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Corel lands big software deal with DOJ

The Canadian software maker scores a significant contract win and a minor public relations victory when it announces the deal with the Justice Department.

Canadian software maker Corel scored a significant contract win and a minor public relations victory when it announced that the Justice Department will begin to widely use the company's office productivity software.

Corel said today that the DOJ will install more than 55,000 "seats" of its WordPerfect Office 2000 productivity software. Some 30 percent of the individual licenses will consist of a specialized version aimed at use in law offices. The multimillion dollar deal spans three years, the company said.

Corel's stock was up on the Nasdaq exchange $2.94, or about 15 percent, to 22 in late trading on the news.

The announcement of the contract comes amid the DOJ's antitrust case against Microsoft, which produces, among other programs, the widely used Microsoft Office suite of productivity programs. U.S. District Judge Thomas Penfield Jackson ruled in November in his findings of fact that Microsoft is a monopoly in the market for computer operating software.

Microsoft and the DOJ are currently holding discussions on a settlement, but little progress has been made.

Corel's WordPerfect office software was once the dominant word processing program and is still widely used in legal offices, but Microsoft's Office software has since surpassed it in market share.

Corel spokesperson Ainley Marcinyk said she saw no irony in the news that the DOJ signed a contract with Corel since the DOJ had been using WordPerfect since before Corel bought the software from Novell in 1996.

"There's no migration here. This is a consolidation of licensing programs they already had which allowed them to upgrade to Corel Office 2000 in a one-time procurement process," Marcinyk said. "The contract does not preclude the use of Microsoft software," she said, noting that the DOJ also purchased technical support services from the company.

In any case, contracts haven't been easy to come by for Corel. In December, Corel filed a lawsuit against the U.S. Department of Labor claiming that the department signed an exclusive three-year software contract, which the company had valued at around $8 million, with Microsoft. Government agencies must comply with regulations that discourage sole sources of supply.

Meanwhile, Corel's CEO, Michael Cowpland, is facing a legal battle of his own. Cowpland is defending himself against insider trading charges in Canada. Cowpland was charged on Oct. 14 with three counts of illegal insider trading in connection with a C$20.4 million ($13.96 million) stock sale he made in mid-August 1997. Lawyers for Corel are aiming to move the trial from Toronto to Ottawa, where Corel is based.

Reuters contributed to this report.