Supreme Court Lets Novell Pursue Antitrust Lawsuit Against Microsoft

Friends in business, enemies in the courtroom, Novell succeeded on March 17 in persuading the Supreme Court, over Microsoft’s objections, that its antitrust suit against Microsoft should go forward.

While Microsoft and Novell have formed a strong technology and marketing partnership in the last 18 months, Novell has never given up its multibillion antitrust lawsuit for the damage that Microsoft did to its one-time WordPerfect line of office applications.

According to Bloomberg.com, the Supreme Court, “without comment, today left intact a lower court decision that said Novell can sue Microsoft under federal antitrust law.” The lower court, the Fourth U.S. Circuit Court of Appeals, in Richmond, Va., had given Novell its blessing to continue its Microsoft lawsuit.

Microsoft had argued that Novell wasn’t an operating system competitor when Novell owned WordPerfect in the mid-1990s, and thus had no grounds for its case. Microsoft was unable to prove this point.

Microsoft has also claimed that WordPerfect, once the most popular word processor of all, had lost to Microsoft Office because of Novell’s own poor business decisions. When Novell first presented its lawsuit, in 1994, Microsoft claimed that “The record is clear that bad decisions and business mistakes are the reasons WordPerfect fell out of favor with consumers. It’s also unfortunate, and surprising, that Novell has just now chosen to litigate over a business it owned for a very short time and that it sold more than eight years ago.”

Novell replied that Microsoft had withheld critical Windows 95 technical information from Novell. This made it almost impossible for Novell to deliver a Windows 95-compatible version of WordPerfect. Novell also claimed that Microsoft had deliberately made Windows 95 so that it would be harder for Novell to create a fully functional WordPerfect for Windows.

In the mid-90s, Novell had acquired WordPerfect by buying WordPerfect Corporation for $1.2 billion. It then bought Quattro Pro, a once-popular spreadsheet program, from Borland. The mission of the late Ray Noorda, Novell’s CEO at the time, was to create a Novell office suite to compete with Microsoft Office 95.

Due to declining health, Noorda retired before he could push this effort forward. Under the next CEO, Bob Frankenberg, Novell sold WordPerfect to Corel in 1996 for $170 million. Today, Corel continues to sell WordPerfect, but WordPerfect has only a tiny fraction of the popularity it once had.

While the courts have dismissed Novell’s technical claims of rigging Windows to work poorly with WordPerfect, it allowed Novell continue to try to prove that Microsoft’s illegal marketing tactics with manufacturers and operating system monopoly lead directly to WordPerfect’s fall.

Similar claims in the EU (European Union) are what lead the EU to hit Microsoft with a a $1.35 billion fine in late February. The EU is also continuing to monitor what it sees as Microsoft’s failure to live up to its antitrust agreements in networking software. In addition, the EU executive body has started two new formal antitrust investigations against Microsoft regarding its interoperability with other product claims, and its tying together of separate software products.

In a statement, Microsoft made the best of the most recent of its courtroom losses: “We realize the Supreme Court reviews a small percentage of cases each year, but we filed our petition because it offered an opportunity to address the question of who may assert antitrust claims. We look forward to addressing this and other substantive matters in the case before the trial court. We believe the facts will show that Novell’s claims, which are 12 to 14 years old, are without merit.”

Be that as it may, Novell’s path is cleared to continue its multi-billion antitrust lawsuit against Microsoft. No matter how close the two companies may appear when it comes to cross-platform Linux and Windows development, the two remain enemies.