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Supreme Court rejects Microsoft appeal: Novell v. Microsoft can go forward - Update
Monday, March 17 2008 @ 12:57 PM EDT

This is a big win for Novell. Here's a snip from the AP account:
The Supreme Court on Monday handed Microsoft Corp. a defeat by refusing to rule on the software giant's request to halt an antitrust suit against it.

The suit was brought in 2004 by Waltham, Mass.-based Novell Inc., which said in court papers that Microsoft "deliberately targeted and destroyed" its WordPerfect and QuattroPro programs in order to protect its Windows operating system monopoly....

The Supreme Court's decision allows Novell's lawsuit to continue. The case is Microsoft Corp. v. Novell Inc., 07-924. Chief Justice John Roberts, who owns Microsoft stock, recused himself from the decision.

So, more antitrust woes for Microsoft. You can find the prior filings on Groklaw's permanent Novell v. MS Timeline page. Here's the Order [PDF] by the U.S. Court of Appeals for the Fourth Circuit that the Supreme Court just left standing. The Supreme Court opinion is not posted, because it's a refusal to hear the case, not an opinion, but here's where Supreme Court opinions are posted, just so you know, and here's where the refusals to hear a case, called summary dispositions, are posted, and you'll find Microsoft listed on page 15 of this document[PDF]. If you forget, note that we have info on how to find courts on both our Courts page and our Legal Research page.

This is a case in part about standards and interoperability. Here's Novell's Complaint [PDF], and we have it as text, along with some analysis, here. With OOXML on the table, it's very timely to read how Novell alleges Microsoft deliberately undermined interoperability, degraded standards, and withheld from competitors necessary technical documentation.

In that connection, you might be interested in either reading a transcript or viewing the video of the the opening talk at the 3rd Idlelo African Conference on FOSS and the Digital Commons, FOSSFA, a speech by the Minister of Public Service and Administration, South Africa, Ms. Geraldine Fraser-Moleketi. Here's a bit of what she said about standards:

The adoption of open standards by governments is a critical factor in building interoperable information systems which are open, accessible, fair and which reinforce democratic culture and good governance practices. In South Africa we have a guiding document produced by my department called the Minimum Interoperability Standards for Information Systems in Government (MIOS). The MIOS prescribes the use of open standards for all areas of information interoperability, including, notably, the use of the Open Document Format (ODF) for exchange of office documents. ODF is an open standard developed by a technical committee within the OASIS consortium. The committee represents multiple vendors and Free Software community groups. OASIS submitted the standard to the International Standards Organisation in 2005 and it was adopted as an ISO standard in 2006. South Africa is amongst a growing number of National Governments who have adopted ODF over the past year.

It is unfortunate that the leading vendor of office software, which enjoys considerable dominance in the market, chose not to participate and support ODF in its products, but rather to develop its own competing document standard which is now also awaiting judgement in the ISO process. If it is successful, it is difficult to see how consumers will benefit from these two overlapping ISO standards. I would like to appeal to vendors to listen to the demands of consumers as well as Free Software developers. Please work together to produce interoperable document standards. The proliferation of multiple standards in this space is confusing and costly....

An issue which poses a significant threat to the growth of an African software development sector (both Free Software and proprietary) is the recent pressure by certain multinational companies to file software patents in our national and regional patent offices. Whereas open standards and Free Software are intended to be inclusive and encourage fair competition, patents are exclusive and anti-competitive in their nature. Whereas there are some industries in which the temporary monopoly granted by a patent may be justified on the grounds of encouraging innovation, there is no reason to believe that society benefits from such monopolies being granted for computer program “inventions”. The continued growth in the quantity and quality of Free Software illustrates that such protection is not required to drive innovation in software. Indeed all of the current so-called developed countries built up their considerable software industries in the absence of patent protection for software. For those same countries to insist on patent protection for software now is simply to place protectionist barriers in front of new comers. As the economist, Ha-Joon Chang, observed: having reached the top of the pile themselves they now wish to kick away the ladder....

One cannot be in Dakar without being painfully aware of the tragic history of the slave trade. For three hundred years, the Maison des Esclaves (Slave House) on Gorée Island, was a hub in the system of forceful transportation of Africans as slaves to the plantations of the West Indies and the southern states of America. Over the same period people were being brought as slaves from the Malay Archipelago and elsewhere to South Africa. The institution of slavery played such a fundamental role in the early development of our current global economy, that by the end of the 18th century, the slave trade was a dominant factor in the globalised system of trade of the day.

As we find ourselves today in this new era of the globalised Knowledge Economy there are lessons we can and must draw from that earlier era. That a crime against humanity of such monstrous proportions was justified by the need to uphold the property rights of slave owners and traders should certainly make us more than a little cautious about what should and should not be considered suitable for protection as property.

Here's just a whiff from Novell's Complaint of what it accuses Microsoft of doing:

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.

92. The specifications for RTF were readily available to Microsoft's applications developers, because RTF was the format they themselves developed for Microsoft's office productivity applications. Microsoft withheld the RTF specifications from Novell, however, forcing Novell to engage in a perpetual, costly effort to comply with a critical "industry standard that was, in reality, nothing more than the preference of its chief competitor, Word. Indeed, whenever Word changed its own file format, Microsoft unilaterally and identically changed the RTF standard for Windows, forcing Novell and other ISVs constantly to redevelop their applications. In this manner, Microsoft gave Word a permanent, insurmountable lead in time-to-market, and made document conversions difficult for users otherwise interested in running non-Microsoft applications. Many WordPerfect users were thus forced to switch to Microsoft Word, which predictably monopolized the word processing market.

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 Microsoft's own applications, those applications, by definition, were always "compatible" with the standards.

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.

Sound familiar? Now, how about the the references to undefined proprietary Microsoft stuff in OOXML? See any wiggle room for Microsoft to make sure it is never really competing on a fair playing field, should that be its desire? Here's the Novell section of its Complaint on withholding technical documentation:

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 in the operating systems market and to achieve and maintain monopolies in the office productivity applications markets. Independent, overt acts during the period in which Novell owned the rights to WordPerfect inflicted new and accumulating harm on Novell.

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 Word consumed only a small percentage of the limited memory, and Microsoft experienced no delay in reaching the market.

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.

103. Microsoft also harmed Novell by hiding the computer-based training ("CBT") "hooks," or interfaces, in Windows, which Microsoft Word and Excel employed to train their users. Novell's developers requested information regarding these undocumented hooks, but they were advised that no information was available to ISVs. Microsoft's ISV support personnel acknowledged, however, that Microsoft's own applications developers were using the hooks.

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 Windows, whenever convenient to resolve technical problems or incorporate new functions into their applications.

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 Microsoft. They lacked any legitimate business justification. The only purpose of this conduct was to maintain and/or achieve monopolies in the operating systems and office productivity applications markets.

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.

So, now you know what the case is about. Microsoft tried to get the case dismissed, and while four counts were dismissed, two were not [PDF], and you can read Microsoft's arguments in part in this document [PDF]. However, despite appealing all the way to the Supreme Court, the case, the two counts, I and VI not dismissed, will now go ahead. If you recall, when Novell signed the patent peace deal with Microsoft, it told us that this case was not part of the deal, and they meant it.

Here are the two claims that will now go forward:


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.

154. 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.

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. ...

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 proven at trial. Novell's injury is of the type the antitrust laws are intended to prevent and thus constitutes antitrust injury.

Update: It has been brought to my attention that Rob Weir did a technical analysis of this case in the OOXML context.

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