioned upon the licensing of another Microsoft Product, or upon the OEM not licensing a non Microsoft product.
  • Microsoft may not impose commitments of minimum sales on OEMs.
  • Microsoft may not use Lump Sum pricing schemes.
  • Microsoft may not impose unreasonable Non Disclosure Agreements (NDA) upon employees.  The details of what constitutes an unreasonable agreement is outlined in the Consent Decree.
The Consent Decree can be broken into two sections: regulations for Microsoft's licensing practices, and regulations for Microsoft's NDAs.  The section of the Consent Decree which was brought into question in the recent 1997 DOJ case (point #5), is actually only a one sentence sub-section of one of the main terms of the Consent Decree.