A clause in Microsoft's proposed settlement with the federal government and nine US states is causing a stink with the industry's largest PC makers, who are now complaining that Microsoft has used the agreement as a way to extract additional concessions from the companies. PC makers fear that rather than curbing Microsoft's illegal business practices (as originally envisioned), the settlement could be a tool for Microsoft to extend its domination. Sony was the first PC maker to complain about this clause; the company's statements were among the "key" public comments that the Department of Justice (DOJ) published last week.

This week, Gateway and Hewlett-Packard (HP) joined the complaint, stating that Microsoft had provided them with new Windows licensing terms that will prevent them from suing Microsoft for patent infringement. The nine nonsettling states, which want to take part in the March 6 DOJ settlement hearing, forwarded the complaints to Judge Kollar-Kotelly. The states and the District of Columbia believe that the settlement isn't in the public interest and should be thrown out.

Under terms of the proposed settlement, Microsoft must provide the top 20 PC makers with uniform licensing terms, a sharp change from the past, when each company individually negotiated such terms with Microsoft. But language in the licensing agreements that Microsoft is now issuing could bar PC makers from suing the company if Microsoft releases hardware products that violate the PC makers' patents, which wasn't the case with previous license agreements.

"\[The proposed settlement\] effectively takes away HP's property without paying for it," HP executive Iain Morris wrote in a letter to Microsoft Senior Vice President Richard Fade this week. PC maker Gateway was so taken aback by the new terms that it refused to sign the license. Microsoft says that smaller PC makers such as eMachines and Micron support the new licensing agreement and that many companies believe the new intellectual property provisions are an improvement over previous licenses.