Judge's ruling opens way for Caldera Win95 suit

By rejecting the appeals court decision, he's lifting Microsoft's immunity


MS on Trial Judge Benson, in dismissing Microsoft's summary judgement motions in the Caldera case, surprisingly commented that he didn't agree with the DC court of appeals decision that let Microsoft off the hook about tying IE to Windows. Rather surprisingly, his court is not bound by that decision, but if Microsoft finds its DoJ case back in the appellate court in DC, or in the supreme court - as seems highly likely - it will be extremely interesting to see how Judge Benson's view influences the outcome. In view of the importance that Microsoft has attached to that case, it's worth delving into just what the judge's view is in Salt Lake City. Judge Benson noted that "Microsoft contends that so long as the integrated design of Windows 95 offers any technological benefit, its design is immune to judicial review under the antitrust laws." Because the tying cases that are binding upon this Court involve non-technical products..., Microsoft argues that the Court should apply the reasoning used by the United States Court of Appeals for the District of Columbia Circuit in United States v Microsoft" last year. He noted that "Microsoft relies heavily on this case in support of its present motion, premising its argument on the contention that technically integrated products are immune from per se [from Sherman Act section 1] liability. As with the case at bar, the case before the D.C. Circuit arose from Microsoft's practices in marketing Windows 95. In that case, the D.C. Circuit considered whether the district court erred in entering a preliminary injunction prohibiting Microsoft from requiring computer manufacturers who license its operating system software to license its internet browser, Internet Explorer, as well. The preliminary injunction turned on the court's interpretation of a consent decree between the Department of Justice and Microsoft, which in relevant part reads: 'Microsoft shall not enter into any License Agreement in which the terms of that agreement are expressly or impliedly conditioned upon: (i) the licensing of any other Covered Product, Operating System Software product or other product (provided, however, that this provision in and of itself shall not be construed to prohibit Microsoft from developing integrated products).' " This text from the 1994 consent decree contains the guts of the so-called contempt case brought against Microsoft by the DoJ on 1998, which resulted in Judge Jackson's interim injunction to stop the forced integration of IE and Windows. This was subsequently over-ruled by the Court of Appeals. But Judge Benson argued as follows: "Although both Microsoft and the DOJ characterise section IV(E) of the decree as an 'anti-tying' provision, the court found that 'the decree does not embody either the entirety of the Sherman Act or even all 'tying' law under the Act.' Nevertheless, the court stated that 'the consent decree emerged from antitrust claims, unresolved as they were, so that we must keep pro-competitive goals in mind in the interpretive task.' It is in this perspective that the court began its analysis in attempting to interpret the consent decree consistent with the antitrust laws. While the court stated that it would keep antitrust 'goals in mind', in essence the court's task was 'to discern the bargain that the parties struck' in the consent decree." At this point, Judge Benson asserted that "the D.C. Circuit's opinion [is] non-binding on the proceedings before this Court" and went on to criticise it: "it is even less persuasive due to the context in which it arose. Nevertheless, due to Microsoft's heavy reliance on this case, the Court will review the D.C. Circuit's analysis as it may apply to the instant case. "After debating whether Windows 95 and its Internet Explorer were an 'integrated product' under the consent decree, the D.C. Circuit determined that it should ask the question 'not whether the integration is a net plus but merely whether there is a plausible claim that it brings some advantage.' Microsoft now urges the Court to adopt this standard and reject Caldera's challenge to Microsoft's integrated product design of Windows 95 so long as Microsoft has a plausible claim of technological improvement that brings some advantage. Upon announcing this standard the D.C. Circuit acknowledged that '[w]hether or not this is the appropriate test for antitrust law generally, we believe it is the only sensible reading of IV(E)(i).'" It takes some courage to disagree with an appellate court, but there is no holding back: "This Court finds that such a test is not the appropriate standard to determine whether an illegal tie has taken place under antitrust law. Simply determining whether a 'facially plausible benefit' has been ascribed to justify an integrated product that is alleged to constitute an illegal tying arrangement falls short of satisfying the antitrust laws, as well as existing antitrust authority. This Court agrees with Judge Wald's dissenting opinion in Microsoft, that the majority's standard allows Microsoft 'too safe a harbour with too easily navigable an entrance.' Just as the dissent recognised that Microsoft could require OEMs to install "integrated" software without fear of running aground on the main prohibition of section IV(E)(i) so long as Microsoft has created a design to combine functionality in a way that offers the ultimate user some 'plausible' advantage otherwise unavailable, this Court finds that if the same standard were applied in the case at bar, Microsoft could similarly avoid [Sherman Act section 1] violations and tie whatever products it wanted by simply pointing to some 'plausible advantage'. Furthermore, as Judge Wald stated: 'It is difficult to imagine how Microsoft could not conjure up some technological advantage for any currently separate software product it wished to 'integrate' into the operating system.' Were this Court to adopt in this case the standard the D.C. Circuit articulated in the narrow context of the D.C. case, the Court would be adopting a broad standard of allowing a showing of 'plausible' product improvement functionality, whatever that means, as an absolute defence to a [Sherman Act section 1] tying claim. The Court is not willing to do so and would find such a standard to be inconsistent with existing legal precedent. "This is a case dealing with technology, and the Court recognises the need to promote pro-competitive conduct in the technology world. Indeed, technological innovation is an important defence in defending antitrust allegations. ... the Court finds that the D.C. Circuit has given too much deference to the technology argument and not enough to current antitrust law. Certainly a company should be allowed to build a better mousetrap, and the courts should not deprive a company of the opportunity to do so by hindering technological innovation. Yet, antitrust law has developed for good reason, and just as courts have the potential to stifle technological advancements by second guessing product design, so too can product innovation be stifled if companies are allowed to dampen competition by unlawfully tying products together and escape antitrust liability by simply claiming a 'plausible' technological advancement." Judge Benson's opinion raises many questions. Just how it will pan out, we shall have to wait and see. ® See also: Is Win95 really just Dos 7 plus Windows 4? Complete Register Trial coverage


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