Microsoft Guards Its Protocols in European Court

As arguments begin in Microsoft's hearing, the company asserts in Luxembourg's Court of First Instance that licensing its communications interfaces and protocols would disclose valuable IP.

Microsoft argued in a Luxembourg court on Thursday that the European Competition Commissions antitrust decision against it would infringe on its intellectual property and cause serious and irreparable harm to the company.

The software giant and the European Competition Commission presented their first day of arguments in Luxembourgs Court of First Instance (CFI) in Microsofts effort to win a reprieve from the commissions antitrust remedies.

Microsoft hopes to delay complying with the commissions demands, including that it provide a version of Windows without a media player and that it license communications interfaces, until the conclusion of its wider antitrust appeal, which could take three to seven years.

The commission is pressing for Microsoft to comply immediately; that could mean as early as next year, if Microsoft loses the current appeal and a further appeal to the European Court of Justice (ECJ).

/zimages/1/28571.gifRead more here about the European commissions ruling against Microsoft.

The court proceedings included lengthy arguments around IP (intellectual property) rights and a discussion of Linuxs role in the server market.

The session began with opening statements from Microsoft and about 10 other interested parties, known as "interveners," supporting either Microsofts case or the commissions. The rest of the day focused on the demand that Microsoft license interfaces and protocols to guarantee that rival companies servers can interact seamlessly with Windows desktops. Fridays hearing is to concentrate on the requirement that Microsoft produce a stripped-down version of Windows without a media player.

Microsoft general counsel Brad Smith said in a post-hearing statement that the court had clearly identified the issues in the case, and said exchanges in court had revealed fundamental weaknesses in the commissions approach. A lawyer supporting the commission agreed that the judge had done his homework extremely well and was engaged in the cases issues.

Earlier in the day, Smith reiterated Microsofts hopes for a settlement, but said it would not budge on the core issues. "The path chosen by the European Commission will harm hundreds of European companies, thousands of European software developers and millions of European consumers," he said in a prehearing statement.

"As well show in the courtroom during these next two days, people want their computers to be simpler, not more complex. We need to provide consumers with more value, not less."

Lawyers from organizations supporting the commissions side of the case took an active part in the proceedings, with participants including the Free Software Foundation, Novell and CCIA (Computer and Communications Industry Association), lawyers said. On Microsofts side, interveners included ACT (Association for Competitive Technology) and CompTIA (Computing Technology Industry Association).

Danish judge Bo Vesterdorf, the courts president, addressed most of his questions to Microsoft, the commission and the commissions interveners, a lawyer said. Microsofts legion of lawyers far outnumbered the other parties—the commission and its numerous interveners amounted to about a third the number on Microsofts side, which numbered around two dozen, participants said.

Those on the commissions side argued that a delay in implementing the commissions remedies would be likely to hand Microsoft the market for media players and workgroup server operating systems.

"If a remedy is not implemented immediately, the risk is that it will become utterly meaningless," said Thomas Vinje, a partner with Clifford Chance, which is representing the CCIA. In the market for workgroup servers, "the remaining competitors are beginning to look very much like fringe players. Once competition has been eliminated, there is no rescuing the market."

/zimages/1/28571.gifRead more here about the possibility of suspending remedies.

Vinje said a substantial discussion was devoted to open-source software, something that has been held up as proof of vibrant competition in the server market. But open-source server software such as Apache does well in areas such as application and Web servers, where desktop interoperability is not an issue, the CCIA argued. "Its true [Apache] is doing well, but thats irrelevant," Vinje said.

Next Page: Intellectual property, or merely value created by secrecy?