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Comes v. MS Antitrust Trial Begins in Iowa
Tuesday, December 05 2006 @ 11:41 AM EST

The antitrust trial against Microsoft, Comes v. Microsoft Corporation, Inc., has now begun in Iowa. The first day was November 30, Thursday.

The link takes you to Friday's opening statement by the plaintiffs' attorney, Roxanne Conlin, who will be presenting 9 stories of how Microsoft has treated competitors, to show how Iowans ended up paying too much for Microsoft products:
"Microsoft didn't come into Iowa and do things directly" to raise prices, Conlin told jurors. "They acted to destroy competition" with "illegal choke holds, one on input and one on output." Those illegal activities allowed the company to charge higher prices than it could have if there had been competition, she said.

Conlin has said that expert witnesses, including a Nobel Prize-winning economist, will present evidence showing that the cost to Iowans of that loss of competition is as high as $330 million during the 12-year period covered by the lawsuit....

Conlin used a variety of computer-generated illustrations, including one that showed 15 icons, each representing what she said was an illegal action taken by Microsoft in pursuit of its bid to become and remain a monopoly. The icons had titles like "exclusionary contract," "technical sabotage," "buying out the competition," "espionage," and "deception and misinformation."

There will be a story about Linux, one about IBM, and also some about lesser known competitors like GO Computers and Acer. In Monday's opening statement, Conlin read from a Jim Allchin memo, from the DRI-Novell story. Here's part of what Allchin said about how to deal with the competitive threat from Novell then:

"We need to slaughter Novell before they get stronger....If you're going to kill someone, there isn't much reason to get all worked up about it and angry. You just pull the trigger. Any discussions beforehand are a waste of time. We need to smile at Novell while we pull the trigger."

Yoo hoo. Novell. In case you need that for the your antitrust lawsuit against Microsoft, there you go.

We'll have regular reports on Groklaw from now on, thanks to the Wixted Pope Nora Thompson & Associates, which is assisting the Plaintiffs attorney Roxanne Conlin in this class action lawsuit against Microsoft. They will have someone in the courtroom every day. Court TV Extra, a subscription service, is also carrying the trial live. What has happened already includes the news that the jury will be played the 10 hour deposition of William Gates from the US antitrust trial. That is the video we tried and tried to find but couldn't. It seems to have been erased totally from the free Internet, which is odd. But now, we will get to see it. That isn't all we'll get to see. Microsoft has turned over 25-million plus documents to Conlin.

The plaintiffs allege that Microsoft has violated Iowa’s anti-trust laws by abusing its monopoly power, with the result that Iowa consumers have been overcharged and had their choices unfairly limited. Another allegation is that Microsoft inhibited innovation in the market and created more security vulnerabilities. Also, the case is, so far as I know, the first ever to allow consumers directly to sue Microsoft.

The suit was granted class-action status on September 6, 2003 and divides plaintiffs into two categories: Iowa indirect purchasers of Microsoft operating system software and Iowa indirect purchasers of Microsoft applications software (Word and Excel including Office). They are indirect, in that they bought from someone, not directly from Microsoft, just like you probably do. You get your Microsoft software, most of the time, when you buy from Dell or HP or whoever.

The full title of the case is: Joe Comes, Riley Paint, Inc., an Iowa corporation, Skeffington’s Formal Wear of Iowa, Inc., an Iowa corporation, and Patricia Anne Larsen vs. Microsoft Corporation, a Washington Corporation. If you wish to see the docket list of documents filed in this case go to www.iowa.gov, and click on the judicial page to conduct a search. The case is in Polk County, and the ID number is 05771 LACL082311. Search by Comes, Joe as Plaintiff and Microsoft, Defendant in Polk County and you'll get there. Unfortunately, you can't get the filings there, or at least I can't with my browsers.

Of course Microsoft says it's changed since 1999. But in the information provided by Wixted, there is this intriguing bit:

Microsoft turned over several discs to Conlin’s staff that contained the Nimda computer virus. The virus could have wiped out her electronic records. Microsoft told Judge Rosenberg on November 9, 2006 in a hearing that the problem came from an outside vendor, but that the virus was actually in the original source code.

Here's the court schedule, in case you wish to attend:

Court schedule: Monday – Friday. Court will begin at 8:30 a.m. and end at 11:00 a.m. for a lunch break. Court will resume at 12:00 p.m. and end at 2:30 p.m. There will be no court over winter break, December 21 – January 3, 2007.

There is one other unusual aspect to this case. The judge has ruled that jurors will be able to ask questions during the trial. So if they have any technical questions, they can ask and get clarity. Here's the complete notes from the trial on Monday, December 4, 2006:

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

Ms. Conlin continued with her DRI (Digital Research, Inc.) story. She read several documents and e-mails to show proof that Microsoft successfully ran DRI/Novell out of the DOS business. Here are some quotes from her story.

A few months earlier, a day after the announcement of the DRI/Novell merger, we have discussed a blunt statement from high level executive Jim Allchin…”We need to slaughter Novell before they get stronger.” Listed below is a transcript excerpt regarding Jim Allchin:
Jim Allchin, who you've heard from

22 before -- inside Microsoft -- he's doing the

23 NT, networking, and the NT Windows new

24 technology called NT was facing its own battle

25 against Novell


1 And he says on September 18th, 1993,

2 he surveys the state of the competitive

3 situation between them, and concludes the time

4 has come for decisive action.

5 This is Plaintiffs' Exhibit 1793.

6 Here is what he says. “Sentiment is

7 against us. We can and must turn this around.

8 As we become more aggressive against Novell

9 product and marketing-wise, we must get our

10 mouth in order. The press, et cetera, is very

11 skeptical of us.

12 So one slip up, and we get set back

13 quite a ways.

14 This really isn't that hard. If

15 you're going to kill someone, there isn't much

16 reason to get all worked up about it and angry.

17 You just pull the trigger.

18 Any discussions beforehand are a waste

19 of time. We need to smile at Novell while we

20 pull the trigger.

21 There are thousands of documents that

22 show the truth.

23 Microsoft is not just a tough

24 competitor. It's not just an aggressive

25 competitor. It is a competitor who is willing


1 to break the law and commit anticompetitive

2 acts in order to destroy competition.

“Windows/DOS Beta Blacklist developed by Microsoft includes DRI on the list as of July 13, 1991”. She also states later that the blacklist includes customers of DRI so they are not able to buy Window software without purchasing MS-DOS instead of DR-DOS.

“Microsoft also knows that its use of the beta blacklist against DR DOS has been quite effective.”

“Microsoft may also say that DRI failed because there was no customer demand for the product…Microsoft had the OEM’s locked into long term per processor licenses with huge minimum commitments, those golden handcuffs they used to prevent OEM’s from ever getting away.”

“The evidence in this case, including Microsoft’s own internal documents and deposition testimony of Microsoft’s own employees, and former DRI and Novell employees, and disinterested witnesses – proves that Microsoft has maintained its monopoly in the desktop operating systems business through predatory conduct that excluded competitors from the DOS market, a market in which Microsoft has monopoly power.”

Ms. Conlin continued her opening statement with her second story about the GO Computer.

Ms. Conlin used an old GO Computer as a visual for the jury. It was not workable, but was very effective in understanding what the first portable tablet looked like.

Ms. Conlin introduced several e-mails and documents proving GO had a very smart successful product and that Microsoft felt they were a threat to their success.

Below are some quotes from Ms. Conlin during her GO story.

“…we will see some of the identical anticompetitive tactics that we saw in Microsoft’s actions against DRI…we will see these tactics over and over.”

“…(Microsoft) drives GO out of business with illegal anti-competitive tactics…the victims are different but they share one common characteristic – they somehow threaten Microsoft’s monopolies.”

“The Penpoint operating system is developed on a desktop and will also run on a desktop PC. Unbeknownst to GO, Microsoft sees it as an OS competitor and sets out to do what it does to competitors. Drive it out of business.”

In an e-mail from Bill Gates, Subject: GO threat…”In reviewing some sketchy stuff on the GO machine it is clear that the threat posed by GO is as much an integration threat as a handwriting threat…I can’t believe we don’t have this as part of our architecture when a real architecture would allow for these things.”

In an e-mail from August 9, 1990 from one Microsoft employee to another…”I sent a memo to you last week which had a bunch of info on GO corp. Turns out some of it was confidential and I was not supposed to make copies. Could you please return all of it to me that I can destroy it?”

Court adjourned at 2:30. Ms. Conlin will continue with her GO story on Wednesday, December 6, 2006 at 8:30 am.


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