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Court rules for Microsoft in antitrust case

People who bought Microsoft products indirectly can't sue the software maker under federal law.

An appeals court on Tuesday upheld a ruling that Microsoft can't be sued for antitrust violations under federal law by consumers and businesses who did not buy their software directly from the company.

Microsoft has already agreed to pay more than $1 billion to settle a number of class-action suits brought under state laws. Tuesday's ruling doesn't affect those cases, but does prevent a nationwide class-action suit under federal law from moving forward. The suit largely covered purchases of Windows made in the mid-to late-1990s, as well as application software such as Word and Excel.

Big payouts
In addition to settling with consumers, Microsoft has paid a pretty penny to competitors in the last few years to end notable legal cases.

$1.95 billion Sun Microsystems
$850 million IBM
$750 million AOL Time Warner
$536 million Novell
$460 million RealNetworks
$440 million InterTrust Technologies
$150 million Gateway
$23 million Be

Source: CNET research

The three-judge panel of the 4th U.S. Circuit Court of Appeals upheld rulings made in 2001 and 2004, pertaining to people who bought their Microsoft software from a retailer, a reseller or as part of a new computer purchase. The rulings held that these people could not obtain an injunction or recover damages from the software maker for antitrust violations, such as overcharging, under federal law. In general, federal law holds that only the direct purchasers of a product can sue for overcharging, though there are some exceptions.

In addition to claims of being overcharged, the plaintiffs in the case had claimed that they were harmed by the lack of competitive technologies that resulted from Microsoft's anticompetitive actions. However, both the appeals court and the earlier lower court ruling by Maryland District Court Judge J. Frederick Motz rejected their ability to pursue such claims under federal law.

"The harms that the plaintiffs have alleged with respect to the loss of competitive technologies are so diffuse that they could not possibly be adequately measured," the appeals court said in Tuesday's ruling. Also, the court said, "the plaintiffs cannot claim that they, as distinct from others in society, were specifically injured in their business or property by the alleged antitrust violation."

A Microsoft spokesman said the company was "extremely pleased" with the ruling, which the plaintiffs had said could have led to damages of more than $10 billion.

"This ruling is an overwhelmingly positive decision that essentially marks the end of this case," company spokesman Mark Murray said in an e-mail.

Christopher Lovell, a lawyer representing the plaintiffs in the case, was not immediately available for comment.

In addition to the settlements with consumers in the state cases, Microsoft has also settled a number of complaints brought by competitors including RealNetworks, AOL Time Warner, Sun Microsystems, Gateway, Be and others. The company still faces other legal battles, however, including its ongoing fight with the European Union.