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Novell v. MS: MS Asks to Appeal June 10 Order & Answers Novell's Complaint
Sunday, June 26 2005 @ 02:06 AM EDT

Want to see a more normal antitrust case? Let's take a look at developments in the Novell v. Microsoft antitrust litigation. Microsoft's attorneys are old hands at antitrust law by now, and indeed what they write is smooth, clear, and easy to understand. That doesn't mean they are 100% correct or that they will necessarily prevail, but it means you at least know what they said, and you can rely on it to make sense enough to land in a normal ball park.

What I think you will find fascinating is when Microsoft discusses what constitutes an antitrust injury and when a plaintiff has standing to sue. Naturally you Wallace v. FSF legal theoreticians -- and I say that with affection -- will want to read those parts.

Here's Microsoft's Answer and Defenses [PDF] to Novell's Complaint, its Motion Pursuant to 28 U.S.C. Section 1292(b) For Certification of the Court's June 10 Ruling to the Extent it Denied Microsoft's Motion to Dismiss [PDF], and the Memorandum in Support [PDF]. The part about standing begins on page 5 of the memorandum, and it really gets interesting when you get to page 9, the section on Ownership of the Claim, and the antitrust injury section is on page 13.

Microsoft isn't happy that Novell was given the right to proceed on two counts of their complaint, Counts I and VI, and here they petition the judge who gave Novell that opportunity despite Microsoft's Motion to Dismiss, asking him to let Microsoft immediately appeal his ruling [PDF]. That's what it means in the Motion that Microsoft asks to "move this court . . . to certify for immediate apeal its June 10 Order". It doesn't have such an automatic right, so the judge must agree with Microsoft that it has a legal basis to immediately appeal what was an interlocutory order, meaning an order determining an intermediate issue but not disposing of the case. Normally, you have to wait until the whole case is decided to appeal such intermediate orders, unless you get permission of the sort Microsoft now asks for. We haven't yet seen anything appealed by any of SCO's victims so far, for example. IBM did ask the Judge Wells if she would reconsider one Order, and she did, but they had to ask permission even to do that, and that isn't the same as an appeal.

Courts have to set up some rules like that. Otherwise, as you've seen from the SCO v. the World litigation, you'd never see the end of any case for many years, because lawyers, particularly if they suffer from an idée fixe, like werewolves in the movies, simply won't quit unless you make them. So that's what courts do to keep things halfway reasonable, make lawyers ask before they can appeal all the stuff in the middle of a case.

Microsoft doesn't think Novell has standing to sue, and they don't agree with the judge that the earlier Caldera v. MS litigation, which Novell commissioned, so to speak, didn't extinguish all of Novell's rights to sue now. You can read the Utah Court of Appeals Opinion in Novell v. Canopy Group, in which Novell won its full share of the winnings from the Caldera v. Microsoft lawsuit, here. One paragraph, paragraph 3, in the Opinion said this:

Accordingly, Novell entered into negotiations with Caldera, Inc., the predecessor in interest to Canopy, to sell DR DOS to Canopy. The main purposes of this sale were to obligate Canopy to bring suit against Microsoft, to allow Novell to share in the recovery, and at the same time to obfuscate Novell's role in the action against Microsoft. Novell insisted that its role be completely undetectable to avoid retaliation from Microsoft.

Microsoft cunningly argues that Novell had their shot by selling their rights to sue Microsoft to Canopy Group. They were paid, and that should be that, they feel, and there are overtones to the way they say it. Did anything come out of old Canopy that doesn't have overtones?

There are two exhibits attached to the memorandum, Exhibit 1 [PDF], United States Code, 85th Congress, 2d Session, 1958, re Rule 1292, Title 28 and Exhibit 2 [PDF], Caldera Inc.'s Consolidated Statement of Facts in Support of its Responses to Motions for Summary Judgment by Microsoft Corporation.

The first is about the right to a quick appeal on interlocutory orders where the district judge has stated that the order "involves a controlling question of law as to which there is substantial ground for difference of opinion" and when an immediate appeal "may materially advance the ultimate termination of the litigation." Microsoft argues this is exactly such a case, and they present their arguments in the Memorandum. A controlling question of law basically means that if it is settled, the whole case or at least a chunk of it goes away. In this case, if, for example, on appeal Microsoft prevailed on the standing issue, there goes the case, as far as Novell's right to go forward.

The second exhibit comes from Caldera's litigation against Microsoft, although I note Microsoft only attaches brief snips of it. Maybe they worried that if the judge read the whole thing, it might make him mad at them. It's a scorcher. You can read it in its entirety here.

Microsoft's Answer I would characterize as deny, deny, deny, deny, deny, deny except we admit the undeniable, such as that, "as to be expected, not every application written for earlier versions of Windows was fully compatible with Windows 95", deny, deny, we don't need to answer the parts dismissed already, and we didn't do nuttin'.

Its defenses are the following: Novell has failed to state a claim upon which relief can be granted. You always say that, by the way, whether it means anything or not, because you might get lucky. The others are statute of limitations, laches, estoppel, collateral estoppel, waiver, that Novell lacks standing, that it didn't suffer an antitrust injury, or any injury in fact, failure to mitigate damages, accord and satisfaction, res judicata, that Microsoft's conduct "constitutes permissible competitive activity", and that Novell has failed to state an adequate basis for an award of treble damages.

That's a lot, but you normally put every defense you can possibly think of that is reasonable or conceivable, so you don't lose the defense. You can drop things by the wayside as you go along, if it turns out you can't make use of the defense after discovery proceeds.

The best thing about all the filings is that Microsoft's attorneys have done a lot of legal research for you, and if you want to know what cases they think apply to standing, here you go. If anyone wishes to do a chart, showing the Novell Complaint side-by-side with this Microsoft Answer, that would be very nice, but it's not vital. So do it only if you feel inspired.


Novell v. MS: MS Asks to Appeal June 10 Order & Answers Novell's Complaint | 90 comments | Create New Account
Comments belong to whoever posts them. Please notify us of inappropriate comments.
OT thread here
Authored by: Anonymous on Sunday, June 26 2005 @ 02:42 AM EDT
For those who just want to say something off topic

[ Reply to This | # ]

Corrections here, please...
Authored by: ankylosaurus on Sunday, June 26 2005 @ 02:48 AM EDT
I suggest simple typos are corrected with a title line like 'mitsake' -->

The Dinosaur with a Club at the End of its Tail

[ Reply to This | # ]

Novell v. MS: MS Asks to Appeal June 10 Order & Answers Novell's Complaint
Authored by: Anonymous on Sunday, June 26 2005 @ 04:22 AM EDT
PJ, Don't you ever sleep? Just when I thought the late night couldn't get any
better, you post another insightful article for our entertainment with your
usual dose of enlightenment. My groggy eyes went wide when I read 'res
judicata'. I've heard that term before...from my lovely wife. She's studying
to be lawyer and, hence, many law related terms have come forth from her lips in
the course of normal conversation, many times with a detailed explaination. In
a way, I'm learning law from my wonderful wife and from Groklaw. God bless you
both. Keep up the good work.

[ Reply to This | # ]

Who can prove anything about DR DOS?
Authored by: Anonymous on Sunday, June 26 2005 @ 04:49 AM EDT
I could be mistaken. I read a lot, but retain not as much as I'd like. However,
if memory serves me, I think Microsoft arranged with Darl to have most of the DR
DOS / Microsoft documents destroyed. An attempt to erase the past?

Make the past disappear, then when it serves you, make it reappear. The problem
is, who can actually reconstruct the old DR DOS case? Too much material

Comments or critique, if you please.

[ Reply to This | # ]

OT - posted by non-anonymous so everyone can see it
Authored by: artp on Sunday, June 26 2005 @ 10:54 AM EDT
See the instructions for HTML posts. They should be right under the box you're
typing in. Yup, there they are, on the last red line!

Don't forget to select Post Mode: HTML formatted right below here, too.

[ Reply to This | # ]

Novell v. MS: MS Asks to Appeal June 10 Order & Answers Novell's Complaint
Authored by: Anonymous on Sunday, June 26 2005 @ 11:36 AM EDT
Reading the MS motion is tricky work. The argument is slippery. That having been
said the lawyers know thier work - its well wrritten and presented.

Lets go thought the though processes here.

Is the market for OSes the same market as for application software? Most of us
would say no. Even MS have suggested this on page 9. They need go on to make
heavy weather of the comment by Novell that the WordPerfect claims are identical
to the OS ones heard earlier before the courts. A slip of the pen by Novell
there I think and smart of MS to pick up on that.

There is a very important point in the bottom of the footnote on page 9 where MS
claim that Caldera litigated and recieved compensation for MS anti compeditive
actions in the Word processor market.

Now these two statements contradict each other - unless there is something left
out here.

The Caldera-Ms case was about OSes. Caldera won. The word processor market is
distinct from the word processor market but yet MS claim here that Caldera
litigated for the word processor market as well as for the OS market.

If Ms are correct here then they are corect - Novell has no standing and the
issue is closed.

If on the other hand Caldera did not litigate the word processor market then
this is nonsense. Clever nonsense but still nonsense.

Now we come down to the payment of $US 25 million by MS to Caldera (newSCO) in
late 2002. In 2003 a statement was released by newSCO that a quantity of
documents relating to the MS case had been destroyed. MS knew that the tolling
argrement with Novell expired in 2003.

The question now arises did the MS deal with SCO have anything to do with these
documents? The timeing is curious. The reason for this question is becase of the
MS satment that Caldera recived compensation of the word processor market as
part of the settlement. Did such an argrement exist and has it bee since
destroyed "accidentally"?

There is some rabbiting on in the filing about the Supreme Court rulings on
antitrust. On the previous article I posted a link to an legal and economic
analysis (PDF:~150 pages) that discusses this that seems pertinant here.

I go back and reread the filing and see if therea re any other matters that
might be worth adressing.



[ Reply to This | # ]

Microsoft's Answer - Does this make sense?
Authored by: rsteinmetz70112 on Sunday, June 26 2005 @ 12:58 PM EDT
"7. Micorsoft denies the allegations in Paragraph 7 and respectfully refers
the Court to the unidentified documents referenced therein for a complete and
accurate description of their contents."

Wouldn't it be a more appropriate answer to respond that they are without
sufficient information to answer, since the documents are unidentified?

Rsteinmetz - IANAL therefore my opinions are illegal.

"I could be wrong now, but I don't think so."
Randy Newman - The Title Theme from Monk

[ Reply to This | # ]

Certiorari---Be careful what you ask for...
Authored by: webster on Sunday, June 26 2005 @ 02:47 PM EDT
M$ is asking the trial judge to allow an appeal on the two counts that he did
not dismiss.

Novell's response might well be OK if you will certify the 4 counts that were
dismissed also. It would be judicially efficient.

So M$ might get their immediate appeal on the 2 with Novell appealing the 4.
They could end up worse off more quickly.


[ Reply to This | # ]

    Suit by proxy
    Authored by: LPrecure on Sunday, June 26 2005 @ 04:20 PM EDT
    "Microsoft doesn't think Novell has standing to sue, and they don't agree
    with the judge that the earlier Caldera v. MS litigation, which Novell
    commissioned, so to speak, didn't extinguish all of Novell's rights to sue now.

    Is Microsoft arguing in court that sueing a business rival through a proxy,
    destroys a principal's right to sue, directly, later?


    [ Reply to This | # ]

    • Suit by proxy - Authored by: Anonymous on Sunday, June 26 2005 @ 07:13 PM EDT
    • Suit by proxy - Authored by: Anonymous on Monday, June 27 2005 @ 01:00 PM EDT
    Take a look at what Microsoft is capable of...
    Authored by: Nick Bridge on Sunday, June 26 2005 @ 11:15 PM EDT
    Then rethink about Microsoft's recent olive branch...

    [ Reply to This | # ]

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