Microsoft can buy off Sun legal threats for 10 years

As part of their landmark agreement reached last week, Microsoft Corp. has the option to pay Sun Microsystems Inc. millions of dollars each year to shield itself from patent infringement lawsuits by its former nemesis, Sun's vice president for legal affairs said Thursday.

Microsoft will make the payments if it decides to extend a part of last week's agreement known as the "Covenant Not to Sue for Damages," under which the companies agreed not to sue each other for past infringements. The agreement gives Microsoft the option to extend the covenant to apply for up to 10 more years by making annual payments to Sun. The payments could total up to $450 million by 2014, Lee Patch, Sun vice president for legal affairs, said through his spokeswoman Thursday.

Furthermore, if Microsoft makes the payments each year and does not take Sun to court over patent issues, in 2014 the companies will enter a broad cross-licensing agreement covering all of their patents and patent applications filed up to that date, Sun said in a regulatory filing Thursday. The cross-licensing agreement would apply to current products and future versions of those products, according to the Sun filing.

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