I did the coding a little differently this time, as an experiment, because marbux pointed out that in long legal documents it's helpful to paginate, so in the future, lawyers will find our text versions easier to use. Perhaps some of you will know a less visually intrusive way to paginate? [Update: we have an elegant solution, thanks to gleef, which I have implemented.] I also tried making the line breaks exactly where they are in the document original. It was a lot of extra work, and unless everyone just adores the line breaks this way, I don't think I'd like to do that again, unless there is some way to make it automatic. I did the HTML myself to find out how horrible a task it would be, because I don't like to ask people to do something I'd hate to do myself. And it was not something I'd ask someone to do again, unless it seems really important.

The Novell Antitrust Complaint

I don't know about you, but I can't read this document without my consumer blood pressure rising. When I read the section beginning at paragraph 92, for example, about Microsoft deliberately making Word incompatible with WordPerfect, so users would find it hard to work on documents written in WordPerfect in a Word environment, all I could think of was a night some years back, when I was working on a document in a domain name dispute to file in the ICANN dispute resolution procedure. My boss and I were sending the document back and forth electronically, but he was in WordPerfect and I was in Word.

We had a serious deadline to meet to answer the other side in the ICANN dispute resolution procedure, and it's a very demanding process. You have to stay within fairly strict rules about how many pages you can have, and there are formatting regulations too, even font size spelled out. It was a really complex document, with footnotes galore -- yes, to save cram more info in -- and lots of last-minute changes to make in the body of the reply, as well as in the footnotes and in the affidavits attached as exhibits. Attached exhibits is another way you get around the length requirements, by the way. And it all has to be just so.

Deadlines are something you have all the time in legal work, and when the bell rings, you have to stand up and be ready to fight, so to speak, no excuses. There's no "my dog ate my homework" or a note from your Mom to save you. I was working from home at night, struggling with formatting, because the draft from my boss was in WordPerfect and I had Word at home. I was up all night that night, and I still have a visual memory of me printing it out in the wee hours of the morning, my bleary, rosy-red eyes glancing out the window as the sun jauntily came up over the horizon, telling me it would soon be time for the messenger to pick it up. Learning that it was probably all a totally unnecessary, artificially manufactured struggle, the result of a deliberate trick for competitive use in the marketplace, is so deeply infuriating as a consumer, I have no words to express my feelings.

Microsoft didn't think about me as a customer at all, I gather from this document. I was using their software, paid for and all, and I couldn't get a simple interoperability task done without pulling my hair out, all in an artificially induced struggle over who got to be a monopoly on the desktop.

But you know what? They couldn't pull those tricks if customers refused to reward them with business. I'm talking to myself. I should have paid the money and bought WordPerfect. WordPerfect for Linux, that is, not that I knew much about Linux then. I know. WordPerfect for Linux was free. But I like to pay for software, because I like to show appreciation for the creative work. My point is, it wasn't until I discovered Linux that I escaped such struggles. For any business, I think this document is a warning. And it's valid to ask: do I really need to do business with a company that treats its customers like that, now that there is a choice? In the FOSS world, thanks to the GPL, you are never stuck, with no way out. No wonder Microsoft hates the GPL. It can't raise the Jolly Roger, stick a knife in its teeth, and sail off to rape and pillage the competition. The GPL stands in the way of dirty tricks.

And when I read the part about coopting standards, of course I thought of the Sender ID controversy, and I am certainly grateful to the Apache guys for standing up to be counted on behalf of the GPL. How can we possibly be so foolish as to let Microsoft control everything? Anything? After this history? We toss the GPL overboard at our peril.

Standards Writing and Antitrust Liability - a New Law

There is a new law that may interest you, because it has to do with standards writing and antitrust law, discussed in "Consulting-Specifying Engineer" by attorney Kenneth M. Elovitz. Groklaw member wolflans gets the credit for spotting this. First Elovitz discusses a case the new law somewhat modifies, Allied Tube v. Indian Head, 108 S.Ct. 1931 (1988), which involved a deliberate subversion of the standards process by the steel tubing industry, who opposed a proposed amendment to the National Electrical Code because it would cost them business. So they had 200 employees join the NFPA and vote down the proposed amendment. They were then sued and lost, and the case "established the principle that the writing of codes and standards is subject to antitrust laws," and that attempts to bias a standard for your own commercial advantage can result in significant liability.

Elovitz says the message for engineers who write codes and standards was that they need to be "based on the merits of objective expert judgments" and adopted "through procedures that prevent the standard-setting process from being biased by members with economic interests in stifling product competition," (Allied, 486 U.S. at 501).

Congress lets industries regulate themselves, he says, but only if they actually do:

"It should be no surprise that Congress stepped in with the Standards Development Organization Advancement Act of 2004 (H.R. 1086). President Bush signed this act into law on June 22, 2004 (Public Law 108–237). This law amends the National Cooperative Research and Production Act of 1993 (15 USC 4301 et. seq.) by extending selected antitrust protections to standards development organizations while those organizations are engaged in standards development activity. The law limits the core holding of Hydrolevel that standards development organizations have the same antitrust liability as anyone else."

That means that there is less liability threat hanging over standards writers now than before, but there is still potential liability, and the limited protection covers the standards writers, not parties trying to bias the results for their own gain. Elovitz:

"As Congressman Forbes pointed out, the act is not a completely free ride for standards-developing organizations. Under section 3, the antitrust protection does not apply to activity that involves: (1) the exchange of cost, sales or pricing information not reasonably required for the purpose of developing a voluntary consensus standard; or (2) any anti-competitive activity for a for-profit entity that stands to financially benefit from participating in any standards development activity.

"Although standards-developing organizations are the nominal authors, codes and standards are actually written by individual technical committee members. Section 8 of the new law makes it clear that antitrust protection applies only to the standards-developing organizations. It does not extend to parties (individual committee members or their employers) who participate in standards development activities. Therefore, individual engineers who attempt to use their positions on standards writing committees for personal financial or competitive gain still face potential antitrust liability." [emphasis added]

The simple truth is that Linux is released under the GPL. Microsoft's license on Sender ID would exclude the GPL from the standard because the license is not compatible with the GPL. Linux is Microsoft's primary competition. Excluding Linux from a standard would be, um, anticompetitive, do you think? See where I'm heading?

And just in case you think I'm picking on Microsoft, read this complaint, and accept only the parts already proven and established in a court of law. Then ask yourself: should Microsoft be allowed to control a standard that would in effect exile Linux from the rest of the commercial world?

*******************************

Max D. Wheeler (3439)
Stanley J. Preston (4119)
SNOW, CHRISTENSEN & MARTINEAU
[address, phone, fax]

R. Bruce Holcomb (pro hac vice pending)
JeffreyM. Johnson (pro hac vice pending)
Milton A. Marquis (pro hac vice pending)
David L. Engelhardt (pro hac vice pending)
DICKSTEIN SHAPIRO MORIN & OSHINSKY LLP
[address, phone, fax]

Attorneys for Plaintiff

______________________________

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF UTAH, CENTRAL DIVISION

_____________________________

NOVELL, INC.,

Plaintiff,

v.

MICROSOFT CORPORATION,

Defendant.

___________________________

COMPLAINT

JURY DEMANDED

Judge Ted Stewart
DECK TYPE: Civil
DATE 11/12/2004 @ 10:20:40
CASE 2:04CV01045 TS

____________________________

Plaintiff Novell, Inc. ("Novell") hereby states its claims for relief against Defendant
Microsoft Corporation ("Microsoft") and alleges on knowledge regarding itself, and
otherwise on information and belief, as follows:

I. NATURE OF THIS ACTION

1. This is an action under Section 4 of the Clayton Act, 15 U.S.C. § 15, for
damages suffered by Novell by reason of the anticompetitive conduct of Microsoft in
violation of Sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1, 2. "Novell" also refers
to the WordPerfect Corporation, which merged with Novell in June 1994.

2. Until March 1996, Novell owned the rights to develop and distribute the
WordPerfect word processing application, which historically had been by far the most
popular word processing application in the global market, as well as other office
productivity applications, including the Quattro Pro spreadsheet.

3. At all pertinent times Microsoft possessed monopoly power in the relevant
market for personal computer ("PC") operating systems, which control PCs and
provide the basic "platform" for developing applications such as WordPerfect.

4. To protect its valuable Windows monopoly and to extend its operating
systems monopoly into other software markets, including word processing,
spreadsheets, presentations, databases, email, office suite, and other office productivity
applications, Microsoft engaged in a series of anticompetitive activities, including
integrating other Microsoft software products, such as its browser technologies, into
Microsoft's Windows operating system in an exclusionary manner, and entering into
exclusionary agreements precluding companies, such as Original Equipment
Manufacturers ("OEMs"), from distributing, promoting, buying, or using products of,

2

5. Microsoft abused its monopoly power in the PC operating systems market
to suppress the sales of WordPerfect and Novell's related office productivity
applications. Microsoft targeted these applications because of their potential to provide
Microsoft's competitors with a way across the barriers to entry that protected
Microsoft's existing operating systems monopoly. In addition, and just as importantly,
WordPerfect and Novell's other applications were leaders in the additional markets that
Microsoft sought to monopolize.

6. Microsoft thus attacked Novell with some of the same anticompetitive acts for
which Microsoft was held liable in United States v. Microsoft Corp., 87 F. Supp. 2d 30
(D.D.C. 2000), aff'd in part, rev'd in part, 253 F.3d 34 (D.C. Cir.), cert. denied, 534 U.S. 952
(2001) (the "Government Suit"). Those anticompetitive acts include integrating
browsing functions into the Windows operating system in an exclusionary manner,
entering agreements in restraint of trade, and otherwise using the Windows monopoly
to exclude competing applications from important channels of distribution.

7. Bill Gates, Microsoft's Chairman and Chief Executive Officer, targeted
Novell's applications by name in documents recording Microsoft's anticompetitive
schemes, in which he explained that the integration of browsing functions into
Windows, coupled with Microsoft's refusal to publish certain of these functions, was a
primary strategy for excluding Novell's applications from the markets. He candidly
admitted that Microsoft's own products could not compete without the benefit of these
anticompetitive acts.

3

II. PARTIES

9. Plaintiff Novell is a corporation organized and existing under the laws of
the State of Delaware, with its principal place of business at 1800 South Novell Place,
Provo, Utah. During times pertinent to this Complaint, Novell licensed and sold office
productivity applications, including the WordPerfect word processing application,
throughout the United States and the world.

10. Defendant Microsoft is a corporation organized and existing under the
laws of the State of Washington, with its principal place of business at One Microsoft
Way, Redmond, Washington. Microsoft licenses its operating systems and applications
software throughout the United States and the world.

III. JURISDICTION, VENUE, AND COMMERCE

11. This Court has jurisdiction over this matter pursuant to Sections 4 and 16
of the Clayton Act, 15 U.S.C. §§ 15, 26 and 28 U.S.C. §§ 1331, 1337.

4

13. Microsoft sells and licenses PC and workgroup server operating systems
and applications throughout the United States and the world and delivers copies of
them across state lines and international borders. Microsoft is engaged in, and its
activities substantially affect, interstate and foreign commerce.

IV. LIMITATIONS: UNITED STATES V. MICROSOFT CORP.

14. The United States brought an antitrust action against Microsoft on May
18, 1998 under Sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1, 2, alleging, inter alia,
that [t]o protect its valuable Windows monopoly against such potential competitive
threats [from alternative platforms], and to extend its operating system monopoly into other
software markets, Microsoft has engaged in a series of anticompetitive activities.
Microsoft's conduct includes agreements tying other Microsoft software products [such
as those providing browsing functions] to Microsoft's Windows operating system;
exclusionary agreements precluding companies from distributing promoting, buying,
or using products of Microsoft's competitors or potential competitors; and exclusionary
agreements restricting the right of companies to provide services or resources to
Microsoft's software competitors or potential competitors." Gov't Compl. ¶ 5 (emphasis
added).

15. The United States District Court for the District of Columbia entered
judgment substantially in favor of the United States, and the U.S. Court of Appeals for
the District of Columbia Circuit largely affirmed the District Court's findings and

5

16. Pursuant to 15 U.S.C. § 16(i), the running of the statute of limitations for
the present action was tolled between May 18, 1998 and November 12, 2003, because the
present action is based in part on matters complained of in the Government Suit. See,
e.g., Gov't Compl. ¶¶ 2-5, 7-8, 13, 24-25, 27, 37, 42-44, 54-55, 57-59, 66-68, 93, 95, 97, 99,
131. This Complaint alleges the same operating systems monopolization count as
alleged and proved in the Government Suit; the anticompetitive schemes employed by
Microsoft that are alleged herein and in the Government Suit are similar and have the
same objectives; and the word processing, spreadsheet, and other applications markets
alleged herein fall within the broad software product markets alleged in
the Government Suit.

17. In fact, the Government Suit applied to the whole spectrum of non-
operating system software, like WordPerfect, that competed against Microsoft products.
For example, as contemplated by the allegations in the Government Suit and as found
by the District Court, Microsoft's anticompetitive conduct targeted competing office
productivity applications during the relevant period alleged herein. For example,
Microsoft threatened to withhold from IBM a license for Windows 95 in retaliation for
IBM's decision to distribute its SmartSuite office productivity suite on IBM computers
sold in the United States. See United v. Microsoft Corp., 84 F. Supp.2d 9 (D.D.C.
1999) ("Findings of Fact") ¶¶ 115-132. Similar Findings of Fact were made with respect
to Microsoft's dealings with other software products that Microsoft perceived as

6

18. In addition, the Government Suit demonstrates how Microsoft's
monopolization of the office productivity applications markets is critical to Microsoft's
maintenance of its monopoly in the operating systems market. According to the
Declaration of Rebecca M. Henderson, filed on behalf of the United States in the
remedies phase, Microsoft Office, in its own right, has the potential to become cross-
platform middleware. Like Navigator, Microsoft Office exposes application
programming interfaces ("APIs"), which are a set of routines, protocols, and tools for
building software applications, and many applications are already written directly to
Office. "Office could also provide a valuable distribution channel for complementary
middleware." United States v. Microsoft Corp., Declaration of Rebecca M. Henderson
¶ 23, at 8-9.

19. Thus, "Microsoft's strong position in applications also gives it a potent
weapon in its attempt to thwart any potential middleware threat .. . [and its] control of
its applications gives it a number of powerful tools that taken together greatly reduce
the likelihood that any competing middleware, including Office, might emerge as an
attractive PC applications development platform." Id. ¶¶ 65-66, at 22. For example,
Microsoft "can keep Office unavailable on alternative platforms and can ensure that it
does not develop into cross-platform middleware. Microsoft can also ensure that its
applications support only Microsoft-controlled or compliant interfaces and can use
preferential access to Office as both a carrot and a stick in working with OEMs, other

7

20. In addition, because Microsoft was successful in monopolizing the
markets for office productivity applications with Microsoft Office and its constituent
applications (such as Microsoft Word and Excel, Microsoft's spreadsheet application),
Microsoft was able to use that monopoly in order to exclude Netscape from the market
for browsers, maintain and indeed strengthen the applications barrier to entry against
other operating systems, and thereby protect the Microsoft operating systems
monopoly. For example, the District Court in the Government Suit found that
Microsoft threatened to cancel Mac Office, the Microsoft Office product for Apple, Inc.'s
Macintosh operating system ("Mac OS"), unless Apple agreed to bundle Internet
Explorer with Mac OS and to make Internet Explorer the default browser. Because
Apple's business was in steep decline in 1997 and many ISVs questioned the wisdom of
continuing to develop applications for Mac OS, Apple knew that if Microsoft stopped
development of Mac Office, that would signal the death knell for Apple. Within a
month of Microsoft's threat, the two companies entered into an exclusive agreement in
which Apple agreed to these terms, among others, and Microsoft agreed to continue
releasing up-to-date versions of Mac Office for at least five years. Findings of Fact
¶ 350. Thus, Microsoft's incentive to monopolize the office productivity applications
markets was the same as its incentive to monopolize the browser market: to preserve
its operating systems monopoly.

21. In the Government Suit, the government alleged and the courts ruled that
Microsoft was liable for integrating certain browsing technologies with the Windows

8

22. By agreement, the parties further tolled the running of the statute of
limitations as of November 7, 2003 through the time this action was filed. Novell's
claims are also tolled because Microsoft's entire course of conduct constitutes a
continuing violation in pursuit of a single anticompetitive objective, namely the

9

23. Among others, the following findings and conclusions of the District
Court in the Government Suit are binding on Microsoft in the present action under
principles of collateral estoppel, having become final on their affirmance by the Court of
Appeals:

(a) At all pertinent times (continuing at least until the date of the
Court of Appeals' decision of August 2, 2001), Microsoft has held a monopoly in the
market for Intel-compatible PC operating systems, which is a relevant market for
antitrust purposes, including Section 2 of the Sherman Act. Findings of Fact ¶¶ 18-67.

(b) Microsoft's integration of browsing functionality with Windows
prevented Netscape Navigator and other middleware products from weakening the
applications barrier to entry, rather than serving any procompetitive purpose.
Id. ¶¶ 155-160.

(c) Microsoft lacked any technical justification for refusing to license
Windows 95 to OEMs without such browser functionality. Id. ¶¶ 175-176.

10

(d) By inducing, threatening, and/or forcing OEMs to take Microsoft's
browser functionality with Windows and imposing additional technical restrictions on
them, Microsoft increased the OEMs' cost of pre-installing and promoting Netscape
Navigator. This foreclosed Navigator from one of the distribution channels that leads
most efficiently to the use of browsing software. Id. ¶ 241.

(e) To protect the applications barrier to entry, Microsoft, through
inducements and restrictive agreements, also foreclosed Navigator from other
distribution channels, hampering consumers' ability to choose browser products based
on their features, and forcing content providers to focus on Microsoft's browsing
technologies to the exclusion of Netscape. Id. ¶¶ 247, 307-308, 311-312.

(f) To further protect the applications barrier to entry, Microsoft
targeted and encouraged individual developers and independent software vendors
("ISVs") to rely on specific browsing technologies found only in Windows for their
Web-centric applications. Id. ¶¶ 337, 340.

(g) An "applications barrier to entry" protected Microsoft's monopoly power in the
operating systems market. Id. ¶¶ 36-52.

(h) Microsoft launched a campaign of anticompetitive acts targeting
competitors and aspiring competitors that developed or threatened to develop products
"that either show[ed] the potential to weaken the applications barrier to entry or
compete[d] directly with Microsoft's most cherished software products." Id. ¶¶ 93-94.

(i) Microsoft chose to forego the short term benefits of having more
applications available to run on Windows and, instead, chose to create incompatibilities
that obstructed the development of certain applications that otherwise might run on

11

both Windows and other platforms, because such applications threatened the
applications barrier to entry. Id. ¶ 407.

(j) Through its conduct toward competitors and OEMs, "Microsoft has
demonstrated that it will use its prodigious market power and immense profits to harm
any firm that insists on pursuing initiatives that could intensify competition against one
of Microsoft's core products," such as Windows, Office, Word, and Excel. Id. ¶ 412.

(k) "[Microsoft] charges different OEMs different prices for Windows,
depending on the degree to which the individual OEMs comply with Microsoft's
wishes." Id. ¶ 64.

(1) OEMs lack a commercially viable alternative to licensing Windows
for pre-installation on their PCs. Id. ¶¶ 53-55.

(m) Microsoft used inducements such as reductions in the royalty
price of Windows to entice OEMs not to pre-install competitors' applications.
Id. ¶¶ 230-234.

(n) Microsoft punished OEMs that pre-installed office productivity
applications competing with Microsoft's applications, by charging them higher prices
for Windows and withholding technical and marketing support. Id. ¶¶ 115-132.

(o) "Because of the importance of 'time-to-market' in the software
industry, ISVs developing software to run on Windows products seek to obtain beta
releases and other technical information relating to Windows as early and as
consistently as possible. Since Microsoft decides which ISVs receive betas and other
technical support and when they will receive it, the ability of an ISV to compete in the

12

marketplace for software running on Windows products is highly dependent on
Microsoft's cooperation." Id. ¶ 338.

(p) Microsoft withheld crucial information regarding Windows as part
of its strategy to injure firms that threatened to weaken the "applications barrier to
entry." Id. ¶¶ 90-93.

(q) Microsoft employed a strategy of giving away its software products for free. Id. ¶¶ 136-142.

(r) Microsoft entered into anticompetitive arrangements with OEMs
that foreclosed competing products from the OEM distribution channel. Id. ¶¶ 144-241.

(s) Microsoft used Microsoft Office to maintain the applications barrier
to entry that protected its operating systems monopoly. Id. ¶¶ 341-356.

V. THE RELEVANT MARKETS

24. Three markets are relevant to this action: the market for Intel-compatible
PC operating systems, the market for word processing applications, and the market for
spreadsheet applications. Word processing and spreadsheet applications are sometimes
referred to herein as "office productivity applications." The word processing and
spreadsheet markets are sometimes referred to herein as the "office productivity
applications markets."

A. The Intel-compatible PC Operating Systems Market

25. An Intel-compatible PC operating system is software that controls the
PC's resources, such as the processor, memory chip, and storage devices, and manages
the execution of software applications, such as word processors and spreadsheets. The
operating systems at issue here are designed to control PCs that feature

13

26. Microsoft has possessed monopoly power in the market for Intel-
compatible PC operating systems at all times relevant to this Complaint.

B. The Word Processing And Spreadsheet Markets

27. Word processing applications are software that creates, edits, prints, and
stores text-based documents. There are no practical substitutes for word processing
applications. The geographic market for word processing applications is
worldwide.

28. Spreadsheet applications are software that electronically organizes,
displays, and manipulates numerical and other data. There are no practical substitutes
for spreadsheet applications. The geographic market for spreadsheet applications is
worldwide.

14

29. Microsoft introduced the Microsoft Disk Operating System ("MS-DOS")
in 1981 (having reportedly purchased its rights a year earlier for less than $100,000).
MS-DOS was a command-driven system that required users to type specific instructions
at a command prompt. MS-DOS became the exclusive operating system for Intel-
compatible PCs and came to be the dominant platform for personal computers as the
market share of competing alternatives (such as Apple's) shrank.

30. In 1985, borrowing substantially from Apple's operating system
technology, Microsoft introduced Windows 1.0, which laid "graphical user interfaces"
over MS-DOS. When run on top of MS-DOS, Windows provided personal computer
users with the ability to invoke many operating system functions, like starting other
programs or organizing files, by selecting elements on a graphical display or using a
pointing device, such as a mouse. Windows also had its own programming interfaces
that became very popular for writing graphical applications, like word processors and
spreadsheets. In 1987, Microsoft released Windows 2.0 and, along with a development
partner, IBM, co-introduced the first version of an alternative operating system known
as "OS/2." Neither of these products met with much market success, and MS-DOS
continued to be the dominant PC operating system.

31. While Microsoft thereafter purported to be working with IBM to repIace
both Windows and MS-DOS with an improved version of OS/2, in fact, Microsoft was
secretly devoting considerably more resources to developing a much-improved version
of Windows. In 1990, Microsoft ceased any pretext of support for OS/2 and introduced
Windows 3.0, which met with considerable market acceptance, as did its immediate

15

32. WordPerfect Corporation introduced the WordPerfect word processing
application for the MS-DOS platform in 1981. By 1986, WordPerfect had achieved 18
percent of the word processing market, which included several competing products
with smaller market shares (including Microsoft Word for MS-DOS, with 8 percent
market share). By 1990, WordPerfect possessed a 47 percent market share and was by
far the most popular word processing application. Microsoft did not have significant
office productivity applications of its own for MS-DOS, and, to attract customers to the
platform, cooperated with WordPerfect Corporation to ensure that the superior
WordPerfect applications would run on the platform.

33. WordPerfect for OS/2 was also introduced in 1990, because WordPerfect
Corporation, like many other ISVs, relied on Microsoft's assurances that it was still
developing OS/2 as the principal PC operating system and successor to MS- DOS.

34. Microsoft's change in position with regard to Windows and OS/2, known
in the industry as the "head fake," delayed introduction of a version of
its applications for the Windows platform until 1991. Shortly after its introduction,
WordPerfect for Windows captured a significant portion of sales of word processors for
the new platform, with approximately 35 percent of such sales by 1993, notwithstanding

16

35. During the same 1990-1991 time period, Microsoft introduced its first
"office suite," known as Microsoft Office, initially consisting only of Microsoft Word
and Excel, which were bundled in a single marketing package. Sales of Office increased
substantially after Microsoft released version 4.0 in 1993, which integrated the
functionality of the separate applications by making use of Microsoft's simultaneously
released Object Linking and Embedding ("OLE) standards, which are discussed below.

36. In 1993, WordPerfect Corporation introduced a comparable office suite in
cooperation with Borland International Inc. ("Borland"); the new suite included
WordPerfect and Borland's Quattro Pro spreadsheet. An improved version of
WordPerfect for Windows was also introduced in 1993.

37. On June 24, 1994, Novell purchased the rights to Quattro Pro from
Borland for $120 million and acquired WordPerfect Corporation for 51 million Novell
shares valued at $740 million (not including the value of Novell options issued to
WordPerfect employees). At this time, WordPerfect's share of the word processing
market was approximately 30 percent.

38. Netscape Corporation's ("Netscape") Navigator application was also
introduced in 1994.

39. In August 1995, Microsoft introduced Windows 95, which integrated
certain new browsing functions that were a primary focus of the Government Suit. The
United States alleged and the Court held that Microsoft perpetrated the integration of
the browsing functions in an anticompetitive manner and committed other

17

VII. MICROSOFT'S ANTICOMPETITIVE ACTS AGAINST WORDPERFECT
AND OTHER NOVELL OFFICE PRODUCTIVITY APPLICATIONS

40. Microsoft intentionally excluded Novell's office productivity applications
from the markets by means of the anticompetitive acts described below, for at least two
reasons.

41. First, as the United States alleged in the Government Suit, Microsoft
sought to extend its monopoly in the operating systems market into the large and
growing markets for applications. Using many of the same anticompetitive acts alleged
and condemned in the government case, Microsoft finally attained its long-sought
monopolies in the office productivity applications markets and in the process destroyed
Novell's office productivity applications business.

42. Second, as the government alleged and the courts found, Microsoft
sought to protect the "applications barrier to entry," which protected Microsoft's
monopoly in the Intel-compatible PC operating systems market, by excluding
applications that could threaten the barrier by supporting alternative operating
systems.

43. As found by the courts in the Government Suit, an end-use application
written for one operating system typically cannot run on another operating system, and
applications developers generally will not incur the expense of modifying their
products for an additional operating system that does not already have a significant
number of users. Because an operating system, in turn, cannot attract a significant
number of users unless desirable applications are already available to run on it, the

18

44. As the Court of Appeals for the District of Columbia Circuit held in
affirming the district court's essential findings, Microsoft's Windows monopoly was
threatened by "middleware" such as Netscape's Navigator, which is a browser
application, and Sun Microsystems' implementation of the "Java" technologies, both of
which were not only able to function on multiple operating systems, but were
potentially able to provide platforms for end-use applications, which made them a
threat to replace Windows itself as such a platform. Once written to Navigator and/or
Java, end-use applications could function on any operating systems on which Navigator
or Java functioned, thereby "erod[ing] the applications barrier to entry." 253 F.3d at 55.
Microsoft engaged in anticompetitive conduct designed to exclude such middleware
from installation on PCs using the dominant Windows operating system, on which any
middleware would depend for survival until sufficient competing operating systems
could emerge. Microsoft thereby violated Section 2 of the Sherman Act "by preventing
the effective distribution and use of products that might threaten [its] monopoly." Id. at 58.

45. For related reasons, Novell's Wordperfect and other office productivity
applications posed a significant threat to the applications barrier to entry that protected
the Windows monopoly. As discussed in Section VII.A.1. below, Microsoft excluded
from the markets the "OpenDoc" technology for sharing information among

19

46. Novell was instrumental in initiating this competition when, in 1993,
Novell, Borland, and other Microsoft competitors established a consortium called the
Component Integration Laboratories ("CIL") to create OpenDoc as an "open-source"
standard for cross-platform linking and embedding. The computer code of open source
standards such as OpenDoc is freely available for use and modification by numerous
developers who compete to maximize its potential. OpenDoc was widely considered to
be both easier to use and more robust than OLE. One reviewer stated that "[c]omparing
OpenDoc with [OLE] is like comparing a modem human with a Neanderthal." Cliff
Reeves, Open Doc v. OLE/COM, Computerworld (Jan. 30, 1995).

47. Novell's efforts to develop OpenDoc were part of Novell's strategy to
provide cross-platform functionality to applications (including its office productivity
applications). In combination with the popularity and functionality of WordPerfect,
this strategy posed a viable threat to Microsoft's operating systems monopoly that was
similar to the Netscape and Java threat discussed extensively in the Government Suit.
Indeed, at the time of the merger, Novell intended to further develop and market
WordPerfect as a "network application" that would ultimately be independent of the
desktop operating system.

20

49. OpenDoc allows users to view and edit information across applications,
directly in competition with Microsoft's OLE standard. Particularly during the period
at issue, OpenDoc was viewed as superior to OLE because it permitted sharing
information across multiple operating systems, among other reasons. As CIL wrote in
its marketing plan: "If OpenDoc is adopted by the Internet, it will become a de facto
standard on all major OS platforms, and execute a brilliant end-run around Microsoft's
stronghold on Windows." CIL, Marketing Plan 3 (Feb. 9, 1995).

50. AppWare, like OpenDoc, was another technology developed by Novell
for cross-platform use. AppWare was Novell's high-level software development tool
for rapid application development using pre-written, reusable software components.
While AppWare had several attractive features, the most important was providing a
new set of APIs. Programmers could write programs using these APIs that could
function on any AppWare installation regardless of the operating system. Thus,
AppWare presented a serious threat to Microsoft. Writing to the AppWare APIs and
not to the Windows APIs would enable applications to run not only on Windows, but
also on Macintosh and other operating systems at no additional cost.

21

52. In other ways, Novell's WordPerfect and other office productivity
applications also posed a significant threat to the applications barrier to entry that
protected the Windows monopoly. The principal use of PCs during the relevant period
was word processing. To become a viable alternative to Windows, another operating
system would need compatibility with a popular word processing application. Because
WordPerfect historically was the most popular word processing application, a new

22

53. The District Court's original remedy, subsequently reversed on
procedural grounds, also recognized that the availability of a widely-used word
processing application on alternative operating systems was critical to the viability of
potential operating system competitors. This remedy was designed to eliminate
Microsoft's control over word processing and other office productivity applications that
protected the Windows monopoly by splitting Microsoft into two separate Applications
and Operating Systems Companies. Microsoft's word processing application, Microsoft
Word, would have been the principal product of the Applications Company. As Dr.
Carl Shapiro, a leading antitrust economist who served as the Government's expert in
the original remedies phase, explained: "The improved availability of the Application
Company's products as complements to rival platforms will thus help those actual and
potential rivals to Windows overcome the applications barrier to entry that currently

23

54. Microsoft's effort to exclude the WordPerfect applications from the
markets increased dramatically upon Novell's merger with WordPerfect Corporation,
which occurred during the crucial period of Microsoft's development of Windows 95.
Upon Novell's merger with WordPerfect, Microsoft's executives decided to intensify
the anticompetitive campaign of withholding technical information that Novell needed
to develop WordPerfect and other applications for Windows 95.

55. A top Microsoft executive wrote that Microsoft should "smile" at Novell,
falsely signifying Microsoft's willingness to help the two companies' common
customers integrate their various products, while actuaIly "pulling the trigger" and
killing Novell. Indeed, Microsoft's Chairman and CEO, Bill Gates, instructed his
executives to develop plans to retaliate against Novell for its cooperation with the
government authorities investigating Microsoft. As explained below, Microsoft fulfilled
these instructions by withholding technical information about the ever-changing
functions of Windows, including the integrated browsing functions in Windows 95, and
by excluding Novell's office productivity applications from the major channels of
distribution and other potential platforms.

A. Microsoft's Scheme To Injure Novell By Withholding Technical
Information About Its Windows Platform

56. Microsoft periodically introduced changes to its Windows operating
system that repeatedly degraded the functionality of Novell's office productivity
applications, including WordPerfect and Quattro Pro. As explained below, Microsoft
then withheld the information that was necessary for Novell to restore the degraded

24

57. For an application to run, it must invoke certain core functions provided
by the operating system, such as ways to find, open, close, and save documents.
Applications invoke these functions by communicating with the operating system's
exposed APIs or "extensions." For instance, an ISV wishing to develop a word
processing application with the basic ability to find, open, close, and save documents
would write its software code to "call" the relevant extensions into service on behalf of
the application.

58. Windows contains thousands of different APIs providing numerous
functions, and ISVs need documentation published by Microsoft to know how to make
the necessary calls to the APIs. Without the documentation, an ISV must expend a
tremendous amount of resources to recreate functions that are already built into
Windows; indeed, without the documentation, an ISV might never be able to recreate
the functions at all. As the District Court found in the Government Suit, the ability of
an ISV to compete in the marketplace for software running on Windows is highly
dependent on Microsoft's cooperation. Findings of Fact ¶ 338.

59. Microsoft's top executives testified in the Government Suit that an
important purpose of documenting programming interfaces or extensions is to free ISVs
from "re-inventing the wheel," so they can devote their resources to innovating new
features that will work in addition to, instead of merely in place of, extensions.
Microsoft "evangelized" the use of its extensions because, among other reasons, it

25

60. In the absence of anticompetitive motives, Microsoft had powerful
economic incentives to cooperate with third-party software and hardware vendors such
as Novell during the development of upgrades to the operating system, such as
Windows 95, and to inform these vendors of recent innovations in the programming
interfaces or extensions. Microsoft benefits from this cooperation by ensuring that a
large number of compatible applications will be available in new versions that will call
new Windows APIs into service, so users will experience the value of the Windows
upgrade. Indeed, Microsoft has devoted substantial resources to facilitating the efforts
of others to develop products that complement its own. Microsoft employs
large organizations devoted to providing technical information and support to third-party
software and hardware vendors. These organizations create and supply documentation
about programming interfaces and other features of Microsoft operating system
products, and can assist third-party vendors with technical support questions that arise
during development of their products. Microsoft makes these resources generally
available to third-party developers on a subscription basis. Accordingly, as its
witnesses testified in the Government Suit, Microsoft has routinely cooperated with
thousands of ISVs -- with almost any ISV in the world, in fact, except major competitors
such as Novell. Indeed, as noted, Microsoft cooperated with WordPerfect with respect
to Microsoft's prior MS-DOS platform, precisely because at that time Microsoft did not
have strong office productivity applications of its own for that platform.

26

62. Although Microsoft's efforts to promote third-party support for its
operating system products have been pervasive, they have not been universal. On
repeated occasions, and even at the cost of diminishing the immediate consumer appeal
of its own products, Microsoft has acted to prevent rather than promote development of
complementary products, like WordPerfect, that threaten the applications and other
compatibility-related barriers to entry that protect Microsoft's operating system
dominance. Microsoft's Jeff Raikes would later articulate this strategy in a 1997 e-mail
to investor Warren Buffet: "If we own the key 'franchises' built on top of the operating
system, we dramatically widen the 'moat' that protects the operating system business."

63. Novell was one of the most important of the independent developers of
applications for Microsoft's operating systems. Microsoft was willing to sacrifice the

27

64. Microsoft's own applications developers always had complete access to
the technical information that was necessary to develop applications to run on
Windows. They could and did simply talk to Microsoft's operating systems engineers to
obtain information about the operating system's proprietary code, whenever necessary
to expedite their work. This discriminatory access and other anticompetitive acts gave
Microsoft applications significant "time-to-market" leads over Novell.

1. Microsoft's Anticompetitive Withholding of Technical
Information Concerning Windows 95

65. Although WordPerfect had previously suffered a decline in market share
as a result of Microsoft's prior but similar anticompetitive acts, WordPerfect remained a
popular and highly regarded word processing application during the period when
Windows 95 was under development.

66. Windows 95 was a significant improvement over earlier versions of
Windows. Microsoft announced with much fanfare that this platform would be "the
first operating system for Intel-compatible PCs that exhibited the same sort of

28

67. This newly integrated browsing technology is the same browsing
technology at issue in the Government Suit. As James Allchin, then Senior Vice
President in charge of Microsoft's Personal and Business Group, testified in the
Government Suit: "The Internet Explorer technologies in Windows enable customers to
view information on the Internet -- as well as on other networks, hard drives, floppy
disks, and other information sources. Accessing and viewing information on the
Internet is widely referred to as 'Web browsing,' but it is the same in principle as
accessing and viewing information stored anyplace else. In short, treating information
stored on the Internet in a radically different way than other kinds of information
makes no sense as a matter of software engineering and is potentially confusing to

29

• "We want to unify the browsing of all types of infomation --
  regardless of whether that information is stored on the Internet (or
  the Web) or someplace else." Id. ¶ 3, at 3.

• "I would like to be very clear on the following point: The very same
  software code in Windows 98 that provides Web browsing functionality
  also provides (i) platform support to developers, (ii) user interface software
  (for Windows itself and other software products) and (iii) access to
  information stored in locations other than the Internet. That software
  code is called Internet Explorer." Id. ¶ 9, at 6-7 (emphasis in original).

• "Browsing generally connotes the process of accessing and viewing
  (or managing) information in a common way, such as having a
  single program that can let you view file folders, text files,
  drawings, spreadsheets, and so on. Web browsing generally
  connotes accessing and viewing information in display formats
  such as HTML that has been transferred over the Internet using
  protocols such as TCP/IP and HTTP. There is no definitive line,
  however, between Web browsing and the more general concept of
  browsing." Id. ¶ 28, at 14.

• "[Microsoft made a] decision in early 1994 -- before Netscape was
  incorporated -- to include comprehensive support for the Internet,
  including Web browsing functionality, in Windows." Id. ¶ 79, at
  32.

• "Microsoft developed a new approach in which the various functions
  performed by Internet Explorer technologies could be
  used by Windows itself or by other software programs designed to
  run on Windows. And Microsoft had to design Windows to unify
  the inconsistent ways in which customers would otherwise have
  had to interact with information depending on where that
  information was found." Id. ¶ 84, at 33.

• "Thus, Microsoft set about the task in early 1995, before the first
  version of Windows 95 was even released, of tearing apart and then
  rebuilding Internet Explorer as a series of software components.
  Microsoft then 'exposed' the functionality performed by these
  components in the form of hundreds of APIs. This is a very
  important point. Today the entire developer community benefits
  from Microsoft's inclusion of Internet support in Windows because

  30

  all developers can call upon this built-in functionality in creating
  their own products." Id. ¶ 85, at 33-34 (emphasis in original).

• "Internet Explorer is the name for a set of technologies in Windows
  that provides essential functionality both to Windows and to other
  software developers. Our vision of deeper levels of technical
  integration is highly efficient and provides substantial benefits to
  customers and developers." Id. ¶ 94, at 36.

• "Certain files . . . form the core of Internet Explorer technologies in
  Windows 98 (and Windows 95 starting with the OSR 2.0 version).
  Here is a very brief overview of the functions performed by these
  six important files, the first four of which listed below are
  collectively known as the 'Web browser control.' . . .

• SHDOCVWDLL is a powerful system service that allows any
  software publisher to embed browsing functionality deep in its
  own programs without showing the Internet Explorer user
  interface. This file provides basic functionality associated with
  browsing, such as 'Back' and 'Forward' buttons, for use
  throughout Windows (whether or not browsing Web pages)
  and in third party software products. It also provides the user
  interface for a Windows 98 browser window (whether called
  'Internet Explorer' or 'Windows Explorer') as well as the
  Windows 98 'Start' menu. This is true whether or not the
  customer is viewing information on the Internet, on a local area
  network or on the hard drive of the computer, and whether or
  not the customer is viewing information presented in HTML.

• MSHTML.DLL 'parses' and 'renders' information in the HTML
  display format -- both within Windows and in third party
  software products. This file provides functionality that is
  similar to the 'Rich Text Control,' another part of Windows 95
  that provides display functionality.

• URLMON.DLL enables Windows and third party software
  programs to work effectively with URLs (addresses on the
  Web). URLMON extends the functionality of a file called
  WINSOCK (short for 'Windows Sockets'), which provides a
  variety of networking functions within Windows and to third
  party software developers.

• WININET.DLL (short for 'Windows Internet') provides the
  capability to Windows and third party software programs of
  retrieving data from the Internet or other locations (such as a
  local area network) using various Internet protocols, such as
  HTTP. WININET also extends the functionality of WINSOCK.

31

• SHLWAPI.DLL reads and processes Internet addresses and
  links.

• COMCTL32.DLL performs a wide range of functions that are
  central to the operation of the operating system. To the extent
  relevant here, this file provides toolbars, the 'Favorites' menu,
  and related features in Windows 98 browsing windows."

  Id.¶100, at 38-39.

"Two other files, IEXPLORE.EXE and EXPLORER.EXE, are of
particular note. One or the other of these two files is invoked when
a customer invokes the Web browsing functionality in Windows
98." Id. ¶ 101, at 39.

68. Many internal Microsoft documents written in 1994 and 1995 were cited
as support for Allchin's testimony. According to Allchin, these documents describe
Microsoft's vision "to lead the market by unifying the mechanisms for finding, viewing
and managing information of all types. This was simply the next step in Microsoft's
efforts to make it easier to access and use information without regard to where it is
stored, a key element of Microsoft's advocacy of the concept of Information at Your
Fingertips that started in 1990." Id. ¶ 213, at 79. For example:

• A January 25, 1994 memorandum entitled 'Windows: The Next
  Killer Application on the Internet,' discussed the benefits of making
  Windows an "Internet navigation tool" and advocated a strategy in
  which "[d]istributed information on the Internet . . . [could be]
  browsed using the [Windows] Explorer across thousands of
  information servers worldwide .. . . Windows becomes the global
  infostructure explorer." According to Allchin, this is the strategy
  Microsoft adopted. Id.¶¶ 221-222, at 82 (emphasis in original).

• Also, in "a June 2, 1995 slide presentation used at a meeting of
  senior Microsoft executives ...where Microsoft's Internet strategy
  and goals were discussed, Internet Explorer was defined to be
  a 'Win95 integrated web browser' that was focused 'on making the
  Internet easy to use.' . . . Internet Explorer was also described as the
  [f]oundation for [a] universal viewing client' and the '[b]asis for
  future Windows shell direction.' Thus, two months before the
  commercial release of Windows 95, Microsoft anticipated that
  Internet Explorer technologies would be more tightly integrated

  32

  into future versions of the operating system, providing a new user
  interface." Id. ¶ 245, at 92.

• Allchin also cited an October 23,1995 memorandum entitled "Web-
  like Shell," in which "Chris Brown described the primary goal for
  what became the Windows 98 user interface as 'enhanc[ing]
  navigation and file management in the shell by adopting the best
  aspects of the World Wide Web.' .. . He stated that the focus would be
  on making 'the shell both easier to use (via new web-like
  navigation commands and single-click interaction) and more
  visually appealing (by implementing rich, graphical document
  views for any folder).' Among the list of benefits he enumerated
  were 'easier browsing,' 'more engaging visuals,' and 'unified
  browsing for the Shell, Internet and Office.' As to this last benefit,
  he stated that '[i]ncorporating the Microsoft Internet Explorer into
  the Windows Explorer bridges the gap between local containers
  and URLs. Users benefit because interaction will be identical, and
  simplified (thus minimizing retraining costs).' The word
  "container" in this context refers to an information source, such as a
  folder or file stored on the hard drive of a personal computer or a
  page stored on the Web.'' Id. ¶ 253, at 96.

• "In a memorandum written in September 1995 and updated in
  November 1995, entitled 'Web-like Shell: Architecture,' Satoshi
  Nakajima referred to Chris Brown's Web-like shell concept and
  stated that Microsoft 'will improve the Shell Explorer by making it
  very easy to 'navigate' -- with the navigation toolbar and the single-
  click page-view. We will also integrate the Shell Explorer and the
  Internet Explorer, so that the user can navigate documents on local
  volumes, [local area networks] and [World Wide Web] as seamless
  as possible.' . . . In general the seamless navigation he was
  discussing was achieved in Internet Explorer 4.0, which provides
  the Windows 98 user interface." Id.¶ 254, at 96-97.

• Finally, "[i]n an e-mail dated December 6, 1995, Brad Silverberg
  stated that the 'new Windows shell unifies folders (file system
  directories) with the web and document-navigation metaphor.' . . .
  He described this new user interface as a 'very friendly way to
  view and navigate your local [personal computer] and your
  corp[orate] net, as well as the [I]nternet.'" Id. ¶ 256, at 97.

69. As the United States alleged in the Government Suit, Bill Gates
recognized that "the development of competing Internet browsers -- specialized
software programs that allow PC users to locate, access, display, and manipulate

33

70. For these and other reasons, some applications written for earlier versions
of Windows, and WordPerfect in particular, would not be compatible with Windows
95. As a consequence, it was critical for Novell and other ISVs to have access to
technical information regarding the browsing functions and other new features, so the
development of applications could proceed simultaneously with Microsoft's
development of Windows 95. Otherwise, ISVs' applications could not reach the market
at the same time as Windows 95, and would surrender time-to-market leads to
Microsoft's own applications. Both parties knew that consumers quickly would replace
their existing operating systems with Windows 95 and almost simultaneously switch to
applications designed to take advantage of its new extensions.

71. During the development of Windows 95, Microsoft's executives schemed
to integrate the browsing functions into Windows 95 in a manner designed to cause the
maximum possible damage to competitors. Microsoft's executives specifically targeted
WordPerfect by name in the documents that recorded the scheme. Microsoft decided to
proceed with the scheme even at the risk of negatively impacting its corporate image
and alienating its important ISVs. For instance, Microsoft intentionally made the use of
any browsing technology other than Microsoft's browser a "jolting experience" for its
own Windows customers, solely to create the false impression that other browsers were

34

72. As a result of Microsoft's integration of the browsing functions into
Windows, ISVs needed documentation of the browsing extensions to design their
applications to perform the most basic file management functions. Microsoft initially
documented the browsing extensions in the beta releases of Windows 95 and otherwise
appeared to cooperate with ISVs in developing applications for release with Windows
95.

73. Microsoft "evangelized" the benefits of using the browsing extensions. In
the early stages of developing WordPerfect for Windows 95, Novell thus devoted
significant resources to ensuring compatibility with and otherwise exploiting the
benefits of Windows' integrated browsing functions. Further, as encouraged by
Microsoft, Novell expended additional resources to expand upon the extensions,
providing still greater functionality for its own customers and potentially for other ISVs
and their customers. For example, Novell designed its software programs and products
to utilize the programming interfaces in Microsoft's main file management utility
(called the Explorer) to display rich directory information about Novell-managed
network resources.

74. In an e-mail dated October 3, 1994, however, Bill Gates ordered his top
executives to retract the documentation of the browsing extensions, but only until
Microsoft's own developers of the Office suite of applications had sufficient time to

35

75. In public test versions of Windows 95 released a few months before the
final product shipped to consumers, ripped out these programming interfaces
without warning to Novell. After Microsoft withdrew the documentation of the
browsing extensions, Novell was suddenly unable to provide basic file management
functions in WordPerfect; in many instances, a user literally could not open a document
he previously created and saved. Indeed, WordPerfect could no longer use the
functions that Novell had innovated atop the extensions, while Microsoft Word could
still take advantage of such innovations.

76. When Novell asked Microsoft why it removed the Explorer interfaces and
browsing extensions, Microsoft claimed that it did not have the time and resources to
complete their development. But in fact, the Explorer interfaces and browsing
extensions had been complete and functional before Microsoft removed them.
Microsoft's real reasons for pulling the interfaces and browsing extensions were
twofold: to delay the development of Novell's software programs and products,
including WordPerfect, which had to be reworked to function through a different set of
interfaces designed for Microsoft's software programs and products; and to hide the
more advanced capabilities of Novell's office productivity applications from users of
Windows 95. Novell had no choice but to spend more than a year recreating the
functionality of Windows' integrated browsing functions. As Gates knew and
intended, withdrawing the documentation of the browsing APIs caused Novell, in

36

77. Thereafter, when Microsoft released Windows 95 and Office 95, at
virtually the same time, Microsoft suddenly reversed course and documented the
programming interfaces. Doing so voided the alternatives that Microsoft previously
forced Novell to expend an entire year developing and, at the precise moment when
WordPerfect needed to enter the market, forced Novell to spend additional time
designing basic functions of WordPerfect all over again.

78. Microsoft's anti-competitive integration of browsing functions into
Windows delayed the release of Novell's office productivity applications for Windows
95. These acts also degraded the functionality of Novell's applications, which never
were able to provide Novell's customers with as robust an implementation of the
browsing extensions as they otherwise could have provided. In short, "Microsoft's
conduct with respect to browsers is a prominent and immediate example of the pattern
of anticompetitive practices undertaken by Microsoft with the purpose and effect of
maintaining its PC operating system monopoly and extending that monopoly to other
related markets," including the office productivity applications markets alleged herein.
Gov't Compl. ¶ 13. By virtue of Microsoft's anti-competitive integration of browsing
functions into Windows 95, for which Microsoft was held liable in the Government Suit,
Novell's applications were delayed in reaching the markets and provided consumers
with less value.

37

80. Microsoft refused to publish the APIs that were used to place items on the
Windows Clipboard, although its own developers had the documentation. The
Clipboard provided a location for storing information until it was "pasted" into another
application. Novell ultimately had to forgo this functionality in its applications because
the expenditure of time and resources required to duplicate the hidden APIs was
prohibitive, so Novell could not provide the same richness of data integration that
Microsoft's applications could provide.

81. Further, Microsoft misrepresented that Windows 95 would operate as an
exclusively "32-bit" system, meaning it would process 32 bits of data at once. A bit --
short for binary digit -- is the smallest unit of information a computer can hold. The
beta versions of Windows 95 indicated that it would be an entirely 32- bit system, rather
than a 16-bit system, as all previous versions of Windows were. This representation
was critical, because applications written for a 32- bit operating system would not
function properly on a 16-bit system. Novell relied upon Microsoft's representations
and developed its applications to run on an entirely 32-bit system. After Novell
completed its PerfectOffice 3.0 suite of office productivity applications, including
WordPerfect and Quattro Pro, Microsoft disclosed that Windows 95 would not be a
purely 32-bit system. Microsoft's deception forced Novell to expend considerable time
and resources to redesign its applications, significantly delaying their release.

38

82. Through these and other anticompetitive acts, Microsoft put Novell "on a
treadmill," forcing Novell's developers to expend significant time obtaining
information and creating functionalities that Microsoft gave to its own applications
developers through secret documentation of hidden APIs.

83. In addition to withholding technical information, Microsoft created and
controlled new "industry" standards and established unjustified certification
requirements to delay the release of Novell's applications and to impair their
performance for Novell's customers.

84. First, as discussed above, Microsoft excluded from the markets the
"OpenDoc" technology for sharing information among applications, by using its
monopoly power to force a different standard upon the industry. Because CIL was
designing OpenDoc to run across multiple platforms, including MS-DOS, DR-DOS,
Windows, OS/2, and Macintosh, OpenDoc threatened the applications barrier to entry
that protected Microsoft's Windows monopoly.

85. Microsoft responded to this competitive threat by preventing CIL from
making OpenDoc compatible with Windows 95. For example, Microsoft routinely
required all ISVs to execute nondisclosure agreements as a condition of receiving the
information they needed to develop their applications. These agreements, however,
contained terms that uniquely targeted ISVs who were members of CIL, by preventing
their employees who worked on OpenDoc from receiving Windows 95 betas or

39

86. Further, Microsoft unilaterally announced that OLE would be
incorporated directly into Windows, instead of existing independently of the operating
system as a technology to be adopted or rejected by ISVs, depending on their
assessments of its technical merit. Microsoft then required OLE-compatibility as a
condition of Microsoft's certification of an application's compatibility with Windows 95.
This certification requirement was a significant barrier to entry into the applications
markets, because Microsoft represented to the industry that any application lacking the
certification could not be trusted to run on Windows 95. By exploiting this barrier to
entry, Microsoft forced ISVs to make their applications OLE-compatible. Furthermore,
Microsoft ensured that only applications using its tools, and not those of its competitors,
would reach customers. This anticompetitive behavior by Microsoft is similar to the
behavior described in the Government Suit with respect to Microsoft's efforts to force
ISVs to use Microsoft's implementation of Java. "Specifically, in the First Wave
agreements that it signed with dozens of ISVs in 1997 and 1998, Microsoft conditioned
early Windows 98 and Windows NT betas, other technical information, and the right to
use certain Microsoft seals of approval on the agreement of those ISVs to use Microsoft's
version of the Windows [Java virtual machines] as the 'default.'" Findings of Fact ¶401.

40

88. Seeing that Microsoft's anticompetitive acts would ensure the demise of
OpenDoc, ISVs were left with no choice but to adopt Microsoft's proprietary OLE
protocol as the de facto industry standard for linking and embedding. Even after
making OLE the industry standard, however, Microsoft still withheld specifications and
final, debugged versions of OLE until after Microsoft released its competing
applications. Microsoft's anticompetitive acts concerning OLE further increased the
"time-to-market" lead that Microsoft's office productivity applications unlawfully
achieved over Novell's applications.

89. Second, Microsoft required office productivity applications seeking
Windows 95 certification to be compatible with the very different Windows NT, which
is an operating system for larger and more powerful computers that are used as
"servers" to link numerous PCs (and peripherals) across an organization into a

41

90. Third, Microsoft unilaterally made the proprietary Rich Text Format
("RTF") of Microsoft Word the standard file format for text-based documents in
applications developed for Windows. Upon capturing the standard, Microsoft
strategically withheld the specification to injure competitors, including Novell.

91. As Microsoft knew, a truly standard file format that was open to all ISVs
would have enhanced competition in the market for word processing applications,
because such a standard allows the exchange of text files between different word
processing applications used by different customers. A user wishing to exchange a text
file with a second user running a different word processing application could simply
convert his file to the standard format, and the second user then could convert the file
from the standard format into his own word processor's format. Thus, a law firm, for
instance, could continue to use WordPerfect (which was the favorite word processor of
the legal profession), so long as it could convert and edit client documents created in
Microsoft Word, if that is what clients happened to use. Microsoft knew that if it
controlled the convertibility of documents through its control of the RTF standard, then
Microsoft would be able to exclude competing word processing applications from the
market and force customers to adopt Microsoft Word, as it soon did.

42

93. Fourth, Microsoft unilaterally announced that other features of Word
were to be considered Windows standards. One important example is the "tool bar,"
which typically runs across the top of the PC's screen in applications operating on
Windows. Microsoft's tool bar originated in the Microsoft Office applications, such as
Word and Excel, while ISVs such as Novell developed competing features, such as
WordPerfect's more widely admired "button bar." Unable to design a better feature
than WordPerfect's, Microsoft simply declared its toolbar to be the Windows standard,
supplanting WordPerfect's button bar and other competitors' offerings. As in the case
of RTF, Microsoft forced Novell to delay its time-to-market while redeveloping its
applications to an inferior standard. Because these standards were lifted directly from

43

94. Fifth, Microsoft made other inferior features de facto industry standards,
by preventing Novell and other competitors from presenting certain of their own
features, such as Novell's QuickFinder, on the desktop. The government alleged and
the Court held in the Government Suit that Microsoft was liable for excluding the
features of certain other ISVs from the desktop in the same manner. See 253 F.3d at 62,
64; Findings of Fact ¶¶ 212-214; Gov't Compl. ¶¶ 24-25.

95. QuickFinder, Novell's search technology, was faster and more advanced
than Microsoft's own "find" capability. QuickFinder enabled users to create search
criteria across the computer's different storage devices and to search files by name, text,
and date. Because Microsoft prevented Novell from presenting QuickFinder on the
desktop, QuickFinder could only be used when running WordPerfect; Microsoft's own
finder technology, with exclusive display on the desktop, could be used anywhere in
the computing environment, gaining an unfair advantage over Novell's otherwise
superior technology.

2. Microsoft's Anticompetitive Withholding of Technical
Information Concerning; Earlier Versions of Windows

96. Microsoft withheld critical information concerning earlier versions of the
Windows operating system, thereby giving itself a time-to-market lead in the
applications markets. Microsoft held and extended this lead following Novell's merger
with WordPerfect by virtue of the anticompetitive acts alleged above. Microsoft's
anticompetitive acts, both pre- and post-dating Novell's merger with WordPerfect, were
committed as part of a continuing violation designed to maintain Microsoft's monopoly

44

97. Microsoft refused to disclose technical specifications that were required to
overcome an operating system flaw known as the "64k (meaning 64,000 bytes of)
memory limitation,'' which adversely affected critical features of WordPerfect.
Specifically, the menu feature in WordPerfect consumed well in excess of 70 percent of
the operating system's limited memory. Using such an inordinate amount of memory
could cause a PC to crash.

98. Microsoft's API documentation did not disclose sufficient information to
cure this limitation. In addition, the Microsoft support personnel, who were assigned to
help Novell solve such problems pursuant to a paid subscription to Microsoft's support
program, simply refused to provide the information. The denial of this crucial
information forced Novell to develop a costly and difficult solution, delaying the
shipment of WordPerfect for Windows, just when Windows was replacing the MS-DOS
platform, on which WordPerfect was the dominant word processing application.
Microsoft's denial of information also increased the risk of performance problems with
Novell's products, and it created programming difficulties for ISVs who wished to
develop applications compatible with WordPerfect, thereby diminishing the
commercial appeal of WordPerfect.

99. By contrast, because Microsoft's own applications developers had access
to complete specifications for the operating system, comparable features of Microsoft

45

100. The 64k memory limitation also caused degrading functionality in
WordPerfect's dialog boxes, which guide the user through the execution of certain
functions, such as the "save as" function. Opening multiple dialog boxes in
WordPerfect consumed a significant amount of memory, which could cause the PC to
crash. Microsoft was aware of the problem, and incorporated into Windows a solution
called Dialog Box Manager ("DBM). Microsoft refused to document this feature of
Windows to competing ISVs, however, making it available exclusively to Microsoft's
own applications developers.

101. As a consequence, Novell had to reduce the functionality of its
application and split its more complex dialogs into several boxes, making WordPerfect
more difficult to use. As always, the effort to overcome the lack of information cost
WordPerfect crucial time-to-market.

102. Microsoft Word's developers had access to the required information all
along. They "solved" the problem by making undocumented calls to the secret DBM in
Windows. Indeed, when WordPerfect's developers first encountered the problem, they
observed Word in operation, to see if it was consuming the same amount of memory;
using developers' tools that monitor the interactions between applications and
operating systems, the WordPerfect developers saw Word making calls to the
undocumented DBM. Even when confronted with this information, Microsoft's ISV
"support" personnel would not tell the WordPerfect's developers how to call the DBM.

46

104. Microsoft's refusal to document the CBT hooks made Novell's
applications more difficult to use, thereby providing less value to consumers and
increasing Novell's customer support costs, further impairing Novell's sales efforts and
delaying the release of Novell's applications.

105. Microsoft also refused to resolve Windows-related bugs affecting
Novell's WordPerfect, Quattro Pro, and related applications as aggressively as it
resolved bugs affecting its own applications. This discriminatory treatment adversely
affected the performance of Novell's applications, causing consumers to believe that
Novell's applications were inferior to Microsoft's competing applications.

106. Further, Microsoft excluded WordPerfect and Quattro Pro developers
from technical conferences and porting labs, which are opportunities for developers to
"debug" their Windows applications and otherwise ensure integration with Windows.
As a result of Novell's exclusion from these conferences, its applications suffered a
greater incidence of malfunctions, which were often caused by Windows itself,
prolonged development efforts, increased customer frustration, and reduced sales. In
contrast, Microsoft's applications developers routinely had access to the developers of

47

107. Microsoft also refused to provide a simple remedy for a phenomenon
referred to as "DLL Hell," which adversely affected non-Microsoft applications running
on the Windows platform. "Dynamic Link Libraries" ("DLLs") are files containing
specific lines of code that must be present in specific places on the PC if applications are
to operate properly on Windows. Microsoft often changed the functions of the DLLs
from one version of Windows to the next, without changing the documentation
provided to ISVs. As a result, Novell was forced to implement elaborate procedures,
which degraded the performance of WordPerfect and sometimes required
WordPerfect's users to "double reboot" their computers. This phenomenon is
commonly referred to as "DLL Hell."

108. Since Microsoft Office developers had timely access to information
concerning the changing DLLs, installing their software did not result in "DLL Hell."
Because of this advantage, OEMs had additional incentive to distribute Word and not
to avoid the technical support issues "DLL Hell" raised.

109. To prevent "DLL Hell," Microsoft needed merely to document "version"
information whenever it changed a DLL. Microsoft was fully aware of the problem and
this simple solution, but refused to implement it.

110. The above-described anticompetitive acts during the development of
successive versions of Windows, including Windows 95 and its integrated browsing
functions, unlawfully hindered the efforts of Novell to develop word processing and
other office productivity applications to compete against applications developed by

48

111. The above-described anticompetitive acts had their intended effect.
Hidden features of each successive version of Windows, including Windows 95 and its
integrated browsing functions, substantially delayed the release of Novell's office
productivity applications, giving Microsoft's own applications a significant time-to-
market lead. It was the perpetual nature of this lead, and Microsoft's exercise of its
unilateral power to protect its lead by strategically withholding information and
otherwise abusing its operating system monopoly during development of Windows 95,
that ultimately forced Novell to sell the WordPerfect assets at a staggering loss.

B. Microsoft's Exclusion of Novell's Office Productivity Applications
From The Major Channels of Distribution

112. In addition to delaying development and degrading operation of
Novell's office productivity applications, Microsoft has substantially foreclosed all of
the efficient methods for their distribution as well, including the OEM channel,
independent retailers, independent or loosely-affiliated resellers, direct sales, and other
platform technologies.

1. The OEM Channel

113. Fully aware that the OEM distribution channel was critical to the
continued success of WordPerfect and other competing applications, Microsoft used a
variety of tactics to eliminate the applications of Novell and other ISVs from this
channel, while "handcuffing" OEMs to Microsoft's operating system and office
productivity applications.

49

115. As the District Court found in the Government Suit, OEMs lack a
commercially viable alternative to licensing Windows for pre-installation on their PCs.
Findings of Fact ¶¶ 53-55. Without a license on favorable terms for the pre-installation
of Windows, an OEM cannot survive. By using its resulting dominance over OEMs to
control the applications that they pre-install, Microsoft directly controls the markets for
applications. Microsoft's executives schemed to use the power of their Windows
monopoly to force OEMs such as IBM to stop supporting applications that competed
with Microsoft's applications. Microsoft's internal correspondence records the scheme.

116. Microsoft perpetrated numerous anticompetitive acts to destroy its
competitors' access to the OEM channel.

117. Microsoft refused or threatened to refuse to grant OEMs licenses for
Windows if the OEMs distributed non-Microsoft office productivity applications. Faced
with a choice between offering non-Microsoft office productivity applications and
obtaining a Windows license, most OEMs had no alternative but to carry exclusively
Microsoft applications. Microsoft forbade OEMs from pre-installing both Novell and
Microsoft products on their machines, and gave OEMs discounts for refusing to sell
other vendors' office productivity suites, such as Novell's PerfectOffice.

50

119. Microsoft entered into anticompetitive arrangements with OEMs to
foreclose competing products from the distribution channel, as found in the
Government Suit. "Virtually every new PC that comes with Windows, no matter which
OEM has built it, presents users with the same screens and software specified by
Microsoft." Gov't Compl. ¶25. These restrictions deprive OEMs "of the freedom to
make competitive choices about which browser or other software product should be
offered to their customers," (id.) "substantially reduce OEMs' incentives and abilities to
innovate and differentiate their products in ways that could facilitate competition
between Microsoft products and competing software products, and enhance Microsoft's
ability to use the near-ubiquity of its Windows operating system monopoly to gain
dominance in both the Internet browser market and other software markets." Id. ¶27.

120. The express terms of Microsoft's "Distributor Licenses" intimidated and
punished distributors who sold competing office productivity applications, such as
WordPerfect, while providing financial rewards to distributors who exclusively sold
Microsoft Office. For instance, Microsoft paid its distributors a pro-rata "rebate" for
each sale of Microsoft Office over a certain minimum quarterly threshold. Conversely,

51

121. Further, to qualify for the rebate program, the distributor was required
to provide Microsoft with detailed weekly and monthly reports of its sales, including
sales of competing applications, such as WordPerfect. The reporting requirements for
competing applications were different from and well in excess of the reporting
requirements for sales of Microsoft's applications. These requirements sent an
intimidating message concerning Microsoft's intolerance of competition. Merely by
asking how many competing applications a distributor might sell, Microsoft
communicated that "zero' was the only number it would tolerate. Distributors of
competing applications were forced to incur the extra administrative costs of tracking,
accounting for, documenting, and reporting all competing sales. These burdens were
anticompetitive.

122. Microsoft's licenses also forced OEMs to divulge confidential and
proprietary information about Microsoft's competitors, including WordPerfect. The
OEMs' reports were to include total pre-installations of WordPerfect, in both absolute
and percentage terms, the times of the sales, and even the specific geographic regions of
the sales. In many instances, the reported information would be sufficient to allow
Microsoft to identify and target markets and even specific customers served by Novell
through an OEM. Neither the competitors nor the OEMs would have provided this
information absent Microsoft's monopoly power in the operating systems market.

52

124. Since the OEM was obligated to pay for Microsoft Office whether or not
Office was pre-installed, the marginal cost of shipping Microsoft Office was effectively
zero. The OEM who wished to pre-install Novell's applications, however, was required
to pay a royalty to both Microsoft and Novell. The per-processor licensing scheme
effectively levied a tax (the payment for unwanted Microsoft applications) on OEMs
who sold Novell's office productivity applications. This practice excluded Novell's
applications from the OEM distribution channel.

125. Microsoft's OEM licenses also based payment terms upon minimum
sales commitments. By making minimum commitments, OEMs received volume-
discounts, but were required to make lump sum payments in advance, reflecting the
commitments. If actual units shipped were less than the committed number, the OEM
was not entitled to a refund. Instead, Microsoft accumulated these overpayments in a
"prepaid balance."

126. While Microsoft usually did not refund these balances, it was often
willing to credit portions of the balance against minimum obligations under a renewed

53

127. Microsoft also withheld or threatened to withhold Market Development
Funds ("MDFs") from OEMs that sold applications competing with Microsoft's
applications. MDFs are payments to OEMs that help fund their advertising and
marketing efforts. Because of the competitive nature of the PC market, Microsoft's
threats regarding MDFs had their intended anticompetitive effect. Faced with the
prospect of losing these funds, OEMs refused to distribute competing office
productivity applications, as found in the Government Suit.

128. Microsoft also punished OEMs that pre-installed Novell's applications
by withholding or threatening to withhold technical support concerning Windows.
Customers experiencing technical problems with their PCs are generally instructed to
contact the manufacturer for assistance. Because the operating system controls the PC,
the customers' problems generally involve Windows. Microsoft's support is therefore
critical to OEMs, who compete fiercely on the basis of their ability to resolve problems
caused by Windows. An OEM that provides poor support will lose sales quickly.
Fearing the denial of technical support from Microsoft, OEMs refused to distribute
competing office productivity applications, as found in the Government Suit.

129. Further, Microsoft charged smaller OEMs, who were more likely to pre-
install Novell's applications, higher prices for Windows, as compared to the prices
charged to larger OEMs. By charging the smaller OEMs higher prices, Microsoft
increased the prices of their PCs and limited their sales, restricting this market for
Novell's applications.

54

131. The above-described anticompetitive acts unlawfully hindered the
efforts of Novell to distribute word processing and other office productivity
applications in competition with applications developed by Microsoft. Collectively,
these practices have foreclosed Novell from a large and growing portion of the
distribution channel for office productivity applications. In foreclosing Novell products
from distribution, Microsoft's conduct has harmed competition, as it has in similar
circumstances, by "inhibiting Microsoft's competitors that nevertheless succeed in
developing promising innovations from effectively marketing their improved products
to customers" and "reducing the incentive and ability of [distributors] to innovate and
differentiate their products in ways that would appeal to customers." Gov't Compl.
¶ 37. These acts lacked any legitimate business justification. Their only purpose was to
maintain and/or achieve monopolies in the operating systems and office productivity
applications markets.

55

132. Other than through OEMs, office productivity software can be
distributed through the following channels: independent retailers that sell to
individuals and small businesses; independent or loosely affiliated resellers that sell to
larger organizations, including government agencies, larger businesses, professional
associations, etc.; and direct sales to government agencies, large corporations, and other
large organizations.

133. Microsoft engaged in predatory behavior in these channels, as well. As
with the OEM channel, Microsoft engaged in similar anticompetitive tactics designed to
monopolize the office productivity applications markets and strengthen the barriers to
entry into the monopolized operating systems market. These anticompetitive acts
unlawfully hindered the efforts of Novell to distribute office productivity applications
to compete against Microsoft's applications. They lacked any legitimate business
justification. Their only purpose was to maintain Microsoft's operating systems and
office productivity applications monopolies.

3. Internet Browser and Other Platforms

134. "Java is designed in part to permit applications written in it to be run on
different operating systems," which threatens to reduce or eliminate the applications
barrier to entry. Gov't Compl. ¶ 7. "Netscape's browser was itself a 'platform' to which
many applications were being written -- and to which (if it thrived) more and more
applications would be written. Since Netscape's browser could be run on any PC
operating system, the success of this alternative platform also threatened to reduce or

56

135. In 1995, "Microsoft attempted to eliminate competition from Netscape
by seeking an express horizontal agreement not to compete." Id. ¶¶ 14, 70-71.
Microsoft attempted "to induce Netscape not to compete with Microsoft to divide the
browser market, with Microsoft becoming the sole supplier of browsers for use with
Windows 95 and successor operating systems and with Netscape becoming the sole
supplier of browsers for operating systems other than Windows 95 or its successors."
Id.

136. Upon Netscape's refusal to participate in the alleged scheme, Microsoft
set about to exclude Netscape and other browser rivals from access to the widespread
distribution, promotion, and resources they needed to offer their browser products to
OEMs and PC users. Id. ¶¶ 15, 72-74.

137. "Microsoft invested hundreds of millions of dollars to develop, test, and
promote Internet Explorer, a product which it distributes without separate charge." Id.
¶16. But Microsoft "did not stop at free distribution. Rather, Microsoft purposefully
set out to do whatever it took to make sure significant market participants distributed
and used Internet Explorer instead of Netscape's browser -- including paying some
customers to take [Internet Explorer] and using its unique control over Windows to
induce others to do so." Id.¶ 17.

138. Microsoft also entered into agreements unlawfully tying its Internet
Explorer software to Windows 95 and Windows 98. It "unlawfully required PC
manufacturers, as a condition of obtaining licenses for the Windows 95 [and Windows

57

139. Microsoft also misused its operating systems monopoly by requiring
"OEMs to agree, as a condition of acquiring a license to the Windows operating system,
to adopt the uniform 'boot-up' sequence and 'desktop' screen specified by
Microsoft.... Microsoft's exclusionary restrictions forbid, among other things, any
changes by an OEM that would remove from the PC any part of Microsoft's Internet
Explorer software (or any other Microsoft-dictated software) or that would add to the
PC a competing browser (or other competing software) in any more prominent or
visible way (including by highlighting as part of the startup sequence or by more
prominent placement on the desktop screen) than the way Microsoft requires Internet
Explorer to be presented." Id. ¶¶ 24, 93-102.

140. Moreover, Microsoft entered into agreements with Internet Service
Providers ("ISPs"), which allowed "Microsoft to leverage its operating system
monopoly by conditioning . . . [ISPs] to offer Microsoft's Internet Explorer browser
primarily or exclusively as the browser they distribute; not to promote or even mention
to any of their subscribers the existence, availability, or compatibility of a competing
Internet browser; and to use on their own Internet sites Microsoft-specific programming
extensions and tools that make those sites look better when viewed through Internet
Explorer than when viewed through competing Internet browsers." Id. ¶¶ 29-30; 75-86.

58

142. Microsoft's contracts with OEMs, ISPs, and ICPs have unreasonably
restrained competition in the market for Internet browsers. "They artificially
increase[d] the share of the market held by Microsoft's Internet Explorer, and they
threaten[ed] to 'tip' the market permanently to Internet Explorer, not because OEMs or
PC customers ha[d] freely chosen Microsoft's product in a competitive marketplace, but
because of the illegal exercise of monopoly power by Microsoft." Id. ¶ 35.

143. Microsoft also used its office productivity applications monopoly as an
additional means to foreclose Netscape and other competing browsers from access to
customers by ensuring that PC users with Microsoft Office already had Internet
Explorer installed.

144. Microsoft's suppression of such potential middleware, as alleged and
shown in the Government Suit, of competing and potentially competing operating

59

145. Microsoft engaged in numerous anticompetitive acts to achieve this
result, such as causing Microsoft software to display bogus error messages when
detecting competing operating systems on a PC; withholding technical specifications in
the manner alleged above; and locking ISVs into the Windows APIs and thereby
preventing them from developing applications for the APIs in competing operating
systems.

146. Microsoft's office productivity applications benefited from unique,
anticompetitive advantages in the markets for applications running on Microsoft's
monopoly Windows platform, as described above. Microsoft's office productivity
applications had no such advantages on platforms that competed with Windows, and
Microsoft's ability to take market share from Novell's applications would have been
greatly reduced, if not eliminated, on these other platforms. Thus, Novell's overall
market share would have been higher if there had been a free market for operating
systems.

147. Microsoft caused Novell to lose market share by excluding these other
platforms from the operating systems market and forcing Novell increasingly to limit
its applications to the Windows platform, where Microsoft's own applications
unlawfully benefited from the anticompetitive acts described above.

60

VIII. THE DEMISE OF WORDPERFECT AND RELATED APPLICATIONS:
INJURY TO COMPETITION AND NOVELL

149. The foregoing conduct has directly and proximately harmed
competition by suppressing innovation and foreclosing choice in the markets for Intel-
compatible personal computer operating systems and for word processing and
spreadsheet applications. The foregoing conduct has caused antitrust injury to Novell,
specifically by, without limitation: delaying and interfering with Novell's product
development and sales efforts; limiting the functionality and degrading the
performance of Novell's products; increasing the costs associated with Novell's product
development, sales and marketing, and customer support; foreclosing Novell from
distributing its products through OEMs; restricting the development efforts of ISVs in
ways that were detrimental to Novell's product offerings and that favored Microsoft's
product offerings; and coercing consumers who would have otherwise preferred
Novell's office productivity applications to purchase Microsoft's office productivity
applications instead.

150. The financial harm to WordPerfect caused by Microsoft's
anticompetitive acts described above is substantial. In 1993, WordPerfect's market
share was approximately 40 percent, with annual sales of approximately $700 million.
By 1996, WordPerfect's market share had plummeted to less than10 percent, with

61

CLAIMS FOR RELIEF

A. Count I: Monopolization Of The Intel-Compatible Operating
Systems Market

151. Novell incorporates the allegations in paragraph 1 through 150 above.

152. Microsoft possessed monopoly power in the market for Intel-compatible
PC operating systems software.

153. Microsoft willfully and wrongfully obtained and maintained its
monopoly power in the Intel-compatible operating systems market by engaging in
anticompetitive conduct to thwart the development of products that threatened to
weaken the applications barrier to entry, including Novell's WordPerfect word
processing application and its other office productivity applications, in violation of
Section 2 of the Sherman Act, 15 U.S.C.§ 2.

62

155. As a direct, foreseeable, and proximate result of Microsoft's misconduct,
Novell was damaged by, without limitation, lost sales of office productivity
applications and a diminution in the value of Novell's assets, reputation, and goodwill
in amounts to be proven at trial. Novell's injury is of the type the antitrust laws are
intended to prohibit and thus constitutes antitrust injury.

B. Count II: Monopolization Of The Market For Word Processing
Applications

156. Novell incorporates the allegations in paragraphs 1 through 155 above.

157. Microsoft unlawfully obtained and possessed monopoly power in the
market for word processing applications.

158. Microsoft willfully and wrongfully obtained and maintained its
monopoly power in the market for word processing applications by engaging in
anticompetitive conduct to thwart the development and distribution of Novell's word
processing applications in violation of Section 2 of the Sherman Act, 15 U.S.C. § 2.

159. Through this misconduct, Microsoft has harmed consumers and
competition by, without limitation, depriving consumers of the lower prices and more
rapid pace of innovation that competition would have brought.

160. As a direct, foreseeable, and proximate result of Microsoft's misconduct,
Novell was damaged by, without limitation, lost sales of its applications and a
diminution in the value orf Novell's assets, reputation, and goodwill in amounts to be

63

C. Count III: Monopolization Of The Market For Spreadsheet
Applications

161. Novell incorporates the allegations in paragraphs 1 through 160 above.

162. Microsoft unlawfully obtained and possessed monopoly power in the
market for spreadsheet applications.

163. Microsoft willfully and wrongfully obtained and maintained its
monopoly power in the market for spreadsheet applications by engaging in
anticompetitive conduct to thwart the development and distribution of Novell's
spreadsheet applications in violation of Section 2 of the Sherman Act, 15 U.S.C. §2.

164. Through this misconduct, Microsoft has harmed consumers and
competition by, without limitation, depriving consumers of the lower prices and more
rapid pace of innovation that competition would have brought.

165. As a direct, foreseeable, and proximate result of Microsoft's misconduct,
Novell was damaged by, without limitation, lost sales of its applications and a
diminution in the value of Novell's assets, reputation, and goodwill in amounts to be
proven at trial. Novell's injury is of the type the antitrust laws are intended to prevent
and thus constitutes antitrust injury.

D. Count IV: Attempted Monopolization Of The Market For Word
Processing Applications

166. Novell incorporates the allegations in paragraphs 1 through 165 above.

167. Microsoft willfully and wrongfully attempted to obtain and maintain
monopoly power in the word processing applications market by engaging in

64

168. Through this misconduct, Microsoft has harmed consumers and
competition by depriving consumers of the lower prices and more rapid pace of
innovation that competition would have brought.

169. As a direct, foreseeable, and proximate result of Microsoft's misconduct,
Novell was damaged by, without limitation, lost sales of its applications and a
diminution in the value of Novell's assets, reputation, and goodwill in amounts to be
proven at trial. Novell's injury is of the type the antitrust laws are intended to prevent
and thus constitutes antitrust injury.

E. Count V: Attempted Monopolization Of The Market For
Spreadsheet Applications

170. Novell incorporates the allegations in paragraphs 1 through 169 above.

171. Microsoft willfully and wrongfully attempted to obtain and maintain
monopoly power in the market for spreadsheet applications by engaging in
anticompetitive conduct to thwart the development and distribution of Novell's
spreadsheet applications in violation of Section 2 of the Sherman Act, 15 U.S.C. §2.
Microsoft acted with a specific intent to monopolize the spreadsheet applications
market. Microsoft's anti-competitive conduct has had a dangerous probability of

65

172. Through this misconduct, Microsoft has harmed consumers and
competition by depriving consumers of the lower prices and more rapid pace of
innovation that competition would have brought.

173. As a direct, foreseeable, and proximate result of Microsoft's misconduct,
Novell was damaged by, without limitation, lost sales of its applications and a
diminution in the value of Novell's assets, reputation, and goodwill in amounts to be
proven at trial. Novell's injury is of the type the antitrust laws are intended to prevent
and thus constitutes antitrust injury.

F. Count VI: Exclusionary Agreements In Unreasonable Restraint Of
Trade

174. Novell incorporates the allegations in paragraphs 1 through 173 above.

175. Microsoft's agreements with OEMs and others not to license or
distribute Novell's office productivity applications or to do so only on terms that
materially disadvantaged these products unreasonably restrained trade by restricting
the access of Novell's office productivity applications to significant channels of
distribution in violation of Section 1 of the Sherman Act, 15 U.S.C. §1.

176. Through this misconduct, Microsoft has harmed consumers and
competition by depriving consumers of the lower prices and more rapid pace of
innovation that competition would have brought.

177. As a direct, foreseeable, and proximate result of Microsoft's misconduct,
Novell was damaged by, without limitation, lost sales of its applications and a
diminution in the value of Novell's assets, reputation, and goodwill in amounts to be

66

X. JURY DEMAND

178. Novell demands a trial by jury of all its claims.

XI. PRAYER FOR RELIEF

WHEREFORE, Novell respectfully requests that:

1. The Court adjudge and decree that Microsoft:

(a) unlawfully obtained and maintained its Intel-compatible PC
operating system software monopoly in violation of Section 2 of the Sherman Act,
15 U.S.C.§ 2;

(b) unlawfully attempted to and did obtain and maintain a word
processing applications monopoly in violation of Section 2 of the Sherman Act, 15
U.S.C. § 2;

(c) unlawfully attempted to and did obtain and maintain a
spreadsheet applications monopoly in violation of Section 2 of the Sherman Act, 15
U.S.C. § 2; and

(d) entered into exclusionary agreements in unreasonable restraint of
trade in violation of Section 1 of the Sherman Act, 15 U.S.C. § 1.

2. Novell be awarded its actual damages in an amount to be determined at
trial, trebled pursuant to Section 4 of the Clayton Act, 15 U.S.C. § 15, along with interest
on such damages.

3. Novell be awarded its costs, including reasonable attorney fees, as
provided in Section 4 of the Clayton Act 15 U.S.C. § 15.

67

DATED this ___12th___ day of November, 2004.

SNOW, CHRISTENSEN & MARTINEAU

By:____[signature]_____
Max D. Wheeler
Stanley J. Preston

DICKSTEIN SHAPIRO MORIN &
OSHINSKY LLP

R. Bruce Holcomb
Jeffrey M. Johnson
Milton A. Marquis
David L. Engelhardt

Attorneys for Plaintiff

68