When affirmed by the city's Board of Supervisors and signed by Mayor Willie Brown, the deal will end a nine-month saga between Big Blue and the Bay Area over the simple stencil of a peace symbol, a heart and a penguin, the official Linux mascot.
"They knew exactly what they were doing," said Gavin Newsom, one of the city's 11 supervisors. "They branded the three images. They knew it would create marketing. It's the guerrilla marketing that Ogilvy cherishes so much."
Ad firm Ogilvy & Mather spearheaded the campaign for IBM, hiring people to paint sidewalks with the stencils in a black chalk that was supposedly biodegradable. However, after several months, many of the stencils could still be seen.
While the ad campaign amused many Linux enthusiasts, the city considered it nothing more than graffiti.
"The ads required an intense baking soda and high-pressure hose mixture to clean up," said Newsom. "Some were etched into the concrete, so, in those cases, they will never be removed."
In total, San Francisco has received complaints about 308 instances of the ad. Others are most certainly out there, said Newsom, who added that graffiti is a misdemeanor and normally carries up to a $500 fine per incident.
Under the terms of the deal, IBM will pay the city $100,000 plus the costs of cleaning up any ads found by the end of the year. So far, cleanup costs have amounted to nearly $10,000. Big Blue will also pay the city's attorney fees of some $9,000.
An IBM representative confirmed the details of the settlement but declined to comment further.
The deal is expected to be reviewed by the San Francisco Board of Supervisors on Dec. 3 and sent to the mayor by the end of the month.