Judge Gives Mixed Ruling in Sun-Microsoft Case

By Darryl K. Taft  |  Posted 2003-01-10

Judge Gives Mixed Ruling in Sun-Microsoft Case

BALTIMORE—A federal judge struck Microsoft Corp. down on two of its requests to dismiss antitrust cases against the software giant and offered a mixed ruling in a third request Friday.

U.S. District Judge J. Frederick Motz denied Microsofts requests to dismiss antitrust cases filed by Be Inc. and Burst.com, saying he believed the claims warrant further discovery and are sufficient to go forward.

In a hearing on Microsofts dismissal motion, Motz "summarily" denied the motion to dismiss the Be Inc. case, and, though adding he did so with greater pause, also denied the request to dismiss the Burst.com case.

Microsoft also had asked Motz to dismiss the case brought by Sun Microsystems Inc. However, Motz granted Microsofts dismissal motion on only two counts—monopolization of the OC operating system market and of the Web browser market—restricted Suns claims on one other count and simply gave the Unix vendor a chance to amend its claim on another count.

The judge said he would "reserve ruling on the tying claims," of which there were seven. "There are serious issues that arise on the tying claims," he said. These claims involve Microsofts bundling of its Web browser with its Windows operating system.

However, Judge Motz said he would not take a long time ruling on these claims. "Id like to get this moving," he said of the case, so that Microsoft could appeal his earlier ruling to impose a preliminary injunction against the software giant that would force it to ship a Sun-compatible Java runtime environment with Windows.

Matthew Larrabee, an attorney for Microsoft, argued that Sun had cited no case "that has held unlawful a technological tie." Besides, he said "consumers want Microsoft technology."

Yet, Lloyd "Rusty" Day, an attorney for Sun, argued that consumers want Microsoft technology partly because they are forced to take it.

"Imagine if General Motors sold 95 percent of all cars and then got into the gas business and held 30 percent of the gas business," Day said. "Imagine if they then made it so that GM cars could only run on GM gas…"

Playing the role of both adjudicator and devils advocate, Motz asked: "What if it increased functionality?" The U.S. Court of Appeals ruled in prior Microsoft proceedings that the company had the right to integrate its products as long as the integration was of benefit to consumers.

Day said that could be tested at trial.

Larrabee later took the judges nod and said: "If buying GM gas gives you better mileage, its not an unlawful tie."

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Meanwhile, Day claimed Microsoft not only harmed Java, but also harmed Sun in both the PC operating system market and Web browser market because Sun had products in both—Solaris for Intel and the HotJava browser. Larrabee told the judge "dont be fooled by that," noting that Sun was never seriously trying to market either offering.

In the Burst.com case, Charles Douglas, an attorney for Microsoft, argued that Burst.com was not a competitor to Microsoft or a customer and was not entitled to an antitrust claim. He said the companys claims then become more of an intellectual property issue.

"They tried to piggyback on the governments case and make antitrust claims," he said.

Yet, Judge Motz apparently didnt see it that way. Spencer Hosie, an attorney representing Burst.com, said he was pleased with the judges decision and was excited to have an opportunity to try Burst.coms case on the merits.

Burst.com claims Microsoft took its trade secrets and used the technology in the latest version of its Windows media player. The move, the company alleges, helped Microsoft maintain its PC operating system monopoly while severely hampering Burst.com.

Hosie said MS either crushed or coerced other players in the market —namely RealNetworks and Intel —and reached non-compete agreements with them "until it could roll out its own product, which is essentially Burstware with a Microsoft logo on it."

Meanwhile, Microsoft accused its opponents of "piling on" following a favorable ruling by a U.S. District Court in a federal antitrust suit against the company.

Regarding Be, Microsoft attorney Mike Shepard, said: "This is a claim that needs to be dismissed because here we have Be not offering a peep to Microsoft or to a court or to its shareholders for three years. Then they see [U.S. District] Judge Jacksons opinion and say woo-hoo, maybe we can pile on here!"

Indeed, the Microsoft opponents in court Friday also sought to seize on Motzs preliminary injunction ruling of last month.

"This court rejected Microsofts claim that Sun has no reason to get a must-carry provision because Sun should have gone on to create its own distribution channel," said Steve Susman. "If Sun is allowed to force Microsoft to ship Java, Be should be allowed to require Bes OS to ship with the Windows operating system."

At that, Motz warned that the preliminary injunction ruling might have "no implication in this context." He said that the ruling "might have a very short shelf life so it might be dangerous to rely on."

Susman argued that pre-installation of the Be OS by OEMs was the only strategy by which BE could effectively distribute its operating system, and that Microsoft killed that option through exclusive deals with the OEMs.

In addition, Susman said, Microsofts "pollution of Internet standards" prevented Be from getting access to developers and was intended to foreclose the development of technologies that might be competitive to Windows.

(Editors Note: This story has been updated throughout the day to include breaking developments in the cases.)

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