Microsoft Ponders Questions Unanswered by EU Court

Communication protocol pricing and how to protect Microsoft's trade secrets are issues that remain to be resolved.

"There are a number of things that are not spelled out explicitly in the decision itself. I am hopeful that we can have the kind of conversation that will enable us to know with confidence what we must do and what we can do in other areas, and I am hopeful that we can do that very quickly," Brad Smith, general counsel for Microsoft, based in Redmond, Wash., said on Sept. 17.

In its ruling issued Sept. 17, the court agreed that Microsoft had abused its dominant position by refusing to make its products interoperable with those of its rivals and by tying Windows Media Player to the Windows operating system.

The full ruling can be found here, in PDF form.

One of the biggest issues to be resolved is the pricing of Microsofts communication protocols, which the European Commission earlier in 2007 said were too high, Smith said.

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Click here to read more about why the EU court struck down Microsofts appeal.

In response, Microsoft did drop the price for protocols that are incorporated into products distributed in Europe to 1 percent of the revenue generated from the product, but it remains unclear whether that is an acceptable price to the Commission, he said.

"If the Commission feels that our prices are still too high, we will, of course, want to understand that very quickly so that we can address it … if the price is still too high, it will be very important for us to understand what price is low enough, so that we can conform to all of our obligations," he said.

While Smith acknowledged that the prices needed to be reasonable and offered on a nondiscriminatory basis, he noted, "The decision itself did not specify that the only reasonable price was zero. Our goal is to be in complete compliance with this decision. We will look to the Commission, among others, for guidance."

But, while Microsoft wanted to do the right thing, Smith said, he was not "necessarily here to urge us and other large companies in our industry to all sign up to the proposition that innovative technology should be free simply because it may be relevant to interoperability," he said.

Microsoft has also argued vociferously that those protocols contain its intellectual property as well as trade secrets. This is another issue that it wants to discuss with the Commission.

"The protection of trade secrets in the way our protocols are implemented in other peoples source code is something that also may need to be sorted out, again, if possible, as quickly as we can," Smith said.

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Microsofts rivals have applauded the courts ruling. Click here to read more.

Given that the current case has been going on for more than seven years, Smith said Microsoft did not want to have continued arguments or disputes about all of the outstanding issues and questions. "We want to move forward, in compliance with the 2004 decision."

He also acknowledged that the Commission was investigating another complaint against the company, from a group representing IBM and others that wanted Microsoft to license additional communications protocols relating to its SharePoint and Exchange servers, as well as some other products.

"We have conveyed our willingness to license those technologies. As a matter of business policy and approach to the industry, we are prepared to license to others in our industry, on reasonable and nondiscriminatory terms, the technologies that are important to interoperability," Smith said.

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