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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.

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