Courts • Novell's antitrust lawsuit claims software giant killed its key product.
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A jury began deliberations Wednesday morning on whether Microsoft Chairman Bill Gates engaged in anticompetitive behavior when he decided in 1994 not to support a feature in Windows 95, an action Utah-based Novell Inc. says caused it to lose about $1 billion.
U.S. District Judge Frederick Motz gave the 12-person jury instructions in a Salt Lake City federal courtroom before the panel adjourned for deliberations about 8:45 a.m. Jurors were sent home for the day about 7 p.m. and are to resume deliberations Thursday. If the jury finds in Novell's favor, the judge could award triple damages as high as $3 billion.
The deliberations came after a two-month trial that saw two days of testimony by Gates, who defended his actions of 17 years ago. Novell lawyers contend his decision in October of 1994 violated antitrust laws because it was aimed at stifling competition from the Novell software programs WordPerfect and Quattro Pro.
The jury is being asked by Novell to find that Gates' decision to withdraw support for a software feature that had been planned for the computer operating system Windows 95 was made for anticompetitive reasons and not for the technical issues that Gates' claimed.
But in an unusual move, Motz on Wednesday added an advisory to his instructions, telling the jury that Novell's lead trial attorney had shown the jury an incomplete table when he presented his closing argument on Tuesday.
Jeffrey Johnson, of a Washington, D.C., law firm, displayed a Novell document on a screen that said the code for the new Quattro Pro version was ready in August 1995, when Windows 95 was launched. But Motz said Johnson neglected to show another part of the document that indicated the new version wouldn't be ready for manufacturing until March of the following year, or months late for trying to capture a high volume of sales from the introduction of the highly successful Windows 95.
Microsoft's trial attorneys blamed Novell for a poor decision in buying WordPerfect and Quattro Pro, and for muddling the updating of the programs for Windows 95. They particularly emphasized that Quattro Pro was nowhere near ready for inclusion in a suite of products, along with WordPerfect, until months after the launch of Windows 95.
"We're confident in the jury and are looking forward to what they have to say," said Steven Aeschbacher, associate general counsel for Microsoft.
Novell attorney Jim Lundberg declined comment.
Novell blames Gates for its delays with its updated software and said his decision meant Novell had to scrap codes it had planned to use with the Windows 95 feature that Gates scrapped. That delayed the launch of a WordPerfect-anchored software suite to the point that the popular word processor lost nearly all its market share, Novell said.
Novell was highly successful with its networking software NetWare in the early 1990s, and WordPerfect had a huge share of the word processing market with software that operated on the MS-DOS operating system. But WordPerfect's market share fell precipitously when Microsoft leaped ahead with its Office suite of products after it introduced Windows 95, which used a graphical interface to interact with users.
Novell filed its action in the wake of the U.S. Justice Department suing Microsoft in May 1998, alleging the software giant engaged in anticompetitive conduct in violation of federal laws in the market for personal computer operating systems and for Internet browsers. Dozens of lawsuits by software companies followed the DOJ's move, including Novell's 2004 filing.
Novell, of Provo, today is a wholly owned subsidiary of the Attachmate Corp. whose key operations are in the Seattle area.
For Microsoft, the trial marks the end of an era of antitrust litigation that began when the U.S. Department of Justice and a number of states sued in 1998. Except for one minor case pending in California, the Novell case is the last antitrust case from that era, Microsoft said.
End of the line for Microsoft's antitrust battles
The Novell trial marks a closure of sorts for major antitrust actions against Microsoft. The company has been sued or reached settlements for alleged antitrust violations since the late 1990s. The years listed are fiscal years that for Microsoft end on June 30 of each year.
1998 • The U.S. Department of Justice and 18 state attorneys general file lawsuits alleging violations of the Sherman Act and various state antitrust laws. The DOJ lawsuit opens the door for other legal actions.
2000 • Caldera, a Utah-company, and Microsoft settle an antitrust case related to DR DOS for $280 million, with $53.2 million eventually going to Novell, which had owned DR DOS but sold it to Caldera.
2002 • Microsoft settles the Justice Department suit and those from nine states, agreeing to alter some of its practices. Nine other states and the District of Columbia continue their suits.
2003 • Microsoft reaches agreement with California plaintiffs in 27 cases. It allows consumers to obtain vouchers for purchases of computer hardware and software.
2003 • Microsoft pays $750 million to AOL Time Warner in antitrust case involving subsidiary Netscape.
2004 • The European Commission fines Microsoft $605 million for anticompetitive practices.
2004 • Microsoft pays Sun Microsystems $700 million for antitrust issues and $900 million for patent issues.
2004 • Novell settles potential antitrust lawsuit related to its NetWare for $536 million.
2005 • Microsoft pays IBM $775 million to settle antitrust lawsuit.
2005 • Microsoft pays Gateway Inc. $150 million.
2005 • Microsoft pays RealNetworks $460 million in cash and $301 million in services.
2011 • Final settlements reached on all consumer claims from states and the District of Columbia. Microsoft estimates the total cost to resolve all of the overcharge allegations will be as much as $2 billion, including the cost of vouchers that could be used to purchase computer products.
Sources: Microsoft filings to Securities and Exchange Commission, Microsoft news releases.