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Setback for MS in EU Antitrust Appeal
Thursday, August 12 2004 @ 08:38 AM EDT

Things are not going swimmingly for Microsoft in its appeal of the EU antitrust decision against it. tglx sends us a report from Financial Times Germany, and his translation indicates things are not going so well for the monopoly there in their EU antitrust appeal. There has been a ruling that Microsoft must provide proof of its claim that complying with the EU decision against it will damage its IP rights:

"Microsoft Experiences a Setback in the EU Lawsuit

".... The judge said Microsoft has not proved yet that the decision of the European Agency is violating Microsofts copyrights. That's the main argument of Microsoft against the first court ruling in March. Brussels decided there that the software giant had violated the European Competition Regulations by taking advantage of its dominant position in the OS market. . . .

"MS must now present a list of all patents, copyrights and trade secrects which are affected by the first court decision by the end of this week. MS has already delivered an extensive documentation of its claims, but obviously it was insufficient to convince the judge."

The report, he says, goes on to quote a Microsoft opponent as saying that the judge has uncovered a weak point in Microsoft's position and that at a minimum, it shows that the judge isn't going to take anything just on Microsoft's say-so. Someone reportedly involved in the case on the commission side is quoted as saying, "I'm convinced that MS has a problem proving the copyright violations and it will be hard for them to sell their position to the judge."

PCPro just put up an equivalent story in English. Speaking of Microsoft and its patents. . .

Here's something from a patent attorney, what he thinks the strategy is:

"But Tom Franklin, a patent attorney with the firm of Townsend & Townsend in Denver, Colorado, said . . . Microsoft may be trying to replicate the success that IBM, Xerox and others have had in producing thick portfolios of patents they then license to their customers. 'A lot of companies that were illegal monopolies, like IBM and Xerox, they learn to like being monopolies, and they say, "How can we do this legally?"' Franklin added.

"IBM typically receives more patents per year than any other single applicant, but Microsoft has been among the top patent-getters in recent years. Speculation that Microsoft is pursuing such a strategy has been ramped up by the company's hiring of an IP expert from Big Blue. 'The idea is to file a tremendous amount of patents and then go about trying to get royalties,' Franklin said. The threat of patent litigation also can become a factor when a company is mulling whether to renew a contract with Microsoft or jump ship to a competitor."

No antitrust issues there. If you quit using their product, they'll sue you for patent infringement? Talk about free as in freedom. Or even just free as in free market. No wonder the world is beating a path to Linux's door. Just the fact that a patent attorney could say that in public as a plausible guess as to MS's patent strategy tells you that the patent system probably could use a tweak, preferably before they are in full battle regalia and armed to the teeth.


  


Setback for MS in EU Antitrust Appeal | 127 comments | Create New Account
Comments belong to whoever posts them. Please notify us of inappropriate comments.
Corrections here please
Authored by: seanlynch on Thursday, August 12 2004 @ 09:46 AM EDT
So we can keep it real.

[ Reply to This | # ]

OT stuff here please
Authored by: seanlynch on Thursday, August 12 2004 @ 09:47 AM EDT
Please place Off topic stuf here.

Thanks

[ Reply to This | # ]

Setback for MS in EU Antitrust Appeal
Authored by: seanlynch on Thursday, August 12 2004 @ 09:53 AM EDT
Its a good thing to see this kind of corporate behavior being covered in the
press.

I long for the good old days when economically conservative papers like the Wall
Street Journal would have been condemning these kinds of practices as 'anti free
market'.

Nowadays WSJ is just another corporate shill.

Thanks for the article.

[ Reply to This | # ]

OT here eom
Authored by: Anonymous on Thursday, August 12 2004 @ 09:57 AM EDT
eom

[ Reply to This | # ]

The difference between IBM and MS on patent generation
Authored by: Anonymous on Thursday, August 12 2004 @ 10:10 AM EDT
Oh come on, MS to be the new IBM for patent generation?

That's so funny it's ridiculous

IBM have a huge research arm, covering a vast number of different areas (not
just computer software), including even basic scientific research, a number of
serious respected in-house journals, and have won Nobel prizes,

MS has a tiny research arm (admittedly with some good computer scientists),
pretty much entirely about computers, and nearly entirely only about software,
and that's it. The rest of their patent push is based on trying to find patents
(mostly questionable software patents) based on the products they are developing
anyway.

IBM do have a strong and long standing ethics of (1) research (see above), and
(2) community contributions and responsibility (although to be fair they have
had other good and bad ethics too). IBM historically has been about more than,
and viewed themselves as being about more than, simply making money (in an
analogous way as say the NY Times is about more than selling newspapers)

MS don't have anything like that. Their over-riding ethic is to sell as many
copies of their software and make as much money as possible. That in itself is
not necessarily a bad ethic for a business provided they don't cross the line
into illegality etc. - but it does mean they are never going to be a home for
much serious research like IBM.

[ Reply to This | # ]

Compulsive behaviour
Authored by: Vaino Vaher on Thursday, August 12 2004 @ 10:26 AM EDT
Why would a company as sucessfull as MS need to behave so that each and every
country as an investigation running?
I think that the answer is: Fear!
- A few executives control most of the votes, so it is not the shareholders that
they fear.
- Those same people have cashed in enough to never need to work again. It is not
fear of their jobs, or fear of loosing their money that drives them.
- Some people fear loosing their magic touch or fear getting old and ridiculous.
I don't think that this is the kind of fear that drives MS.

I think it is the same kind of fear that I would fear a criminal feels that have
told on his partners. The kind of fear that witness protection programs are ment
to ease. The kind they share with SCO:
Knowing that everyone has their own reason to hate you. The conviction that they
will get you if only they can. That you are all alone, and have no friends*).
That is why MS still pursues it's agressive style. At least that is what I
belive. And to survive, they are willing to use nay mean.
---
*) Well, They still have Enderle, but there are friends that one would rather
not have.

[ Reply to This | # ]

Setback for MS in EU Antitrust Appeal
Authored by: Anonymous on Thursday, August 12 2004 @ 10:58 AM EDT
If you quit using their product, they'll sue you for patent infringement?

Seems to me that forcing you to continue using their product would not be enforceable in court - clearly it's a question of applying duress to cause a client to sign a contract (or in this case to renew one). And I'm pretty confident that a judge would see it that way.

Duress, for those of you not of the legal bent, is forcing someone into a contract by intimidation, typically the threat of violence, imprisonment, economic or legal consequences that effectively "holds a gun to their head" until they sign. In such cases the court may provide equitable relief and hold the contract unenforceable.

Nevertheless, going through the proof of duress would be unpleasant and expensive.

Of course IANAL, UANAL, everyone INAL (sing with me!)

[ Reply to This | # ]

Easy to argue IP damage????
Authored by: Anonymous on Thursday, August 12 2004 @ 11:45 AM EDT
From PCPro story

"In its appeal Microsoft is arguing that handing over information that
would enable its competitors to make their server products more interoperable
with Windows would irreparably damage its intellectual property rights."

I think it is easy to argue this in terms of (legal) IP monopoly: Damage to my
profit if I have to disclose interoperability stuff.

Then again, isn't interoperatbility something a monopolist has to disclose to
readdress its monopolist behaviour?

To argue this is just like saying: I cannot share because I gain more
monopolistic power by not doing so.

If this is MS's arguement, it is not only lame but more importantly, shows us
how MS is going to use its legal IP monopoly for. This will push IP worries of
software companies to a new height. May be this is the straw we need to make
Lawmakers aware that they need to fix the IP system.

[ Reply to This | # ]

Copyrights, Competition and the ECJ
Authored by: autosepha on Thursday, August 12 2004 @ 12:56 PM EDT

Even if MS can give proof for the damage of IP rights, they will only have made the first step.

There are decisions in which the European Court of Justice (ECJ) established that copyrights are no barrier for prosecution in cases of abuse of a dominant position:

Magill decision:

[...]
2. The conduct of an undertaking in a dominant position, consisting of the exercise of a right classified by national law as "copyright", cannot, by virtue of that fact alone, be exempt from review in relation to Article 86 of the Treaty.[...]

(Article 86 in the meantime has become Article 82 of the Treaty.)

IMS Health case :

Therefore, the refusal by an undertaking in a dominant position to allow access to a product protected by copyright, where that product is indispensable for operating on a secondary market, may be regarded as abusive only where the undertaking which requested the licence does not intend to limit itself essentially to duplicating the goods or services already offered on the secondary market by the owner of the copyright, but intends to produce new goods or services not offered by the owner of the right and for which there is a potential consumer demand

In this decision the court furthermore lays down very precise rules for compulsory licensing in cases where a refusal to deal would make up an anti-competitive abuse of a dominant position. But with regard to the MS case the more important point is the "access to a product protected by copyright" mentioned in this decision. I'm sure that I' am not the only reader that concludes from this that the powers derived from copyrights may well be restricted by antitrust laws and decisions.

Of course, the MS case is far more complex than the mentioned decisions, also deals with the measures adopted by the commission's decision (not only the questions whether a dominant position exists and was abused), and last but not least it has to be kept in mind that different cases are never fully comparable. Nevertheless, the Magill case was seen by many scholars as the introduction of the so-called "essential facilities doctrine" (which is supposed to be well established in US antitrust law) into EC competition law. Whether that assumption is true or not, it is certain after these decisions that copyright itself doesn't hinder the application of antitrust laws within the EC and as a consequence that copyrights can be restricted by antitrust law.

After all, it is hard to foresee what will happen in the MS case (especially under the new European Commission; new opportunities for bri^Wlobbying right now) and especially which legal yardstick will be applied by the court. But I'm quite sure that the whole case isn't over with MS proving some kind of "copyright violation". This will only prevent them from loosing before the trial even started.

[ Reply to This | # ]

Eerily familar
Authored by: Anonymous on Thursday, August 12 2004 @ 01:13 PM EDT
"MS must now present a list of all patents, copyrights and trade secrects which are affected by the first court decision by the end of this week. MS has already delivered an extensive documentation of its claims, but obviously it was insufficient to convince the judge."

In other words, "Microsoft has claimed harm, but hasn't proven it."

Sound familiar? Are these guys trying to kill us off by getting us to die laughing? Yeah, I know, ultimately this really isn't funny, but it does make me chuckle that these morans keep trying to trick the courts. I guess if they ever get away with it, that small bit of humor will drain away rather quickly.

[ Reply to This | # ]

Setback for MS in EU Antitrust Appeal
Authored by: John M. Horn on Thursday, August 12 2004 @ 01:36 PM EDT
I find it difficult to believe that the SCO case hasn't progressed far enough
for even Microsoft to see that making unsupported claims of copyright/IP
infringement does not, ultimately, work in a court of law.

Oh, sure, they've been irreparably damaged. Damaged so badly in fact, they were
forced to increase their dividend to their stockholders with a one time payout
(also known as a windfall profit for said stockholders). Geez, I wish the
companies in my stock portfolio could be damaged in a similar manner. For that
matter, they probably wish they could suffer a little of that damage too...

John Horn

[ Reply to This | # ]

The Ultimate Patent
Authored by: overshoot on Thursday, August 12 2004 @ 01:38 PM EDT
MS should just cut to the chase and file for a general concept of interacting
with a Microsoft Windows system. The USPTO would certainly grant it, and then
they wouldn't have to mess around any more.

[ Reply to This | # ]

Microsoft relies on Tradesecret protection not copyrights
Authored by: Anonymous on Thursday, August 12 2004 @ 02:27 PM EDT
I was looking at things the other day, and I was wondering
if all software is protected by copyrights (as it is) why
are Microsoft and other companies extremely reluctant to
publish the source code. The only explanation I can see
is that software primarily relies on trade secret protection
and just secrets in general instead of copyrights.

When discussing these matters I feel it is important to make
the distinction about what kind of IP rights people are worrying about.

What this sounds like is the court has asked Microsoft to reveal the details of
their interfaces and Microsoft has replied those are trade secrets. And the
court has said so.

But all in much more confusing language from Microsoft so their is a chance of
convincing someone that their trade secrets of what are valuable IP that should
not be revealed. And hiding the fact that is exactly what the court determined
should happen and ordered them to reveal. calling trade secrets IP is seems to
be a very standard way of muddying the watters.


[ Reply to This | # ]

The ultimate vendor lockin...
Authored by: frk3 on Thursday, August 12 2004 @ 05:03 PM EDT

"The threat of patent litigation also can become a factor when a company is mulling whether to renew a contract with Microsoft or jump ship to a competitor."

So, Salesman might say, "Oh, I hear you are considering moving to Linux. I should inform you, that you could face a possible patent infringement lawsuit, and we wouldn't want that, now would we? So, let's get you signed up for our special Microsoft corporate licensing, sign here and yes, we take credit cards."

Makes my skin crawl just thinking about it. This would be like The SCO Group, but even more sinister.

[ Reply to This | # ]

Not as cynical
Authored by: Anonymous on Thursday, August 12 2004 @ 05:35 PM EDT
While I am not a fan of either micro$oft or software patents I think it is worth
mentioning that at least part of the patent motivation is the lawsuites against
Microsoft by junk patent holders over things like the mouse click. As long as
the system is going to allow patents the only defense is to own the patents.
One needs enough to trade with the other folks who also are in your busines.
The F/OSS community should create it's own patent portfolio along with
challenging junk patents.
The problem remains of the "lone inventor" who has nothing to trade
but wants money. The Defense against that is the lack of assets to be attached.
That is one reason lawyers don't like "free" they can't get a profit
from it. 1% of all the copies of windows is worth something. How much is 1% of
a copy of Linux worth?
;-)

[ Reply to This | # ]

The difference between IBM and MS on patent generation
Authored by: emmenjay on Thursday, August 12 2004 @ 07:08 PM EDT
Those of us with grey (or missing) hair might recall things differently.

Today, IBM is a good corporate citizen. Back in the early mainframe days, it
was a slightly different story. They used every trick under the sun to
discourage competition. They would regularly change interfaces so as to prevent
competitors peripherals from working, and they certainly used their patents as a
weapon.

In the 70s and 80s they had the same kind of anti-trust legal problems that MS
has had over recent years.

Perhaps it is a good precedant. If IBM can become a good citizen, there may yet
be hope for MS. (Though if they follow IBM, it might take another 20 years)
:-(

Oh well, here's to hoping. :-)

[ Reply to This | # ]

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