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Microsoft did not break antitrust laws in dealings with Novell, court rules

Published: Monday, Sept. 23 2013 5:55 p.m. MDT

Microsoft Corp. did not violate antitrust laws two decades ago in its dealings with one-time competitor Novell Inc., a federal appeals court ruled Monday.

Scott G. Winterton, Deseret News

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SALT LAKE CITY — Microsoft Corp. did not violate antitrust laws two decades ago in its dealings with one-time competitor Novell Inc., a federal appeals court ruled Monday.

"Novell complains that Microsoft refused to share its intellectual property with rivals after first promising to do so. But the antitrust laws rarely impose on firms — even dominant firms — a duty to deal with their rivals," according to a 10th Circuit Court of Appeals three-judge panel.

"With respect to Novell at least, Microsoft did nothing unlawful."

Provo-based Novell now has several options in what is already a prolonged, contentious legal battle, including asking for a full 10th Circuit review, appealing to the U.S. Supreme Court or abandoning the case.

"Naturally we are disappointed by the decision issued today by the U.S. Circuit Court of Appeals, and are considering next steps," said Jim Lundberg, Novell vice president. "Ultimately this decision will have no effect on our day-to-day operations nor our company's vision for current and future Novell customers."

The appeals court opinion affirms U.S. District Judge J. Frederick Motz's ruling last year that Novell did not produce enough evidence to prove Microsoft broke antitrust laws in its development of applications for the Windows 95 operating system.

Novell sued Microsoft in 2004 for at least $1.3 billion, claiming six antitrust violations. Courts dismissed all but one.

The remaining issue, in which Novell argued that Microsoft deliberately put Novell's newly acquired WordPerfect word processing products at a competitive disadvantage in the mid 1990s, went to trial in 2011.

The trial ended in a hung jury after eight weeks of testimony. Microsoft co-founder Bill Gates took the witness stand for two days of hostile and humorous exchanges with Novell lawyers.

Novell bought WordPerfect in 1994 for $1.5 billion. It sold the one-time Orem-based company about 18 months later for just $146 million.

"All WordPerfect wanted was to compete with Microsoft Word and Office on a reasonably level playing field," Novell attorney Jeff Johnson told jurors in closing arguments at the trial. "Unfortunately, as you have seen, Mr. Gates and Microsoft had other plans."

Novell contended Gates purposefully abandoned a key piece of computer code from a beta version of Windows 95 that Novell intended as an integral part of its products for Windows.

That decision, Novell argued, impeded the development and release of its WordPerfect Office Suite for Windows 95, allowing Microsoft to gain a foothold in the home computer software market.

Microsoft contended Novell bought a dying company in WordPerfect and was slow to recognize the emergence of Windows. It argued that delays in the making of Novell's spreadsheet product slowed the release of its Windows 95 software.

In siding with Microsoft, however, the appeals panel noted the company had a "rich diversity of antitrust misdeeds in the 1990s" while it was "busy amassing a virtual empire."

"This case calls on us to decide whether Microsoft back then committed still another, as-yet undetected antitrust violation — this time at Novell’s expense," the court wrote.

"At the end of the day it is clear to us, as it was to the district court, that Microsoft’s conduct does not qualify as anticompetitive behavior."

Email: romboy@deseretnews.com

Twitter: dennisromboy

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