Apple sues Microsoft for ripping off Mac OS: Today in Apple history

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 top developers, paves the way for an epic battle between the two companies that will rage for years.

Apple sues Microsoft after developer goes from friend to foe

As a valued developer, Microsoft got a behind-the-scenes look at the development of the Macintosh prior to its 1984 release. Shortly after the very first Mac 128K went on sale, Microsoft founder Bill Gates wrote then-Apple CEO John Sculley. Gates suggested that Apple should 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, Apple exec Jean-Louis Gassée shot down the proposal. (Gassée took over running the Mac division from Steve Jobs after the Apple co-founder left the company following a failed boardroom coup.)

Gates decided to capitalize on what he saw as a great business opportunity to create a mass-market operating system. He debuted Windows on November 15, 1985.

Windows debut stirs anger at Apple

Sculley reacted furiously when he saw Windows, although version 1.0 did not compare well to Mac OS. For example, although the new Microsoft OS featured onscreen windows, they could not overlap one another.

However, in some ways, Windows made PCs seem eerily similar to the Mac. For one thing, Microsoft packaged it with built-in apps Write and Paint, which were reminiscent of Apple’s MacWrite and MacPaint.

Since Microsoft drove two-thirds of Mac software sales at the time, it was in nobody’s interest to break up the partnership. Mac sales were underperforming, and Microsoft’s first version of Windows was no more threatening than any of the other Apple knockoffs floating around.

A disastrous agreement between Microsoft and Apple

Windows wasn’t a straight-up Mac OS ripoff. In fact, Microsoft began developing Windows before Gates ever saw the Macintosh. Plus, both operating systems licensed technology from Xerox PARC, which did a lot of the creative legwork on inventing the graphical user interface.

As a result, Microsoft and Apple came to an agreement. Sculley and Gates signed a deal on Nov. 21, 1985, that licensed the Mac’s “visual displays” to Microsoft. Gates agreed that Microsoft would continue writing software for Mac. Microsoft also gave Apple a two-year exclusivity window on its popular spreadsheet program, Excel.

Controversially, this deal gave 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.”

Windows 2.0: Apple sues Microsoft

A couple of years later, Windows 2.0 arrived. It resembled the Macintosh interface much more closely than the first version of Microsoft’s operating system. As a result, 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 existing license between Apple and Microsoft covered certain interface elements for the new version of Windows. Those that weren’t covered were not copyrightable.

It was the start of a decade of dominance for Microsoft, and a decade of disaster and near-ruin for Apple.