Value through Secrecy

By Matthew Broersma  |  Posted 2004-09-30 Print this article Print

?"> The issue of intellectual property is likely to make or break the case, according to analysts, and it made up the substance of the days hearing. Microsoft argues that if it is compelled to license interface specifications, it will disclose valuable intellectual property, infringing its IP rights and causing it irreparable harm. The commission and its backers say there is nothing valuable about the specifications Microsoft is being asked to disclose. "It is our contention that this case has nothing to do with intellectual property," Vinje said. "As someone said today in the hearing, Microsoft does not keep its interface specifications secret because theyre valuable, theyre valuable because theyre secret.
"And the reason theyre valuable is because when theyre secret, Microsoft can prevent competition. These are not the crown jewels, the secret sauce, the recipe for Coca-Cola."
On Microsofts side, a spokesman said the question of whether IP is at issue is no longer controversial, saying even the commission would now agree that rights are involved. CompTIA told the court that it supports Microsofts position on IP. "The interoperability section of the ECs order, which directs Microsoft to give away its valuable intellectual property to competitors, stands contrary to widespread industry practice that clearly shows interoperability thrives in Europe," Lars Liebeler, CompTIAs antitrust counsel, said in a statement published after Thursdays hearings. "It also represents a monumental departure from long-recognized European IP legal protections that provide the needed incentive to create and innovate for consumers." Click here to read about Microsofts moves to assemble an arsenal of patents. This weeks oral arguments are not just a formality, and can win or lose the case, according to legal experts. "The oral pleadings are key in these kinds of proceedings," said Javier Ruiz Calzado, a lawyer with Latham & Watkins LLP who worked as "reféréndaire" to a Court of First Instance judge for six years. "A real dialogue takes place between the judge and the parties, with the enrichment of the interveners." Thursdays pleadings will be particularly significant to the final decision because they address the critical issue of IP rights, experts say. As part of its case, Microsoft must prove that the commissions remedies would cause irreparable harm to the company, and its best chance of doing so is likely to be through its IP rights argument. "Financial damages are always reparable. IP harm may well not be," Calzado said. "Microsoft has a chance on the protection-of-IP argument, which appears strong." Microsoft has said it will argue that the commissions order to license communications interfaces would impinge on limited-time, exclusive rights such as patents, copyrights and trademarks. The company has said disclosing such secret information to other companies could even help hackers find new security vulnerabilities. The IP argument hinges on whether potential licensees would produce a "new" product—that is, whether licensing would allow innovation or merely help competitors copy Microsofts products, according to legal analysts. Microsofts argument is that competitors would use the interface information to essentially duplicate Microsofts server product, while the commission is arguing that the refusal to supply the information is abusive because it prevents innovation, according to analysts. A related issue is whether the commissions March decision proves that competitors cant operate sufficiently without access to the interface information in question. An ECJ judgment of April 29 in the case of IMS Health v. NDC Health laid down specific rules for the compulsory licensing of IP, according to lawyers. The IMS case was frequently referred to during the day, according to participants, and is said to offer material useful to both sides. The court is expected to issue its decision in November or December. Check out eWEEK.coms Windows Center at for Microsoft and Windows news, views and analysis.

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