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Novell v. Microsoft -- What's It All About? ~ by pj - Updated
Thursday, November 03 2011 @ 02:29 AM EDT

Some of you have asked what's happening in the Novell v. Microsoft antitrust trial over WordPerfect and QuattroPro in Utah. So let me bring you up to date on what this trial is all about and a couple of things that have happened of note to date. This week, nothing is happening, by the way, because the judge, the Hon. Frederick Motz, had a prior commitment, and the trial won't restart until November 7.

You can see in paragraph 9 of this letter [PDF] from the judge to the parties back in July, talking about scheduling and such:
9. We will try to sit as many Fridays as possible in Salt Lake City. I will let you know at the pretrial conference the Fridays on which I must return to Baltimore. I now know that I have to be in Baltimore on Friday, October 21, 2011. Further, as I believe I have previously advised you, we will not sit at all during the week of October 31, 2011 because of a previous commitment I have.
He's going back and forth between Baltimore, where he's normally located, to Salt Lake City for this trial. I can't help but wonder why. This litigation began in Utah which is where Novell wanted it to be, with the same judge who handled SCO v. Novell, the Hon. Ted Stewart, and he would be perfectly capable of taking the case back, I would think. But Judge Motz decided not to recuse himself, after his ruling [PDF] in favor of Microsoft on summary judgment was overturned on appeal and the case remanded for trial, and so he's commuting to beautiful Utah.

So we have taken advantage of the blank time while the judge is taking care of his commitment in Baltimore or whatever to bring our Novell v. Microsoft timeline up to date. It meant getting a lot of documents at once, which is expensive, so we've gotten the essential ones only. But there are more than enough to understand what is happening. So feel free to dig in, particularly if you are hoping to attend at least some days of the trial. I'll highlight a few documents that should give you a handle on what this case is all about, but there are many more on that page, and so you can dig as deeply as you wish.

Before I get to that, let me tell you about the two things that happened of particular note in the first week of the trial.

Microsoft Misstatements:

First, Microsoft already said some things they shouldn't have said in the opening statement, I gather, and Novell filed two motions -- 240 [PDF] (Motion for a Curative Instruction Regarding Microsoft's Misstatement of the Court's Preliminary Jury Instruction) and 242 [PDF] (Motion for a Curative Instruction Regarding Date of Case Filing), both asking the judge to tell the jurors not to be influenced by the misstatements.

What did Microsoft say? From the Memorandum [PDF] in support of its first motion, Novell tells the judge what was said that it believes was inappropriate:

Novell submits this memorandum in support of its motion regarding Microsoft’s misstatement of the Court’s preliminary jury instruction to ask the Court for a curative instruction reminding the jury that the Court, and the Court alone, determines the law that is applicable to this case. Novell makes this request because Microsoft’s counsel misquoted to the jury this Court’s substantive preliminary instruction on unlawful monopolization under Section 2 of the Sherman Act. Microsoft displayed the erroneous instruction in two PowerPoint slides and jurors were seen taking notes of the incorrect instructions. We are concerned that jurors will accept as true Microsoft’s misstatement of the Court’s instructions, and we submit that the issue should be addressed now to ensure that the jury does not incorrectly view the evidence through the prism of a mistaken view of the law.
That was fast, huh? Here's what Novell says the Preliminary Instruction said:
On October 11, 2011, this Court provided the parties with its Proposed Jury Instruction No. 1, which stated, in part: In order to prove its claim Novell must establish that (1) Microsoft willfully maintained its monopoly in the PC operating system market by engaging in anticompetitive conduct, including conduct to thwart development of Novell’s WordPerfect word processing application and its other office productivity applications, during the period relevant to this case and (2) Microsoft’s anticompetitive conduct engaged in from June 1994 to March 1996, injured Novell in its business or property during that period of time.
Both Novell and Microsoft objected to that wording, Novell to the clause “including conduct to thwart development of Novell’s WordPerfect” on the ground that "Section 2 of the Sherman Act does not limit proof of anticompetitive conduct to particular victims". The judge said he'd rule on that issue later, and then when the jury was seated, he read this:
The Court told the jury that the law required some causal connection between the conduct and Microsoft’s maintenance of its monopoly, but that it would instruct the jury on the specific requirements at the close of evidence.
But here's what Microsoft's lawyer said, followed by Novell's objection:
Yesterday Judge Motz provided you with this instruction, that: In order to prove its claim, Novell must establish among other things that Microsoft willfully maintained its monopoly in the operating system market by engaging in anticompetitive conduct against Novell’s products during the time Novell owned those products. October 18, 2011 Tr. at 137:22-138:4 (emphasis added).
That is wrong. The underlined language is inconsistent with this Court’s instruction and would impose on Novell a greater burden of proving that Microsoft maintained its monopoly by engaging in conduct directed at Novell’s products alone, as opposed to anticompetitive conduct, “including” conduct that harmed Novell’s office productivity applications. Microsoft compounded this error by displaying the incorrect instruction in a PowerPoint slide. Several jurors were seen taking notes of the incorrect instruction. Given the attention given by the parties in various briefs and argument to the Court regarding the preliminary instructions, it is hard to understand how Microsoft’s counsel would misquote – in a slide shown to the jury – the Court’s carefully crafted preliminary instructions.

A few moments later, Microsoft’s counsel told the jury that

[F]or Novell to prevail in this case they have to prove to your satisfaction, as the court instructed you yesterday, that Microsoft’s monopoly in operating systems, in Windows, came about because of the conduct they claim was wrong . . . . And to prevail in this case, Novell is going to have to show you that somehow if WordPerfect had come out earlier . . . that that would have changed everything in the market for operating systems, that Windows’ popularity would have declined significantly. We don’t think . . . there will be any evidence at the trial that the market for operating systems would have been any different had WordPerfect come out sooner or had the NameSpace extension APIs been fully documented or anything else that Novell lawyer -- Novell’s lawyer asserted. Id. at 138:13-139:14 (emphasis added).
Again, this Court did not provide any such instruction. This misstatement – suggesting that Novell’s claim had to do with monopoly acquisition, as opposed to monopoly maintenance – mischaracterizes Novell’s claim, in addition to misstating the relevant applicable law under the guise of a supposed court instruction. Moreover, Microsoft counsel suggested that the Court gave a causation instruction, when in fact the Court told the parties and the jury that it wanted to wait until later in the case to decide on the appropriate final instruction on this issue.
The jury had no notebooks when first seated and listening to the judge's instructions, they did have notebooks the next day when Microsoft was talking, and so Novell is worried about the effect. How do you unring that bell? So it asked not only for a curative instruction but for the following:
In addition, at the appropriate time, Novell will ask the Court to reconsider its tentative view that “I don’t think that Novell can rely upon what happened after the relevant period to show cause in the maintenance of the monopoly.” October 13, 2011 Tr. at 12:25-13:02. Microsoft has now told the jury that Novell must show how the operating system market would have developed but for the misconduct and challenged Novell to put that evidence before the jury. It would be fundamentally unfair to prevent Novell from doing so. While Novell maintains that a curative instruction is appropriate to remedy the misquotations noted above, it does not believe that it can un-ring the bell that Microsoft sounded regarding the “causation” element of a Section 2 claim.
The second motion [PDF] reads like this, in its entirety:
Plaintiff Novell, Inc. (“Novell”) respectfully moves this Court for the following curative jury instruction:
During opening statements, counsel for Microsoft made reference to the fact that Novell did not file this lawsuit until 2004. The jury should draw no adverse inference against Novell based on the fact that it filed the present lawsuit in 2004 rather than at some earlier time. Under the law, Novell had the legal right to file its lawsuit when it did and was under no legal obligation to bring this lawsuit at any earlier date.
As explained in the accompanying memorandum in support of this motion, this instruction is necessary to cure the unfair prejudice resulting from Microsoft’s improper argument during its opening statement that the jury should infer, from the fact that Novell’s suit was not brought until 2004, that Novell’s suit lacks merit.

Wherefore, Novell respectfully requests that the Court give the requested curative instruction.

The details are in the Memorandum in Support [PDF]:
In its opening statement, Microsoft repeatedly argued that the jury should infer, from the fact that Novell’s suit was not brought until 2004, that Novell’s suit lacks merit: “Novell didn’t even file this lawsuit until November of 2004, more than ten years later.” October 18, 2011 Tr. at 91:1-2. “[T]his conduct that allegedly is so bad . . . Novell said nothing about at the time and waited more than ten years before it even brought this case . . . .” Id. “We don’t blame anyone or say it’s anyone’s fault. But making a misjudgment about a business that you buy and then, ten years later, blaming someone else for your mistake, that, with all respect, I think is wrong.” Id. at 103:23-104:2. “And as I told you when I started this opening statement way back when, though the decision was made in ’94 and Novell made no complaint in 1994, the lawsuit was filed 10 years later.” Id. at 141:3-6.

In making this argument, Microsoft took improper advantage of the fact that (1) the jury has been shielded from learning of the existence of the Government case, and (2) the jury is unaware of the fact that the statute of limitations was tolled during the pendency of the Government’s prosecution of that case. Novell has been unfairly prejudiced as a result....

As matters currently stand, the jury will not know that the existence of the Government case tolled the statute of limitations, much less the sound policy reasons for allowing private parties like Novell to await the completion of such proceedings before having to decide whether or not to bring a private action. Indeed, the Court ruled that the jury should not even be told that the findings as to which this Court granted collateral estoppel were made in the Government case, but should instead only be informed that the findings were made in a case that was brought in the District of Columbia. As a result, the jury will not be informed that, during the time period between the events at issue and the filing of Novell’s suit, a Government investigation and trial of antitrust claims against Microsoft took place and that the existence of this litigation tolled the statute of limitations for Novell’s claim.

Microsoft took unfair advantage of the Court’s prior rulings when it repeatedly argued that the reason that the present lawsuit was not filed until 2004 was because the suit lacked merit. Microsoft made this argument because it knew that the jury would not be told the real reason for the delay: the pendency of the Government antitrust case against Microsoft and the resulting tolling of the statute of limitations.

It is unjust and unfair to allow Microsoft to try to impugn the merit of Novell’s claims and thereby punish Novell for exercising its legal rights under the Clayton Act, by allowing the jury to infer that the reason for the delay in filing was because the suit was not meritorious. To prevent this unfair prejudice to Novell, the jury should be given the instruction proffered above.

In short, they're off to the races. The judge agreed to issue a "curative instruction". You can see that in the Minute Entry #244, dated Oct. 19th:
Outside the presence of the jury, the Court hears argument on motion for curative instruction re: remarks made by Mr. Tulchin during opening statements 10/19/2011. The motion is GRANTED and an instruction will be given to the jury.
I don't know if that means both motions or just one, but later, if we can get a transcript, we'll get the full details. Meanwhile, I'd say we can rest assured that Microsoft is still Microsoft. They are, as you know, world-renowned for always playing fair.

The Judge: "We shouldn't be here, but we are - and that's your fault."

And second event of note is that the judge expressed what seemed to one of our witnesses as a hostile or at least negative remark to Novell. You know how I always tell you that judges don't have deep fears or anxiety or emotions about being overturned on appeal? I might have to make an exception, although I'm not sure. But our second witness there at trial on the second day, cpeterson, sent me this report about the incident:

Back to Microsoft's opening statement - I'm going to quote a piece from Chris's notes, an excerpt from Microsoft's NDA covering the Chicago (Win95) beta: "The Product may not operate correctly and may be substantially modified prior to first commercial shipment. Company assumes entire risk with respect to the use of the product."

Shortly after this, Judge Motz interrupted for a break. After the jury left, one of Novell's lawyers raised an objection about the NDA content, saying that Judge Motz had already ruled that Microsoft couldn't use that language for (I didn't catch the next part clearly.)

Judge Motz very frostily replied "We shouldn't be here, but we are - and that's your fault. I'm not going to rule on that, so you'll just have to fight it out between yourselves the best you can." Then he walked out of the courtroom.

I left during the break, so I can't report on what might have happened after that.

When I read that, I immediately contacted Chris Brown, our other reporter, to find out if he heard that also. He did, but he wasn't sure what was meant and he says that after the break, all seemed fine:
The judge had seemed good-natured and even happy to be at the trial until then.

  I couldn't tell if he had become upset because Microsoft brought it into the trial, or because Novell objected to it.

  When he'd returned from the break he seemed just fine.

So who knows? Nevertheless, it raises a question in at least my mind -- why didn't this judge recuse himself, as Judge Dale Kimball did when he was overruled on appeal in SCO v. Novell? Is it possible Judge Motz holds a little grudge? Or maybe he's just sick of hotel rooms or commuting. After all, it was Microsoft, if I recall correctly, who wanted the trial moved to Maryland from Utah, where Novell first filed its case. Then, after his summary judgment ruling in favor of Microsoft was reversed and remanded on appeal, and the case is sent back for trial but *not* back to Maryland but to Utah, he decided to commute from Maryland to Utah, to stay on the case.

It could be nothing, just a bad day, what he said. But it definitely stands out as an event in my mind. If I were Novell, I'd be a little bit concerned, or at least alert.

The Collateral Estoppel Issue:

As you'll recall from our earlier coverage, one issue is collateral estoppel. Novell filed a renewed motion [PDF] seeking collateral estoppel back in August, and the issue is still in the air. The quick overview is that Novell wants issues settled in the earlier DOJ v. Microsoft antitrust case to be given "preclusive effect" -- which just means Novell doesn't want to have to prove them all over again. It got to read the Findings of Fact on the first day of jury trial, if you recall, although the judge wouldn't let them tell the jury what the case was called or who sued Microsoft. It was a renewed motion, because the judge had earlier ruled that some of the Findings of Fact would be given preclusive effect, but he'd deferred until later on some others. It's worth reading the renewed motion in part, to get a really clear picture of what Novell hopes to prove at trial:

Plaintiff Novell, Inc. (“Novell”) submits this memorandum in support of its renewed motion seeking collateral estoppel for the Findings of Fact (“Findings”) and Conclusions of Law (“Conclusions”) of the United States District Court for the District of Columbia in the case United States v. Microsoft Corp., 84 F. Supp. 2d 9 (D.D.C. 1999) (the “Government case”), that the United States Court of Appeals for the District of Columbia Circuit affirmed in United States v. Microsoft Corp., 253 F.3d 34 (D.C. Cir. 2001). On December 3, 2008, this Court ruled that Microsoft Corporation (“Microsoft”) is collaterally estopped from contesting the following Findings: 2, 4, 6-10, 30-31, 33-39, 144-145, 148, 159, and 239. The Court determined that these Findings “clearly were ‘critical and essential’ to the judgment affirmed by the D.C. Circuit in the Government case.” Order at 1 (Dec. 3, 2008) (attached as Exhibit 1). The Court deferred, until a later stage of this litigation, ruling upon (1) whether other Findings were “critical and essential” and would be given preclusive effect, (2) whether the Findings and Conclusions in the Government case were material to the issues in this case, and (3) what language the Court will include in the instructions to the jury regarding the Findings and Conclusions to which the Court gives preclusive effect. See id. at 1-2.

Novell now moves the Court to preclude Microsoft from relitigating other Findings and Conclusions in the Government case, and for a determination that the Findings and Conclusions are material to the issues in this case.2 As Novell demonstrates below and in Appendix B, all of the Findings that Novell has asked the Court to preclude Microsoft from contesting are material to the issues in this case and were critical and essential to the affirmed judgment in the Government case. Microsoft, therefore, should be precluded from relitigating those Findings and Conclusions.

I. ISSUES TO BE TRIED IN THIS CASE

Trial in this case currently is scheduled to begin in October on Novell’s claim that “Microsoft violated § 2 of the Sherman Act by taking anticompetitive actions against, and causing damage to, software applications owned by Novell for the purpose of obtaining and maintaining its monopoly in the operating system market.” Novell, Inc. v. Microsoft Corp. (In re Microsoft Corp. Antitrust Litig.), 699 F. Supp. 2d 730, 734 (D. Md. 2010), rev’d on other grounds, No. 10-1482, 2011 WL 1651225 (4th Cir. May 3, 2011). To succeed on this claim at trial, Novell must prove, among other things:

1. Microsoft had monopoly power in the relevant market (the Intel- compatible personal computer (“PC”) operating systems market); and

2. Microsoft engaged in anticompetitive conduct that caused anticompetitive harm in the relevant market – that is, “willfully and wrongfully maintained its monopoly.”

Novell, 699 F. Supp. 2d at 745. With respect to monopoly power, there can be no reasonable debate over the relevant market and Microsoft’s monopoly power in that market over the entire 1990s period. See Finding 35. While the Court’s December 3, 2008 Order granted preclusive effect to Findings 33-39, as well as certain other Findings related to the relevant market and Microsoft’s monopoly power in it, the Order did not grant preclusive effect to all Findings critical and essential to the D.C. District Court’s Conclusions regarding those issues and deferred any ruling on the materiality to this case of such Findings.

With respect to anticompetitive conduct and harm to competition, which involve overlapping considerations and analyses, Novell intends to demonstrate at trial, among other things, that Microsoft willfully and wrongfully maintained its monopoly by:

(1) withdrawing access to information about and changing course and otherwise refusing to cooperate regarding the Windows 95 namespace extensions, thereby delaying and impairing Novell’s development of the Perfect Office suite that was designed to run on Windows 95;

(2) misleading Novell about Windows 95 print functionality, thereby increasing WordPerfect’s costs and decreasing its functionality; and

(3) refusing to grant a Windows 95 logo certification for Novell’s Perfect Office suite.

Novell will further demonstrate that “Microsoft intentionally took actions against Novell’s applications because . . . ‘PerfectOffice,’ developed by Novell, constituted (or nearly constituted) ‘middleware,’ which could have been effectively used with any operating system and that therefore would have ‘commoditized’ Windows 95 and undermined the monopoly Microsoft enjoyed in the operating system market.” Novell, 699 F. Supp. 2d at 736 (emphasis added). Novell will show that Microsoft’s anticompetitive conduct, which must be viewed as a whole, caused injury to Novell and “contributed significantly to Microsoft’s monopoly in the PC operating system market considering all the characteristics of that market at the time, including the condition of other [independent software vendors] and applications.” Id. at 750 (emphasis added); see Caldera, Inc. v. Microsoft Corp., 72 F. Supp. 2d 1295, 1309 (D. Utah 1999) (finding “no bar to allowing [plaintiff] to present all of its evidence of Microsoft’s alleged anticompetitive conduct to a fact finder in support of its § 2 claim” (emphasis added)).

More specifically, Novell will show that “Microsoft’s corporate practice” was to “pressure other firms to halt software development that either shows the potential to weaken the applications barrier to entry or competes directly with Microsoft’s most cherished software products,” Finding 93, and that Microsoft’s anticompetitive conduct against applications and independent software vendors (“ISVs”) throughout the 1990s (including conduct against Netscape’s Navigator and Sun’s Java addressed in the Government case) weakened the applications and ISVs that represented threats to Microsoft’s operating systems monopoly. In that weakened market, Microsoft’s anticompetitive conduct that harmed Novell was reasonably capable of making a significant contribution to Microsoft’s continued monopoly power. See Novell, 2011 WL 1651225, at *7 (“Novell’s expert’s opinion about a hypothetical market leaves ample room for ‘a finding that Microsoft’s actions toward Novell were a significant contributor to anticompetitive harm in the PC operating system market in light of the weakened state of other applications and [independent software vendors].’” (alteration in original) (citation omitted)).3 Novell will further show that Microsoft’s intent, motive, purpose, and methodology for its anticompetitive conduct against Novell were the same as those for its conduct against Navigator and Java, i.e., protecting the applications barrier to entry from the cross-platform middleware threat by impeding sales, choking distribution, and deceiving developers.

In his report, Novell’s expert, Dr. Roger G. Noll, chronicles the history of Microsoft’s anticompetitive conduct in the 1980s and 1990s (including its use of exclusionary agreements, integration of software in its operating system in an anticompetitive manner, and withholding of critical technical information from and deception of software developers) and explains how Microsoft’s anticompetitive conduct that injured Novell harmed competition in the operating systems market in light of the weakened state of other ISVs and applications. See Declaration of Roger G. Noll at 8-10, 84-157 (attached as Exhibit 2). Dr. Noll specifically cites Microsoft’s conduct against Netscape’s Navigator and Sun’s Java, among others, id. at 89-90, which the D.C. District Court and the D.C. Circuit found to be anticompetitive in the Government case, as evidence that “Microsoft would destroy any product that it regarded as a threat to its core business assets,” id. at 10. Novell intends to present evidence at trial regarding that anticompetitive conduct to demonstrate the state of the operating systems market in light of Microsoft’s anticompetitive conduct against middleware threats like Netscape’s Navigator and Sun’s Java and the harm to that weakened market caused by Microsoft’s anticompetitive conduct against Novell. Microsoft should not be allowed to contest the D.C. courts’ Findings and Conclusions regarding its anticompetitive conduct against Netscape’s Navigator, Sun’s Java, and other middleware applications, all of which not only show Microsoft’s anticompetitive conduct and its effect on competition, but also undermine Microsoft’s business justification defense and assertion that its actions were intended to foster competition….

Generally, the offense of monopolization has two elements: “(1) the possession of monopoly power in the relevant market and (2) the willful acquisition or maintenance of that power as distinguished from growth or development as a consequence of a superior product, business acumen, or historic accident.” United States v. Grinnell Corp., 384 U.S. 563, 570-71 (1966). In holding that the Government proved these elements in the Government case, the D.C. District Court made determinations, which the D.C. Circuit affirmed, regarding: the definition of the relevant market; Microsoft’s dominant share in the relevant market; the existence of a barrier to entry; Microsoft’s possession of monopoly power; the exclusionary effect of Microsoft’s conduct; the lack of procompetitive justification for Microsoft’s conduct; and the harm caused to competition and consumers. See Microsoft, 253 F.3d at 50-51; Microsoft, 87 F. Supp. 2d at 36-39….

Granting preclusive effect to the Findings in listed in Appendix C and discussed in Appendix B and the Conclusions in Appendix A promotes judicial efficiency by streamlining the issues on which the parties must present evidence at trial and that the jury must decide.

_________
2 Novell intends to address the issue of the appropriate language for preliminary and final jury instructions after the Court determines to which Findings and Conclusions it will give preclusive effect.

3 See also Novell, Inc. v. Microsoft Corp., 505 F.3d 302, 314 n.22 (4th Cir. 2007) (“As with Novell’s office-productivity applications, the primary threat that Java and Navigator posed to Windows was not that they were competitors or potential competitors in the operating-system market . . . but rather that, from outside that market, they could enable an alternative operating system to compete with Windows. The anticompetitive activities that harmed Java and Navigator are undeniably similar to those alleged by Novell. . . . [W]e are not sufficiently persuaded by Microsoft’s proffered distinction between Novell’s products and middleware to consider irrelevant the parallels between Novell’s claims and the government’s claims.” (emphasis added) (citations omitted)).

Novell lists all the illegal conduct that the Findings of Fact in the DOJ litigation found Microsoft guilty of, and here are Appendix A, B, and C, where it is all laid out.. Appendix A is the list of all the Findings of Fact that Novell wanted the judge to now rule on:
Microsoft illegally maintained a monopoly in the market of licensing of all Intel-compatible personal computer (“PC”) operating systems worldwide through various specified acts of anticompetitive conduct. 355 F.3d at 328.

Microsoft possessed monopoly power in the market for the licensing of Intel-compatible PC operating systems. 253 F.3d at 51-52.

The relevant market is the licensing of all Intel-compatible PC operating systems worldwide because there are currently no products, and there are not likely to be any in the near future, that a significant percentage of computer users worldwide could substitute for these operating systems without incurring substantial costs. Id. at 52.

Microsoft’s license restrictions that prevented original equipment manufacturers (“OEMs”) from removing visible means of user access to Internet Explorer (“IE”) prevented many OEMs from pre-installing a rival internet browser like Netscape’s Navigator and, therefore, protected Microsoft’s monopoly from the competition that middleware might otherwise present. Therefore, the license restriction at issue was anticompetitive. Id. at 61.

Microsoft’s license provision prohibiting OEMs from modifying the initial boot sequence has the effect of decreasing competition against IE by preventing OEMs from promoting rivals’ browsers like Netscape’s Navigator. Because this prohibition has a substantial effect in protecting Microsoft’s market power, and does so through a means other than competition on the merits, it is anticompetitive. Id. at 61-62.

Microsoft’s license restrictions prohibiting OEMs from adding icons or folders different in size or shape from those supplied by Microsoft and from using the “Active Desktop” feature to promote third-party brands have the anticompetitive effect that OEMs are not able to promote rival browsers, like Netscape’s Navigator, which keeps developers focused on the application programming interfaces (“APIs”) in Windows. Microsoft reduced rival browsers’ usage share not by improving its own product but, rather, by preventing OEMs from taking actions that could increase rivals’ share of usage. Id. at 62.

Microsoft’s intellectual property rights did not confer a privilege to violate the antitrust laws, id. at 63, and Microsoft could not justify these license restrictions on the grounds that it was simply exercising its rights as the holder of valid copyrights, id. at 62-63.

Microsoft’s decision to exclude IE from the “Add/Remove Programs” utility in Windows 98 reduced the usage share of rival browsers not by making Microsoft’s own browser more attractive to consumers but, rather, by discouraging OEMs from distributing rival products. Because Microsoft’s conduct, through something other than competition on the merits, has the effect of significantly reducing usage of rivals’ products and hence protecting its own operating systems monopoly, it is anticompetitive. Id. at 65.

Microsoft’s decision to bind IE to Windows 98 by placing code specific to Web browsing in the same files as code that provided operating system functions has an anticompetitive effect. The commingling deters OEMs from pre-installing rival browsers, thereby reducing the rivals’ usage share and, hence, developers’ interest in rivals’ APIs as an alternative to the API set exposed by Microsoft’s operating system. Id. at 65-66.

Plaintiffs plainly made out a prima facie case of harm to competition in the operating systems market by demonstrating that Microsoft’s actions in excluding IE from the “Add/Remove Programs” utility and commingling code increased its browser usage share and thus protected its operating systems monopoly from a middleware threat and, for its part, Microsoft failed to meet its burden of showing that its conduct serves a purpose other than protecting its own operating systems monopoly. Id. at 67.

The internet access providers (“IAPs”) constitute one of the two major channels by which browsers can be distributed. Microsoft has exclusive deals with fourteen of the top fifteen access providers in North America, which account for a large majority of all internet access subscriptions in this part of the world. By ensuring that the majority of all IAP subscribers are offered IE either as the default browser or as the only browser, Microsoft’s deals with IAPs clearly have a significant effect in preserving its monopoly; they help keep usage of Navigator below the critical level necessary for Navigator or any other rival to pose a real threat to Microsoft’s monopoly. Id. at 70-71.

Although independent software vendors (“ISVs”) are a relatively small channel for browser distribution, they take on greater significance because Microsoft had largely foreclosed the two primary channels to its rivals. In that light, one can tell from the record that by affecting the applications used by millions of consumers, Microsoft’s exclusive deals with ISVs had a substantial effect in further foreclosing rival browsers from the market. Because, by keeping rival browsers from gaining widespread distribution (and potentially attracting the attention of developers away from the APIs in Windows), the deals have a substantial effect in preserving Microsoft’s monopoly (and Microsoft having offered no procompetitive justification), the deals violate Section 2 of the Sherman Act. Id. at 72.

Microsoft’s exclusive contract with Apple had a substantial effect in restricting distribution of rival browsers, which serves to protect Microsoft’s monopoly, and Microsoft offered no procompetitive justification for the exclusive contract. Accordingly, the exclusive deal is exclusionary, in violation of Section 2 of the Sherman Act. Id. at 72-74.

Microsoft’s First Wave agreements foreclose a substantial portion of the field for Java Virtual Machine (“JVM”) distribution and because, in so doing they protected Microsoft’s monopoly from a middleware threat, they are anticompetitive. Because the cumulative effect of the deals is anticompetitive and because Microsoft has no procompetitive justification for them, the provisions in the First Wave Agreements requiring use of Microsoft’s JVM as the default are exclusionary, in violation of Section 2 of the Sherman Act. Id. at 74-76.

The ultimate objective of Microsoft’s conduct related to its Java developer tools was to thwart Java’s threat to Microsoft’s monopoly in the market for operating systems and served to protect its monopoly of the operating systems market in a manner not attributable either to the superiority of the operating system or to the acumen of its makers, and therefore was anticompetitive. Microsoft offered no procompetitive explanation for its campaign to deceive developers. Accordingly, this conduct is exclusionary, in violation of Section 2 of the Sherman Act. Id. at 76-77.

Microsoft’s threats to Intel to stop aiding cross-platform Java were exclusionary in violation of Section 2 of the Sherman Act. Id. at 77-78.

These are not allegations; they are findings from the DOJ case against Microsoft, and now Novell is asking the court to rule that they are established for this case as well. It's an awful list, but two absolutely leap off the page in 2011, the one "Microsoft’s license provision prohibiting OEMs from modifying the initial boot sequence…" and the one "Microsoft’s intellectual property rights did not confer a privilege to violate the antitrust laws, id. at 63, and Microsoft could not justify these license restrictions on the grounds that it was simply exercising its rights as the holder of valid copyrights…" Presumably the latter is also true of patents. And on the booting question, it's creepy to realize that right now, Microsoft is requiring OEMs to use a "Secure Boot" feature if they ship Windows 8 that has the potential to block competing operating systems, like Linux, from being put on a machine with Windows 8.

Plus ça change. So in case you imagined this was all dusty legal issues that no one cares about all these years later, or maybe you felt you didn't care what happens to Novell after all that happened, think again. This case matters to Linux and to everybody.

As you might imagine, this is not what Microsoft wants, to have the jury hear all that or have it preclusively established, while Novell argues that the jury deserves to hear the full story and provide evidence about the history of the violations at central issue in a case, so there has been motion practice about the Netscape and Sun issues, but this is enough for now. This look at least tells us what Novell's issues are, and as we work on Comes v. Microsoft exhibits, it will be interesting to see which, if any, match up with Novell's issues and Microsoft's defenses. We've already found some that match Novell, and just yesterday, I read an email to Bill Gates from Ben Slivka, dating from 1997, Exhibit 4482 [PDF; text on this page], asking Gates "how do we wrest control of Java away from Sun?".

I know.

cpeterson went back the following day, Wednesday, and here's what happened that day:

That brings me up to Wednesday's hearing. The witness on the stand today was Gary Gibb, Director of the "Engine Team" for Perfect Office. On direct, he was questioned by John Schmidtlein (Williams&Connolly).

(Sorry, I'm not Chris. The more notes I take, the more stuff I miss.)

Mr. Schmidtlein asked Mr. Gibb to explain the effort to make Perfect Office a cross-platform product. Mr. Gibb said that the WordPerfect product was successful on DOS, Win, OS/2, and Unix, and they wanted to continue that.

He also explained about WordPerfect becoming middleware -- that it had its own set of APIs, so that developers could create custom solutions on top of WordPerfect. Many users "lived inside" WordPerfect - that is, when they turned on their computer, they immediately started WordPerfect and used that as their operating environment.

Mr. Gibb covered a lot of the internal workings of managing the different teams of programmers involved: about 300 people on different portions of the project; their work milestones would be compiled into a Gantt chart, allowing determination of the "critical path" -- that portion of the project which would be the hang-up as far as getting things done.

Sharon Nelles (of Sullivan & Cromwell) cross-examined Mr. Gibb, asking about a number of items in different parts of the timeline which may have been critical path at one time or another. These included QuattroPro at several different junctures (the merger, the point in late '95 when a number of developers left, and others). Mr. Gibb was steadfast in asserting that, contrary to what they expected in the planning phase, the QuattroPro portion never did become critical path. That distinction went to PerfectFit (the shared code project) very early on, and stayed there all the way through.

(A number of times during Ms. Nelles questioning, Judge Motz interrupted and answered for Mr. Gibb. It made for some very awkward moments -- really, what could she do? Object?)

She also questioned whether Novell was spending extra time trying to make a "cooler" project, and wasted unnecessary time trying to make the File Open Dialog much more complicated than it needed to be.

Mr. Gibb maintained that WordPerfect had always allowed its users a great deal of range in what it could do inside the product, and that capability was something they felt important to include in the merged suite of products.

On re-direct, Mr. Schmidtlein asked if it would have been easier to use the Common Open Dialog - the simpler API, rather than the newer one.

Mr. Gibb replied "Yes - I wouldn't have had a job!"

That is what always made WordPerfect so wonderful for law offices -- you could make it do whatever you wanted, and right out of the box it did things well that Microsoft Word wasn't so good at, like headers on legal documents and footnotes, and versioning. But I personally experienced the incompatibility glitches between the two products, when lawyers I worked for and I tried to send drafts of things back and forth between the two products.

So, that should give you a pretty good idea of what Novell wants to say at trial, if the judge lets them. This E-Commerce Times account stresses that it's mostly about the delay in Windows 95, but as you can see, it's more complex than just that one issue, and what it will end up being about is still being determined in motion practice. Plus there are always surprises at trial.

The article quotes some lawyers who seem to think it's more than a little likely that Microsoft will settle before this litigation goes to the jury for a decision:

The trial is moving forward on Novell's allegations that Microsoft delayed releasing Windows 95 in order to keep WordPerfect and Quattro from gaining traction. Novell is seeking between US$500 million and $1.2 billion in compensation.

The trial promises to be a long one, with former Microsoft CEO Bill Gates possibly being called as a witness.

That is just one reason Microsoft may settle this case, suggested Hillard M. Sterling, a partner at Lewis Brisbois Bisgaard & Smith.

"I can't imagine Bill Gates wants to be publicly embarrassed," he told the E-Commerce Times.

Even if Gates' testimony is confined to a video deposition, it may prove too uncomfortable for Gates to have his emails trotted out for public consumption.

Too late! We have a zillion Microsoft emails right here, pages and pages of them, ready for historians, and you, to read to your heart's content, from an earlier antitrust case that settled before the jury could rule, but which lasted long enough for the judge to allow the exhibits to be made public, and we've carefully preserved them, doing them as text so they are more easily searchable.

Anyway, nothing will be happening in the courtroom now until November 7th, as you can see in the final item on our Timeline, #258:

Jurors are directed to return 11/07/2011 @ 8:00 a.m. for trial.
Update:

Some asked what kind of questions the judge was answering, so cpeterson fills in the gaps for us with a followup report:

Ms. Nelles was cross-examining Mr. Gibb about things in his deposition (2009, I think it was), in comparison with some emails from the 1993-1995 time frame. One set of questions concerned something he had said in his deposition about there being no place in the market for a second best product, I believe it was; in his email at the time he had mentioned Microsoft's suite having an unassailable lead, followed by Lotus SmartSuite and Borland. (I may have those jumbled or wrong, but it gives the gist of what was happening.)

She then proceded to use those two factoids to press Mr. Gibb on whether Novell was trying to produce the "best software", or whether they were really shooting for number 2 or 3, since he had already admitted they couldn't catch Microsoft.

Judge Motz interrupted, saying that nobody tries to be second best.

(It seemed to me she was crossing up sales rank with software quality. A Yugo was "better" than a Bentley, right? They probably sold more, anyway.)

The other one I remember was a line of questioning on a date; I believe it was the date of the sale of WordPerfect to Caldera. Ms. Nelles was trying to pin Mr. Gibb down on the particular date; Judge Motz gave the answer.

Ms. Nelles turned away from the microphone looking like she had just bit into something vile. She didn't go back to that line of questioning, so I have no idea what she would have been driving toward. After about a 10 second pause, she moved on to another subject.


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