Caldera judge finds MS ‘grossly misprepresented’ facts

'Particularly offensive,' sniffs Benson...

MS on Trial When denying Microsoft's motions for summary judgement in the Caldera case last week, US District Judge Dee Benson found that "Microsoft has grossly misrepresented" a cited case in a brief to the court. What follows is a little long-winded, but the detail is necessary to see just what Microsoft did. Microsoft was trying to contend that for Caldera to succeed on its claim it must first show that each of the alleged incompatibilities between DR-DOS and Windows "had no purpose other than to preclude competition from DRI", and cited in support Transamerica Computer Co., Inc. v. I.B.M. Corp. Transamerica was a producer of compatible peripherals for IBM mainframes (not personal computers as Judge Benson says). IBM redesigned its CPU to make it incompatible with any peripheral product not made by IBM. (Yes, that's how the old IBM functioned.) IBM maintained that the redesign had technological value and therefore the resulting incompatibilities could not support a Sherman Act section 2 claim. Judge Benson wrote: "Microsoft asserts in its reply brief that the court in Transamerica "held that a plaintiff must prove, in addition to intent, that the design decision was devoid of technical merit and had a significant effect on competition". Microsoft also adds that "the court [in Transamerica] expressly stated that design conduct violates 2 of the Sherman Act only if the 'design changes had no purpose and effect other than the preclusion of... competition' [citing the Transamerica case]. Applying this standard to the instant case, Microsoft argues that Caldera cannot show that even one of the alleged incompatibilities had as its only purpose the preclusion of competition or that the incompatibilities were devoid of technological merit. Therefore, defendant argues, plaintiff's claims fail as a matter of law." Judge Benson then commented: "Applying this standard, the Court may agree that plaintiff has not met its burden. However, Microsoft has grossly misrepresented the holding of Transamerica. Particularly offensive to the Court [that's as near fury as you can get in a judge's opinion] is the assertion that 'the court [in Transamerica] expressly stated that design conduct violates 2 of the Sherman Act only if the 'design changes had no purpose and effect other than the preclusion of... competition.'" This is simply not true. "It appears that Microsoft scanned the Transamerica opinion for language favourable to its position and then quoted that language entirely out of context with the intent of leading this Court to believe that the court in Transamerica held something it did not. What the Transamerica court did say is: " 'had IBM responded to [the manufacturers of peripheral equipment's] inroads on its assumed monopoly by changing the System/360 interfaces with such frequency that [peripheral equipment manufacturers] would have been unable to attach and unable to economically adapt their peripherals to the ever-changing interface designs, and if those interface changes had no purpose and effect other than the preclusion of [these manufacturers] from competition, this Court would not hesitate to find that such conduct was predatory.' "The Transamerica court was attempting to provide a hypothetical illustration of what would undeniably be predatory conduct. The court did not maintain that IBM had engaged in such conduct let alone intend to announce a standard that a plaintiff must meet in order to succeed on a technological incompatibility claim. The Transamerica court went on to add, "it is more difficult to formulate a legal standard for design conduct than it is to imagine clearly illegal situations. "Finally, the Transamerica court stated the standard by which it would evaluate the changes IBM made to the CPU design: 'A more generalised standard, one applicable to all types of otherwise legal conduct by a monopolist ... must be applied to the technological design activity here. If the design choice is unreasonably restrictive of competition, the monopolist's conduct violates the Sherman Act. This standard will allow the fact finder to consider the effects of the design on competitors; the effects of the design on consumers; the degree to which the design was the product of desirable technological creativity; and the monopolist's intent, since a contemporaneous evaluation by the actor should be helpful to the fact finder in determining the effects of a technological change.' The standard actually applied by the Transamerica court contemplates the effect the design choice has on competition. It does not impose the much heavier burden on a plaintiff of demonstrating that a design choice is entirely devoid of technological merit. "In addition, in the instant case plaintiff has not alleged a separate intentional incompatibility claim upon which a finding of liability is sought. As previously discussed, Caldera's claim of unlawful predatory conduct is based on the aggregate effect of all of Microsoft's anticompetitive behaviour. While each separate fact used to support Caldera's claim may not by itself legally support the claim, the overall effect may be prohibited anticompetitive conduct." There can be little doubt about Judge Benson's view of Microsoft's deliberate acts to make Windows incompatible with DR-DOS, but in this case it will be a matter for a jury to decide. However, the judge's view of Microsoft's lawyering could influence what matters he decides should be put to a jury. ® Complete Register Trial coverage

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