Cisco Systems will appoint a director to ensure that its Linksys products comply with the terms of free software licenses, and in return the Free Software Foundation will dismiss its lawsuit against the networking giant, the parties said on Wednesday.

Cisco will also make an undisclosed contribution to the foundation and has agreed to notify Linksys users of their rights under applicable licenses. The new director will report periodically to the foundation regarding Cisco's compliance efforts.

The settlement deal appears to end a process that began in 2003 when the FSF started looking into complaints that users of the Linksys WRT54G wireless router were not receiving all the source code, based on Linux, that they were entitled to under the terms that Cisco had licensed the software. Since then, the foundation says it discovered similar transgressions and tried to work with Cisco to ensure the proper disclosures.

But late last year the foundation gave up, complaining that Cisco was unwilling to take the necessary steps towards compliance, and the FSF filed a copyright infringement lawsuit suit against Cisco.

It was the first time the FSF had gone to court over a license violation, Brett Smith, FSF compliance engineer, wrote in a blog post Wednesday. He stressed that the group would prefer not to take companies to court.

"We're not out to wreck businesses or make lots of money. We just want compliance. And any company selling free software shouldn't have any problem providing that," he wrote.

Cisco has been in trouble before for failing to comply with open source licenses. In 2007, it came under fire for compliance issue in one of its IP phones.

Companies like Cisco may not intentionally share open source code improperly. It may be that they have not implemented the sometimes complicated and costly internal processes to track and share code properly.

The Free Software Foundation said it will continue to monitor Cisco's compliance with open source licenses in Linksys products.