Microsoft appeals EU antitrust ruling

Microsoft appeals to a European court in its fight against EU antitrust regulators. An antitrust attorney says the European Commission may have the upper hand in the courtroom.

Dawn Kawamoto
Dawn Kawamoto Former Staff writer, CNET News
Dawn Kawamoto covered enterprise security and financial news relating to technology for CNET News.
3 min read
Microsoft has appealed to a European court to overrule measures imposed by European antitrust regulators that the company says would hurt its competitive edge and give vital intellectual property to rivals.

Microsoft's appeal, filed Monday with the Court of First Instance, had been expected, given the significance of the orders issued by the European Commission. The technology industry is closely watching the case, because the orders to unbundle software components and share proprietary information could have significant effects on other software and hardware firms.

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"The Commission's decision undermines the innovative efforts of successful companies, imposing significant new obligations...to license their proprietary technology to competitors, and restricts companies' ability to add innovated improvement to their products," Horacio Gutierrez, Microsoft's European associate general counsel, said in a statement. "The legal standards set by the Commission's decision significantly alter incentives for research and development that are important to global economic growth."

Microsoft filed a 100-page appeal asking the court to annul the Commission's March 24 decision and to annul, or substantially reduce, the accompanying $611 million fine. European antitrust regulators said Microsoft didn't provide rivals with information they needed to fairly compete in the server software market. Also, by bundling a wide variety of features--such as media players and browsers--into its Windows operating system, the company unfairly blocked competitors. The Commission ordered Microsoft to offer a version of its operating system without a media player and share some of its intellectual property with competitors.

Microsoft representatives have said that in coming weeks the company will also ask the court to suspend the Commission's interim measures until the appeal is concluded. The interim measures included in the Commission's March 24 decision gave Microsoft 90 days to offer an operating system without the media player bundled in, and 120 days to begin sharing proprietary information with its competitors regarding its servers.

A one-day hearing on Microsoft's request for a stay or suspension will likely take place within a month or two, said Frank Fine, an antitrust attorney for law firm DLA in Brussels. He added that Microsoft faces a challenge in winning a stay, given recent decisions by Europe's highest court.

"It won't be easy for Microsoft to get a suspension," Fine said. "It will have the burden of proving it will face irreparable harm if these interim measures take hold. I doubt Microsoft will go out of business if it has to abide by these measures."

He added that Judge Bo Vesterdorf, president of the Court of First Instance, may uphold the Commission's order on sharing of intellectual property, given that Vesterdorf was, in essence, recently "overruled" on a similar case by a higher court.

Three years ago, Vesterdorf suspended the Commission's interim measures that would have forced drug distribution company IMS Health, which held 95 percent of the market, to share some of its copyrighted information with competitor NDCHealth, whom Fine represented.

Vesterdorf, in his IMS ruling, narrowly defined a landmark decision by the European Court of Justice in the 1995 Magill case.

"Vesterdorf showed an extreme pro-IP bias toward IMS' alleged copyright, which made it impossible for NDC to demonstrate effectively that there was no risk of serious harm to IMS if it was compelled to license for a limited time (its technology)," Fine said, in an e-mail.

But in late April of this year, the European Court of Justice confirmed the Commission's decision against IMS, ruling that a dominant firm may be compelled to license essential IP to competitors.

If Microsoft or the Commission appeals the temporary injunction decision by the Court of First Instance, it will likely take a couple months for the Court of Justice to hear the case and issue the final decision on the suspension, Fine said.

Fine said it will take up to six months for the court to decide on granting a suspension. Meanwhile, Microsoft will not have to carry out the interim measures. The actual appeal, however, will likely take a couple years.

Mario Monti, the EC commissioner who oversees competition, said in a speech before an EC conference: "We feel pretty comfortable on that decision and we look forward with confidence to the very likely court proceedings."

He noted that all of the European Union's member states supported the decision to impose interim measures against Microsoft.