Novell Sues Microsoft over WordPerfect

By Peter Galli  |  Posted 2004-11-12 Print this article Print

"The record is clear that bad decisions and business mistakes are the reasons WordPerfect fell out of favor with consumers," Microsoft responds to the antitrust claims. Novell says the company withheld "critical technical information**QT

After playing nice with one another earlier this week when they announced a $536 million legal settlement, Novell and Microsoft on Friday were back attacking one another again. The flare-up comes as Novell Inc. on Friday filed suit against Microsoft Corp. in U.S. District Court in Utah seeking unspecified damages arising from Microsofts efforts to eliminate competition in the office productivity applications market during the mid-90s when Novell owned the WordPerfect word-processing application and the Quattro Pro spreadsheet application. Novell said it planned to file the lawsuit earlier this week when it announced that it had reached an agreement that would see Microsoft pay the Waltham, Mass., company $536 million to settle potential antitrust litigation related to Novells NetWare operating system.
At that time, Joseph A. LaSala Jr., Novells senior vice president and general counsel, said the company has held extensive, yet unsuccessful, discussions with Microsoft to resolve the WordPerfect claims without resorting to litigation.
Microsoft general counsel Brad Smith agreed that "we could not resolve claims related to WordPerfect in any manner we thought appropriate, and we are prepared to turn to the courts to resolve it." LaSala said Friday that the lawsuit was based in part on facts proved by the U.S. government in its successful antitrust case against Microsoft. That case found Microsoft to have unlawfully maintained a monopoly in the market for personal computer operating systems by eliminating competition in related markets. In the lawsuit filed Friday, Novell claims (PDF form) that Microsoft withheld certain critical technical information about Windows from Novell, thereby impairing its ability to develop new versions of WordPerfect and other Novell office productivity applications. It also alleges that Microsoft integrated certain technologies into Windows that were designed to exclude WordPerfect and other Novell applications from relevant markets. Novell also claims that Microsoft used its monopoly power to prevent hardware partners from offering WordPerfect and other applications to customers. Novell acquired the WordPerfect word processing program when it merged with the WordPerfect Corp. in June 1994. In a related transaction at that time, Novell also bought Quattro Pro, a spreadsheet product, from Borland International. The combined value of WordPerfect and Quattro Pro at that time was more than $1 billion yet, less than two years later in March, 1996, both WordPerfect and Quattro Pro were sold to Corel Corp. for some $170 million. Read more here about Corel pinning its hopes on WordPerfect. "WordPerfects share of the word processing market was almost 50 percent in 1990, but fell to less than 10 percent by the time Novell sold WordPerfect and related applications in 1996. Microsoft Words share of the word processing market rose from approximately 20 percent prior to 1990 to a monopoly share of approximately 90 percent by 1996," LaSala said. Next Page: Microsoft says Novell is trying to pass the blame "for its own mismanagement and poor business decisions."

Peter Galli has been a financial/technology reporter for 12 years at leading publications in South Africa, the UK and the US. He has been Investment Editor of South Africa's Business Day Newspaper, the sister publication of the Financial Times of London.

He was also Group Financial Communications Manager for First National Bank, the second largest banking group in South Africa before moving on to become Executive News Editor of Business Report, the largest daily financial newspaper in South Africa, owned by the global Independent Newspapers group.

He was responsible for a national reporting team of 20 based in four bureaus. He also edited and contributed to its weekly technology page, and launched a financial and technology radio service supplying daily news bulletins to the national broadcaster, the South African Broadcasting Corporation, which were then distributed to some 50 radio stations across the country.

He was then transferred to San Francisco as Business Report's U.S. Correspondent to cover Silicon Valley, trade and finance between the US, Europe and emerging markets like South Africa. After serving that role for more than two years, he joined eWeek as a Senior Editor, covering software platforms in August 2000.

He has comprehensively covered Microsoft and its Windows and .Net platforms, as well as the many legal challenges it has faced. He has also focused on Sun Microsystems and its Solaris operating environment, Java and Unix offerings. He covers developments in the open source community, particularly around the Linux kernel and the effects it will have on the enterprise.

He has written extensively about new products for the Linux and Unix platforms, the development of open standards and critically looked at the potential Linux has to offer an alternative operating system and platform to Windows, .Net and Unix-based solutions like Solaris.

His interviews with senior industry executives include Microsoft CEO Steve Ballmer, Linus Torvalds, the original developer of the Linux operating system, Sun CEO Scot McNealy, and Bill Zeitler, a senior vice president at IBM.

For numerous examples of his writing you can search under his name at the eWEEK Website at


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