As if its landmark antitrust trial against the Justice Department and 19 states wasn't enough to keep defense attorneys busy, two new fronts are expected to open in the next week. The escalation kicks off tomorrow in federal court in Salt Lake City, as the first of five pivotal hearings starts in a lawsuit brought by Caldera.
A week from
|Microsoft's legal battles|
The Justice Department and 19 states:
By far the broadest of the four lawsuits. Alleges that Microsoft used its
power in operating systems to crush competition from
Netscape Communications, Sun Microsystems, and others. A
decision in the case is not expected until December at the earliest. A loss for Microsoft
in this case could hurt the company's
standing in other cases.
Bristol Technology: Much narrower in scope. Alleges that Microsoft sought to cut off Bristol's access to Windows NT source code because it enabled the small company to build a product that made developers less dependent on the operating system. Microsoft's refusal in 1997 to license the code on the same terms as before violates antitrust law, Bristol alleges. A jury decision in the case could come as early as August.
Caldera: This suit targets a wide array of conduct Microsoft allegedly took in the late 1980s and early 1990s to freeze competing operating system DR-DOS out of the market. Many of Caldera's allegations are echoed in an earlier lawsuit the government settled with Microsoft in 1995.
Sun Microsystems: While the cornerstone of Sun's lawsuit alleges breach of contract and copyright infringement, it also alleges Microsoft violated unfair competition laws by flooding the market with a version of the Java programming language that was dependent on Windows technology. Those charges are similar to claims leveled in the government's antitrust lawsuit. U.S. District Judge Ronald Whyte already has ruled that Sun is likely to prevail on those charges.
The two suits heat up as the trial in the government's antitrust lawsuit in Washington is scheduled to resume, and as Microsoft asks a federal appeals court in San Francisco to overturn a preliminary injunction to Sun Microsystems in its suit over the Java programming language.
Antitrust experts say that additional court proceedings are likely to add a new layer of complexity to Microsoft's existing antitrust trial. Making sure that Microsoft attorneys in one court room don't trip up their colleagues in one of the other cases is a major concern, they say.
"It's a very big job for one or two people who have to be the central coordinators," said Peter Detkin, an Intel vice president who heads the company's litigation team. "If you take a position in one case [you have to consider] how a creative attorney [will] take advantage of that statement in another case."
"This is one of our busiest and most challenging periods," said Microsoft associate general counsel Tom Burt, who oversees the company's litigation department. "It really does seem like a series of scheduling coincidences has led to there being significant proceedings in all four cases."
Burt declined to say how much Microsoft is spending to defend the cases. "It certainly is an expensive proposition to be defending a number of significant cases at one time," he added. "The good news is that we have all the resources we need to fully defend ourselves."
Tomorrow's hearing in the Caldera case concerns two of nine motions Microsoft has filed seeking to get various parts of the case dismissed. Another motion will be heard on Thursday, and three more motions are scheduled over the next few weeks. Caldera alleges that Microsoft used its market dominance in the late 1980s and early 1990s to freeze out the rival DR-DOS operating system, which the Utah-based provider of Linux services bought from Novell in 1996. The suit revives charges that Microsoft settled with the government nearly five years ago. The case is scheduled to go to trial in January.
Meanwhile, Bristol, which makes cross-platform tools that could lessen developers' reliance on Microsoft products, is about to have its day in court as well. Smaller than Caldera, the company asserts that Microsoft came to view Bristol's Wind/U product as a potential threat to Windows NT, so the Redmond, Washington, software maker drastically raised the royalty rates it charged Bristol for the source code needed to continue making the product, in violation of state and federal antitrust laws. A decision could come as early as August.
Microsoft's federal antitrust trial is scheduled to resume next Monday before U.S. District Judge Thomas Penfield Jackson.
Already, Microsoft's multi-front war has posed challenges to attorneys defending the software giant. Last January, for instance, Justice Department lead attorney David Boies used evidence submitted in the Bristol case to challenge contentions by Richard Schmalensee, an economist testifying for Microsoft, that the Internet Explorer browser is seamlessly integrated into the Windows operating system.
Beth Finnerty, an attorney overseeing the Microsoft trial for Ohio Attorney General Betty Montgomery, said prosecutors would be watching the proceedings carefully to "see if there is anything useful to comes to light" in them. "It should make for an interesting summer," she added.
Burt acknowledged that "it takes a significant amount of my time" to coordinate the defenses of each team, but said in many ways they have many similarities. "They all involve this incredibly dynamic software industry that changes so rapidly that any company that wants to succeed has to be nimble," Burt said. "How [Microsoft's] business interfaces with the antitrust law is pretty well understood by the counsel the defends us."
There are other risks posed by fighting a war on multiple fronts as well. For instance, should Microsoft be labeled a monopoly in one case, that ruling would likely stick in the others, putting opponents at a tremendous advantage. "That's a very painful thing for a defendant in a monopolization case" to lose, said Stephen Axinn, an antitrust litigator at Axinn, Veltrop & Harkrider.
Similarly, Microsoft's case against the government is vulnerable to charges leveled by Sun that it flooded the market with versions of the Java programming language that were dependant on Windows. Attorneys for Sun and Microsoft will square off on June 16 over a U.S. District Judge Ronald Whyte's preliminary finding that the practice violated unfair competition laws. "A final judgment of unfair competition with regard to Java would have very negative consequences for Microsoft," said Rich Gray, an antitrust attorney at Bergeson, Eliopoulos, Grady & Gray.
Still, Axinn and others add, Microsoft remains most vulnerable to the government antitrust suit, because it is the broadest. A negative ruling there could open up dozens of new lawsuits. By contrast, a ruling that Microsoft harmed DR-DOS or Bristol would leave a much narrower wake.
"If Microsoft wins before Judge Jackson that will spill the wind out of the sails of the other plaintiffs pursuing these cases," Axinn said. "The whole world would know they had won, and that would give Microsoft so much momentum that it would be hard to resist the conclusion they are likely to win the other cases."