Microsoft ruling may blunt other cases

Friday's antitrust ruling may give Microsoft powerful ammunition to defend itself against more than 60 private lawsuits pending against the software giant, legal experts claim.

On Friday, US District Judge Colleen Kollar-Kotelly approved, with few changes, a November 2001 settlement between Microsoft and the Justice Department and nine states. She then issued a revised settlement as her remedy in continued litigation brought by nine other states and the District of Columbia.

In the 344-page memorandum supporting her decision, Kollar-Kotelly potentially set limits on the use of US District Judge Thomas Penfield Jackson's "findings of fact" in other cases. Many of the cases already faced an uphill struggle but would have greatly benefited from the document's use to show Microsoft had harmed consumers or competitors, legal experts say.

But Kollar-Kotelly's comments, part of her explanation for not imposing the stiffer sanctions requested by the plaintiff states, could effectively end the majority of private cases pending against Microsoft.

Microsoft is expected to renew with new vigour its assault on the private lawsuits, which, with the exception of an investigation by the European Union's Competition Commission, derive from the US antitrust case. Most of the suits, filed on the behalf of consumers or competitors, seek damages resulting from Microsoft's anticompetitive acts.

"This judge has presented powerful reasoning to Microsoft's lawyers for defending its various private lawsuits that will allow them to argue that much of Judge Jackson's findings of fact are irrelevant or at least should not be accepted wholesale by these other courts as a clear basis for antitrust liability," said Rich Gray, a California-based lawyer closely following the trial.

Brad Smith, Microsoft's general counsel, agreed and made it clear that the company would use the newfound ammunition in some of the private antitrust cases.

"Just as the plaintiffs in these other cases have been introducing Judge Jackson's findings of fact, I think it is more likely we will be submitting, rather than they, the determination that was made" on Friday, he said. "There will be findings (in Kollar-Kotelly's ruling) that will be useful in these other cases. At the same time, I don't think that everything in these other cases will be disposed of by either Judge (Kollar-Kotelly) or Judge Jackson."

Attorneys filed the majority of the lawsuits after Jackson issued his devastating two-part ruling against Microsoft in November 1999 and April 2000. Jackson concluded that Microsoft used anticompetitive means to maintain an operating system monopoly in violation of the Sherman Antitrust Act.

At one point, Microsoft faced more than 130 private lawsuits, the majority brought on behalf of consumers and alleging the software giant had overcharged consumers for Windows. But Microsoft effectively defeated the majority of the suits on an important technicality. Under federal law, third parties cannot directly sue an antitrust violator. Since the majority of consumers bought Windows through retailers or installed on PCs, they could not sue Microsoft for damages resulting from the company's antitrust violations.

But California and some other states have passed laws that allow third parties to sue the antitrust violator. So the cases there and another group in Baltimore successfully moved forward, even as Microsoft defeated others on the technicality. At the same time, companies potentially directly affected by Microsoft's antitrust violations started to file their own private antitrust lawsuits: AOL Time Warner's Netscape division, Be Inc. and Sun Microsystems are among the filers.

A federal judge in California has already accepted 382 of Jackson's findings for the group of lawsuits there. In Baltimore, US District Judge J. Frederick Motz said on Monday that 395 of Jackson's findings could be used in the Be, Burst.com, Netscape and Sun lawsuits. But he granted their use "subject to Microsoft being afforded a final opportunity to challenge particular findings as not having been necessary to the judgment in the government's case."

Microsoft has until 20 November to respond.

Joe Wilcox writes for News.com