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MS wins Sun appeal – but it's probably only temporary

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MS on Trial There was a mixed decision yesterday by the Court of Appeals in the long-running Java corruption trial in which Sun has accused Microsoft of trying to pollute Java. Yesterday's unanimous Opinion resulted from an appeal by Microsoft over some technical issues about the preliminary injunction. The essence of the decision is that Judge Ronald Whyte in the District Court did not give a sufficient explanation of his decisions. Accordingly, the preliminary junction by Judge Whyte was vacated and the case sent back to the District Court for elaboration. But the appellate court agreed that it was likely that Sun would win the substantive case at trial, although a date has not yet been fixed. The legal issue centres on whether Sun's suit is properly one for copyright infringement or breach of contract. The important distinction is that if it is a copyright case, Sun is entitled to a presumption of irreparable harm, which is more valuable to Sun in that a contract case limits damages. Judge Whyte will now have to give his reasons for deciding it was a copyright case, and it would appear unlikely that he would reverse his own conclusion. Normally a copyright owner that grants a non-exclusive licence to use copyright material waives the right to sue the licensee for copyright infringement, the appellate court noted, but went on to observe that if a licence is limited in scope and the licensee acts outside the scope, the licensor can bring an infringement action. The court noted that the issue is at the intersection of copyright and contract law, an area of law that is not well developed. The appellate court Opinion made it clear that it favoured that a party that demonstrated likely success on merits would be entitled to a presumption of irreparable harm, provided it established that copyright had been violated. Another claim by Microsoft was that in the unfair competition claim, under California law any injunction must be based on future as well as past conduct. Sun had filed a motion under the California Business and Professions Code alleging unfair competition. Microsoft's claim was agreed by the appellate court and referred back, so Judge Whyte will have to address this. Again, it is likely that the judge will just tidy up his decision. The case draws attention to deficiencies in the speed with which the courts act in high technology cases, and shows that contracts can be wilfully broken by a party without much fear of effective punishment. Java was licensed to Microsoft "on a rushed basis" in 1996 for an annual fee of $3.75 million. In late 1996, Sun became concerned that Microsoft was attempting to pollute Java by creating a version that would only run with Windows. Sun sued in October 1997 and won a preliminary injunction in November 1998 that required Microsoft to pass Sun's Java compatibility tests if it shipped a product that included Java technology. The Order was clarified in May. With the weight of evidence in the Washington trial being strongly in favour of Microsoft having acted deliberately to sabotage Java and protect its operating systems monopoly, yesterday's decision adds weight to the need for monopolists to be dealt with effectively by the courts, since high tech contracts and technology licensing require goodwill on both sides if they are to be effective. When the licence was negotiated, the Java Native Interface did not exist, so was undefined. Nevertheless, the court found yesterday that there was "considerable evidence that JNI falls within Microsoft's compliance obligations". Overall, the case still looks good for Sun since the appellate court was firmly of the opinion that: "There is significant evidence to support the district court's holding that Sun has a reasonable likelihood of proving that Microsoft's Java compiler violated the compatibility provisions" of the contract. The court also found "considerable evidence" supporting the finding that Microsoft's extended (and incompatible) compiler mode is not permissible. The appellate decision made it possible for both sides to claim victory. Sun said that it thought "Judge Whyte will make the necessary findings to sustain the injunction." Microsoft said it is not anticipating making any "substantial product changes" as a result of the appellate court decision. Sun and Microsoft are not discussing any settlement, but Sun said yesterday it would welcome any interest by Microsoft in talks. ® Complete Register Trial coverage

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