Microsoft problems

[Karl Hergenrother]

Of possible interest.

Karl

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Jury to Decide Private Microsoft Suit

              By Rajiv Chandrasekaran
              Washington Post Staff Writer
              Wednesday, July 14, 1999; Page E1

     BRIDGEPORT, Conn., July 13 )B–– In more than a few ways,
     the trial in a federal courtroom here has mirrored a nationally
     prominent one in Washington. Both have featured unflattering
     clips from a video deposition of Microsoft Corp.'s billionaire
     chairman, Bill Gates. Both have aired scores of internal
     Microsoft e-mail messages.

     But there is one big difference in the two antitrust trials:
     length. While the government's case against Microsoft in
     Washington has been dragging since October, the trial of a
     private suit brought against the company by tiny software
     maker Bristol Technology Inc. wrapped up with closing
     arguments today after just six weeks. The jury is scheduled to
     begin deliberations Wednesday.

     Government attorneys are watching the trial here closely.
     Should Bristol win, some of its evidence could be introduced
     in Washington if Microsoft loses that case and a hearing
     follows on what sort of sanction to impose. The software
     industry is also keenly interested. A win by Bristol could
     embolden other companies that feel wronged by Microsoft to
     file similar suits.

     Bristol, based in Danbury and employing about 70 people,
     contends that Microsoft illegally restricted its access to crucial
     technical details of Microsoft's dominant Windows operating
     system out of fear that Bristol's software could help promote
     the use of Unix, a rival operating system.

     Bristol, which argued that Microsoft has a "duty to deal" with
     it, today appealed to the jury to force Microsoft to share the
     "source code" -- its equivalent of Coca-Cola's secret formula
     -- for the company's most-advanced operating system, its
     upcoming Windows 2000 product.

     Should the jury side with Bristol, it could seriously complicate
     Microsoft's plans to make Windows 2000 the far-and-away
     leader in the market for software for large corporate "server"
     computer systems. That's because Bristol's software, which
     allows software written for Windows to run on Unix
     machines, could inject new life into Unix.

     "There's a chance this [Windows] monopoly can be undone
     before it goes much further," Bristol's lead attorney, Patrick
     Lynch, told the five-man, four-woman jury in his closing
     arguments. "Competition could return to the server market,
     and maybe, there's a chance some of it will return to the
     desktop market."

     Microsoft maintains that it has no obligation under the
     antitrust laws to share its Windows technology with Bristol.
     The software giant said the lawsuit simply is a contract
     dispute -- that Bristol sued after it was told that it would have
     to pay more to license the source code and that it would not
     get access to every piece of code. "Source code belongs to
     the company that developed it," said David B. Tulchin, an
     attorney representing Microsoft, in his closing arguments.

     Bristol is asking the jury for $263 million in damages, roughly
     32 times its revenue last year, a figure that a Bristol
     economist estimated as the sum the company would lose over
     the next 10 years due to Microsoft's actions. Tulchin asserted
     that Bristol is suing not for technology, but money. He called
     Bristol's strategy "the let's-try-to-make-money-in-court
     business plan."

     The government's antitrust case, which is being heard by a
     judge, will not have closing arguments until September.
     Lawyers on both sides of that dispute do not expect a ruling
     until late fall.

     The issue of access to Microsoft's technology focuses not just
     on source code, but on the hooks Microsoft builds into
     Windows -- called application programming interfaces, or
     APIs -- which allow programmers to write software, such as
     word processors and spreadsheets, that runs on Windows.
     The company's critics have long argued that Microsoft does
     not fully disclose APIs to rivals, a charge the firm denies.

     Requiring Microsoft to commit to fully disclosing APIs and
     other technological details of Windows is one "remedy" under
     consideration by government attorneys, and it has been a
     topic of discussion during preliminary settlement discussions
     between both sides, according to sources close to the case.

     Founded in 1991 by former financial analyst Keith Blackwell,
     his wife and his brother, Bristol conceived of a product called
     Wind/U that would allow programs written to run on
     Windows also to operate on Unix machines. In the early '90s,
     as Windows was making its first inroads into the server
     market, Wind/U appealed to Microsoft because it felt more
     companies would write Windows applications if those
     applications could also be used on Unix computers.

     For Bristol's product to work, though, it would need access to
     Microsoft's technology, which Microsoft granted in 1994.
     Shortly thereafter, Bristol's business boomed. Its 1997
     revenue topped $8 million. But when Bristol tried to renew its
     contract with Microsoft in late 1997, the software giant said it
     was raising the fee for the source code and it would no longer
     part with all of the code. "It was a classic bait-and-switch,"
     Blackwell said in an interview.

     Bristol said Microsoft changed the terms of its contract
     because Windows had made significant inroads in the server
     market and it no longer needed to persuade software
     developers to write for it. Instead, Microsoft wanted to make
     Unix less attractive by preventing it from being able to run the
     latest Windows programs.

     Microsoft argues that its new contract was not onerous, and it
     notes that one of Bristol's chief rivals, a firm called Mainsoft,
     agreed to the terms.

     Blackwell doesn't see it that way. The contract Microsoft
     offered would have given his firm access to only 6.5 percent
     of new Windows code, he said. "It clearly would have killed
     our business." Going to court, "is our only chance to stay
     alive."

                    )B© 1999 The Washington Post Company

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