March 17, 1988: Apple sues Microsoft for allegedly stealing 189 different elements of its Macintosh operating system to create Windows 2.0.
The incident, which causes a deep rift between Apple and one of its former top developers, paves the way for an epic battle between the two companies that will rage for years.
From friend to foe
As a valued developer for the Mac, Microsoft got a behind-the-scenes look at the development of the Macintosh project prior to its 1984 release. Shortly after the Mac 128K went on sale, Bill Gates wrote then-Apple CEO John Sculley, suggesting that he license the Macintosh operating system to outside manufacturers to help establish it as the standard interface for personal computing.
Sculley was tentatively open to the idea, but on June 25, 1985 the proposal was definitively shot down by Apple exec Jean-Louis Gassée, who had taken over running the Mac division from Steve Jobs.
Gates decided to capitalize on what he saw as a great business opportunity to create a mass-market operating system. He debuted his own operating system, Windows, in November 15, 1985. John Sculley was furious when he saw it — although version 1.0 of Windows didn’t compare well to Mac OS.
For example, although it featured onscreen windows, these windows were unable to overlap with one another. However, in some ways it was eerily close to Mac, such as the decision to package it with built-in apps Write and Paint, which were reminiscent of MacWrite and MacPaint.
Since Microsoft was making up two-thirds of the software sales on Mac at the time, it was in nobody’s interest to break up the partnership. Mac sales were underperforming as it was, and Microsoft’s first version of Windows was no more threatening than any of the other Apple knockoffs floating around.
A disastrous agreement
Because Microsoft had already began developing Windows before the Macintosh was shown to Bill Gates, and both systems had licensed technology from Xerox PARC — which did a lot of the invention legwork on the graphical user interface — an agreement between Microsoft and Apple was arranged.
John Sculley and Bill Gates signed an agreement on Nov. 21, 1985, which licensed the Mac’s “visual displays” to Microsoft, so long as Microsoft kept developing for Mac and agreed to give Apple a two-year exclusivity window with Excel. Controversially, this deal gives Microsoft a “non-exclusive, worldwide, royalty-free, perpetual, nontransferable license to use [parts of the Mac technology] in present and future software programs, and to license them to and through third parties for use in their software programs.”
A couple of years later, Windows 2.0 arrived — and much more closely resembled the Macintosh interface. On March 17, 1988 — the date we’re commemorating today — Apple sued Microsoft for stealing its work.
Unfortunately, things didn’t go well for Apple. Judge William Schwarzer ruled that the interface elements for the new Windows were covered by the existing license between Apple and Microsoft, and those that weren’t were not copyrightable.
It was the start of a decade of dominance for Microsoft, and a decade of disaster and near-ruin for Apple.