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Microsoft to EU Commission: We're Not the Bad Guy; You Are [MS Doc as Text]
Monday, July 07 2008 @ 07:54 PM EDT

Sean Daly has kindly prepared a text version of the EU-LEX notice of Microsoft's complaint against the EU Commission, found in the latest EU Official Journal.

Microsoft says the fine announced in February is too high. It should be annulled, and if not, they ask that it be reduced. Oh, and it would like the EU Commission to pay costs. Yes, the EU Commission is the defendant. It seems it neglected to believe Microsoft's experts about how valuable its patents are. And it accuses the Commission of accepting reports from the trustee, whom Microsoft hand-picked, by the way, based on "documents obtained through powers of investigation that the Court of First Instance held to be unlawful." Whoah. No more Mr. Nice Guy for Microsoft, I see.

Note that this is news to us, but not to the EU Commission, as this action was brought May 9th. So. Here we go again.

Sean's description of it made me smile:

It's a blast from the past: "We want clarity", "our licenses were not expensive and everyone who wanted a license negotiated one", "nobody listened to our paid experts", "the Commission's trustee got incriminating documents illegally", "due process was not followed", "the fine is too heavy, since there was only a little partial problem with the licenses".

Note that the period in question is for the daily fines covering the period between June 21, 2006, and October 21, 2007, when Ballmer and Commissioner Kroes made their deal. This is really a followup to Neelie Kroes' press conference in February.

Of course, as they require that I tell you regarding the document, and I would have anyway, "Only European Union legislation printed in the paper edition of the Official Journal of the European Union is deemed authentic." So as always, go by the PDF for anything that matters, but the text version is helpful for those who rely on screen readers and for searching.


5.7.2008 EN Official Journal of the European Union C 171/41

Action brought on 9 May 2008 — Microsoft v Commission

(Case T-167/08)

(2008/C 171/80)

Language of the case: English


Applicant: Microsoft Corp. (represented by: J.-F. Bellis, lawyer, I. Forrester, QC

Defendant: Commission of the European Communities

Form of order sought

  • annul the Decision of the European Commission C(2008) 764 final of 27 February 2008 fixing the definitive amount of the periodic penalty payment imposed on Microsoft Corporation by Commission Decision C(2005) 4420 final;

  • in the alternative, annul or reduce the amount of the periodic penalty payment imposed;

  • order the defendant to bear the costs.

C 171/41 EN Official Journal of the European Union 5.7.2008

Pleas in law and main arguments

By a decision of 10 November 2005 adopted pursuant to Article 24(1) of Regulation 1/2003 (1) the Commission imposed a periodic penalty payment on the applicant for failure to comply with the obligation to make the technical documentation embodying the Interoperability Information available to interested under takings on reasonable and non-discriminatory terms pursuant to Article 5(a) of Commission Decision 2007/53/EC of 24 March 2004 (2). The contested decision fixed the definitive amount of the periodic penalty payment for the period between 21 June 2006 and 21 October 2007 inclusive at EUR 899 million. The applicant seeks the annulment of the contested decision on the following grounds:

  1. The Commission erred by subjecting Microsoft to periodic penalty payments to force it to apply ‘reasonable’ price terms without first specifying what price terms would, in the Commission's view, be ‘reasonable’ so as to allow Microsoft to know what to do to avoid the imposition of such penalty payment.

  2. The Commission committed a manifest error of assessment and violated Article 253 EC by concluding that published rates adopted by Microsoft were unreasonable and contrary to the 2004 decision without taking account of the facts that (i) these published rates were expressly intended to facilitate negotiations between Microsoft and prospective licensees and (ii) Microsoft had, in consultation with the Commission, created a mechanism whereby the trustee would review the rates proposed by Microsoft if any prospective licensee failed to reach agreement which was virtually identical to the mechanism created by the Commission itself in NDC Health/IMS Health: Interim Measures (‘IMS Health’) (3). The Commission also committed a manifest error of assessment by (i) failing to give due weight to the fact that these published rates were set by Microsoft at a figure lower than the rates that a third party expert determined to be reasonable (ii) failing to give due weight to the fact that no prospective licensee failed to reach agreement with Microsoft and (iii) failing to consider the fact that licensees of the ‘no patent’ licence also obtain rights to use Microsoft's patents.

  3. The Commission committed a manifest error of assessment by requiring Microsoft to establish that its trade secrets were innovative under a heightened patentability test in order to justify the imposition of royalties for a licence to such trade secrets. The Commission also violated Article 253 EC by failing to take account of numerous arguments raised by Microsoft on the basis of reports prepared by patent experts which criticised the Commission's approach.

  4. The Commission violated Article 233 EC by failing to take the necessary measures to comply with the judgment in Case T-201/04 (4) in so far as the Commission based its assessment reports prepared by the trustee on the basis of documents obtained through powers of investigation that the Court of First Instance held to be unlawful.

  5. The Commission denied Microsoft's right to be heard by failing to give Microsoft an opportunity to make known its views after the end of the reference period for which Microsoft is fined, there by preventing Microsoft from commenting on all relevant aspects of the case.

  6. The amount of the periodic penalty payment is excessive and disproportionate. Among other reasons, the Commission failed to take due account of the fact that the contested decision only concludes that the royalties allegedly established by Microsoft under one particular licence (the ‘no patent’ licence) were unreasonable, and therefore doesn't challenge (i) the royalties allegedly established by Microsoft for all of its intellectual property rights incorporated in the entirety of the Interoperability Information that Microsoft is required to disclose under Article 5 of the 2004 decision or (ii) the completeness and accuracy of the Interoperability Information.

(1) Council Regulation (EC) No 1/2003 of 16 December 2002 on the implementation of the rules on competition laid down in Articles 81 and 82 of the Treaty (Text with EEA relevance) (OJ 2003 L 1, p. 1).

(2) Commission Decision of 24 May 2004 relating to a proceeding pursuant to Article 82 of the EC Treaty and Article 54 of the EEA Agreement against Microsoft Corporation (Case COMP/C-3/37.792 — Microsoft) (notified under document number C(2004) 900) (OJ 2007 L 32, p. 23).

(3) Commission Decision 2002/165/EC of 3 July 2001 relating to a proceeding pursuant to Article 82 of the EC Treaty (Case COMP D3/38.044 — NDC Health/IMS Health: Interim measures) (notified under document number C(2001) 1695) (OJ 2002 L 59, p. 18).

(4) Case T-201/04, Microsoft v. Commission, not yet published in the ECR.

(c) European Communities, 1998-2008


Microsoft to EU Commission: We're Not the Bad Guy; You Are [MS Doc as Text] | 92 comments | Create New Account
Comments belong to whoever posts them. Please notify us of inappropriate comments.
Corrections Here
Authored by: om1er on Monday, July 07 2008 @ 08:00 PM EDT
Any corrections should be shown in the title, if possible.

August 10, 2007 - The FUD went thud.

[ Reply to This | # ]

Comments on NewsPicks here
Authored by: om1er on Monday, July 07 2008 @ 08:02 PM EDT
There's lots of interesting things happening, these days. Comments?

August 10, 2007 - The FUD went thud.

[ Reply to This | # ]

Eyeballs for ODF - the Groklaw discussion thread
Authored by: bbaston on Monday, July 07 2008 @ 08:02 PM EDT
Urgent "Eyeballs for ODF" feedback goes here. PJ says:
"... from now on, only post anything that seems to be vital" and "Stay polite at all times, of course, if you say anything, and you needn't say anything"

Helpful links to ODF Implementation, Interoperability and Conformance: formation, archive, draft charter , and #oiic logs.

imaybewrong, iamnotalawyertoo, inmyhumbleopinion, iamveryold

[ Reply to This | # ]

Off Topic Here
Authored by: om1er on Monday, July 07 2008 @ 08:04 PM EDT
Comments to your hearts content.

But to be on-topic, thanks PJ and Mr. Daly!

August 10, 2007 - The FUD went thud.

[ Reply to This | # ]

Microsoft to EU Commission: We're Not the Bad Guy; You Are [MS Doc as Text]
Authored by: om1er on Monday, July 07 2008 @ 08:13 PM EDT
Talk about sore losers.

Is there interest compounding daily on the fine?

Just take the penalty, change your ways, and move on, Microsoft!

August 10, 2007 - The FUD went thud.

[ Reply to This | # ]

The fine has to be set high enough to be a deterent.
Authored by: Anonymous on Monday, July 07 2008 @ 08:18 PM EDT
The fact that Microsoft continued to refuse to comply with the EU court order is
undeniable evidence that the initial fine wasn't high enough as it failed to
deter Microsoft from ignoring the courts and continue breaking the law.

If you fine a felon, and the felon ignores the fine and continues to offend,
then it is clear that the felon considers it more profitable to pay the fine and
continue to offend. In this case it is clear the fine isn't high enough to deter
the crime by making it unprofitable to continue offending, and the only option
then is to raise the level of the fine to a point at which it does act as a
deterrent to the crime.

[ Reply to This | # ]

Microsoft to EU Commission: We're Not the Bad Guy; You Are [MS Doc as Text]
Authored by: Anonymous on Monday, July 07 2008 @ 08:22 PM EDT
Seems to me that M$ MUST have known that this fine was going to be imposed at
least as early as 21 June 2006 (...if not earlier); as such, they had ample
warning that this was going to happen. It seems to me that it's a little late
to be crying about it now. They SHOULD have complied back then, instead of
crying now. I have NO sympathy for them now, at all, robber barons that they
are. C'mon, M$, pay up, already, and mend your ways (fat chance of that,

[ Reply to This | # ]

So Ballmer's Word . . .
Authored by: tuxi on Monday, July 07 2008 @ 08:29 PM EDT

. . . isn't worth anything beyond the distance he can throw a chair? ;-)

I find it interesting that M$ claim that the ground rules weren't set (i.e., what is "reasonable"). This may give the EC room to let them off the hook a la the Bush Administration.

I hope I'm wrong in the above paragraph. I'm sick and tired of M$ gaming the system.


[ Reply to This | # ]

Haiku here
Authored by: Crocodile_Dundee on Monday, July 07 2008 @ 11:44 PM EDT
How can we owe you?
This is not the way we work
I want to throw chairs

It is just too much
Why should we be made to pay
said the criminal

Judge, please consider
Bad US corporation
just has no manners

Microsoft defines
what those outside simply call
ugly Americans

That's not a law suit. *THIS* is a law suit!

[ Reply to This | # ]

in the alternative, annul or reduce
Authored by: SpaceLifeForm on Tuesday, July 08 2008 @ 12:33 AM EDT
Allegedly, Microsoft has plenty of cash to cover this fine.


Perhaps the pyramid scheme is collapsing.


You are being MICROattacked, from various angles, in a SOFT manner.

[ Reply to This | # ]

Microsoft to EU Commission: We're Not the Bad Guy; You Are [MS Doc as Text]
Authored by: PolR on Tuesday, July 08 2008 @ 01:51 AM EDT
I am not sure this is primarily about money owned for past activities, although
this must be an important secondary objective.

I would say the main goal must be about defanging the Commission for the future.
They are testing what is the burden the Commission must meet to make the fines
stick. If they succeed to make this burden hard enough to meet, then the
Commission will have much less enforcement power for future offenses because
Microsoft will know what to do to make sure the fines won't hurt.

[ Reply to This | # ]

Documents obtained illegally?
Authored by: maroberts on Tuesday, July 08 2008 @ 02:53 AM EDT
There is far less "fruit of a poisoned tree" protection in Euroland,
despite the various laws with respect to privacy.

[ Reply to This | # ]

Logically, the fine isn't large enough.
Authored by: Stevieboy on Tuesday, July 08 2008 @ 03:56 AM EDT
If M$ was being truthful about this (rather than just playing games to undermine
the EU commission for the future) I would ask them:

Is the fine large enough to discourage you from such anticompetitive behaviour
in the future?

If the answer is no, then, logically, the fine is too small rather than too

[ Reply to This | # ]

the problem with Microsoft...
Authored by: Anonymous on Tuesday, July 08 2008 @ 02:00 PM EDT
is if they have a decision go against them, they set the lawyers on it looking
for any irregularity with which to get it overturned... they have a massive
legal department and also have all the law companies in Washington state on

[ Reply to This | # ]

Standard Corporate Practice?
Authored by: BitOBear on Tuesday, July 08 2008 @ 06:06 PM EDT
Recently Exxon got a major discount on their penalty for the big oil spill up in
Alska. They basically held out and kept bringing motion and objection practice
against the verdict. Finally the awards were reduced by something like
four-fifths. And as far as I know, no money has actually changed hands as of

It woldn't surprise me to discover that Microsoft is just trying to outlast a
government just like Exxon out-lasted our legal system. A million dollars today
is worth more than a million dollars in three years, and government employees
are just as likely to suffer issue fatigue as anybody else.

There really ought to be an income-tax like structure to having to pay these
fines. If you intend to dispute a fine or judgement you should be on the hook
to put the money into escrow immediately or pay hefty daily interest fines that
are _not_ forgivable if you get the judgment reduced. Once the money is in
escrow you can argue that it was too much and get some back if you can. The
interest from the exscrow account would be divided as percentage of any
reduction earned.

If you lost legal costs then you should have to pay ongoing legal costs of your
opponent into the escrow account or even directly to the opposition as well, as
they occur, or again pay hefty percentage penalties. The bills would be instant
penalties just like bankruptcy service payments are instant deliverables.

This way, once you "lost", re-raising the dispute and adding delay
wouldn't be "free money for zero risk".

the fact of the matter is that we cannot "put companies in jail" even
though they get virtual person status. I wish we could. When a company wass in
jail its stocks would frozen and it is enjoined from doing any business except
for sail of real property, but it's expenses are not halted. Thats basically
what happens when a person goes to jail, they stop getting the benefits of
social participation but their mortgage and child support and credit card bills
are still payable. Freezing the stocks would also punish the board etc who have
all those stocks and interest positions tied up in the company they let run
roughshod over the common good.

But that isn't going to happen, that jail thing, so how do you keep a deep
pocket from trying to run out the clock on any and every social issue and fine
other than leverage escrow.

Remember, this clock manipulation worked out for Microsoft in the past. They
kept the penalty phase of the anti-trust case in play long enough to outlast our
government until the natural regime change of presidential politics cleaned
house at the USAG's office. The new people came in with none of the history and
no investment in making the previous administration look good, so a major
federal violation was punished by a slap on the wrist and a turned back.

Why _shouldn't_ Microsoft, or anybody who can afford to try it, _not_ try it
with the EU and anybody else who has a bone to pick?

[ Reply to This | # ]

prisoner's dilemma
Authored by: Anonymous on Wednesday, July 09 2008 @ 12:22 AM EDT
MS is a master at playing prisoner's dilemma. An altruistic organization like
EUC or ISO is bound to be nice, and assume good intentions. MS and its ilk take
advantage of it.

How can the rest of us counter, without taking the low road ourselves?

[ Reply to This | # ]

Microsoft IS the "bad guy" - make no mistake
Authored by: clark_kent on Wednesday, July 09 2008 @ 04:55 PM EDT
A trail of broken companies, broken promises, broken dreams, broken software,
and broken interoperability over the past 30+ years testifies to their
insatiable desire to be the number one software company (as in politics, volume,
and cash flow, not in quality and overall end-user satisfaction) in the world,
no matter what it costs (everyone else besides) them.

They aren't the only company that does this, but they are the best of the worst
that do this. If they want to be first in "appearances and
performance" they also need to be first to take responsibility for their
mis-steps and intentional modern mafia-style harm they have done to businesses
over the years. (And you think the mafia still uses machine guns? No! They use
the stock market! Easier to rob and rip off!)

Anything close to old-school mafia tactics that Microsoft uses today are the
tactics that a certain Microsoft executive uses. That exec will curse out your
mother and throw chairs at you to get his point across. Also, they will use
lobbyists and an army of lawyers to bend the hand of government to their end.
Apparently, the EU has not given in toward their interests like the United
States government has. Maybe there is a price at which the EU can be bought, but
maybe Microsoft isn't rich enough to do the EU in like it did the U.S.

[ Reply to This | # ]

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