The Redmond company had accused TomTom of alleged patent infringement, with eight patents being cited.
Three were related to the Linux kernel used by TomTom and there was widespread interest in the case due to this, with the FOSS community quite sure that this was the long-awaited patent battle which Microsoft has been hinting at for some time.
TomTom, which countersued Microsoft and appeared to be digging in for a fight by joining the Open Invention Network, will now have to remove the functionality provided by the patents relating to Microsoft's FAT filesystem.
It will thus be able to continue to redistribute its code downstream without violating the GPLv2.
According to a statement from Microsoft, TomTom will pay Microsoft for coverage under the eight car navigation and file management systems patents. As part of the agreement, Microsoft receives coverage under the four patents included in the TomTom countersuit.
The agreement, which has a five-year term, does not require any payment by Microsoft to TomTom. It covers both past and future US sales of the relevant products.
As usual, specific financial terms of the agreement were not disclosed.
It is a measure of Microsoft's diminishing clout in the technology industry that it has had to settle with a tiny company like TomTom. In earlier years, it would have gone for the throat and ensured that an opponent as small as TomTom was shut down.
This will surely encourage smaller software makers and other companies which are targeted by Redmond to feel that they can make a stand and force a settlement.