Be Sues Microsoft

Software developer Be Inc. filed suit against Microsoft alleging that the software giant's allegedly illegal and anticompetitive practices were directly responsible for the destruction of it's business.

Microsoft Corp. faces yet another legal challenge.

Software developer Be Inc. on Tuesday filed suit against Microsoft alleging that the Redmond, Wash., software giants allegedly illegal and anticompetitive practices were directly responsible for the destruction of Bes business.

The 21-page suit was filed in the San Francisco District Court and alleges that Microsoft has "long held and willfully maintained monopoly power in the worldwide market for Intel [Corp.]-compatible personal computer operating systems."

Be, which is based in Menlo Park, Calif., and recently sold most of its assets and intellectual property to handheld personal digital assistant maker Palm, Inc., said it had developed and marketed its technically acclaimed operating system, BeOS, in an effort to enter that market.

"BeOS threatened to undermine the barriers to entry that protect the dominant position of Microsofts Windows line of products. As a consequence, Microsoft exercised its monopoly power to exclude BeOS from the market, and forced Be to cease doing business," the suit alleges.

"Sensing that BeOS posed a significant threat to its illegal monopoly, Microsoft smothered Be by using its dominant market position to prevent computer manufacturers from installing Bes technically superior operating system," the suit further states.

Microsofts exclusionary exercise of monopoly power had "extinguished the value of Be as a going concern, deprived Be of future profits, and denied Bes shareholders the return of their invested capital," it said.

As such, Be is asking the court for a jury trial to award it compensatory damages in an amount to be proven at trial as well as an order trebling the amount of compensatory damages to be awarded. It is also seeking an order to treble the actual damages it has sustained; an order requiring Microsoft to make full restitution for its violations; an award of punitive damages and payment of its attorneys fees and costs of the suit; as well as an award of pre-judgment and post-judgment interest on all these sums.

The latest suit follows a similar one from AOL Time Warner subsidiary Netscape last month seeking redress for Microsofts anticompetitive conduct against it.

Microsoft spokesman Jim Desler declined to comment on the specifics of the Be suit, saying Microsoft officials had not as yet had the opportunity to review the filing.

"But this sort of litigation is not in the best interests of consumers or the industry, who are best served by the continued development of products with new and exciting features," he said.

When asked to explain how consumers benefited when a company like Microsoft used anticompetitive means to force other smaller and innovative firms like Be out of the market, as alleged in the Be and Netscape suits, Desler said computer manufacturers had always been able to ship multiple operating systems and "it is our understanding that OEMs could always have bundled the BeOS if they so chose," he said, declining any further comment.

Another Microsoft competitor, Sun Microsystems Inc., is also believed to be considering a similar suit, and executives have publicly said they are keeping their options open in this regard.