MS-DOS - Legal Issues

Legal Issues

As a response to Digital Research's DR DOS 6.0, which bundled SuperStor disk compression, Microsoft opened negotiations with Stac Electronics, vendor of the most popular DOS disk compression tool, Stacker. In the due diligence process, Stac engineers had shown Microsoft part of the Stacker source code. Stac was unwilling to meet Microsoft's terms for licensing Stacker and withdrew from the negotiations. Microsoft chose to license Vertisoft's DoubleDisk, using it as the core for its DoubleSpace disk compression.

MS-DOS 6.0 and 6.20 were released in 1993, both including the Microsoft DoubleSpace disk compression utility program. Stac successfully sued Microsoft for patent infringement regarding the compression algorithm used in DoubleSpace. This resulted in the 1994 release of MS-DOS 6.21, which had disk-compression removed. Shortly afterwards came version 6.22, with a new version of the disk compression system, DriveSpace, which had a different compression algorithm to avoid the infringing code.

Prior to 1995, Microsoft licensed MS-DOS (and Windows) to computer manufacturers under three types of agreement: per-processor (a fee for each system the company sold), per-system (a fee for each system of a particular model), or per-copy (a fee for each copy of MS-DOS installed). The largest manufacturers used the per-processor arrangement, which had the lowest fee. This arrangement made it expensive for the large manufacturers to migrate to any other operating system, such as DR DOS. In 1991, the U.S. government Federal Trade Commission began investigating Microsoft's licensing procedures, resulting in a 1994 settlement agreement limiting Microsoft to per-copy licensing. Digital Research did not gain by this settlement, and years later its successor in interest, Caldera, sued Microsoft for damages. It was believed that the settlement ran in the order of $150m, but was revealed in November 2009 with the release of the Settlement Agreement to be $280m.