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Judge declares hung jury in Novell-Microsoft trial
This is an archived article that was published on sltrib.com in 2011, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.

A federal judge declared jurors deadlocked and dismissed them Friday after three days of deliberations that capped a two-month antitrust trial involving Utah-based Novell Inc. and Microsoft Corp.

Novell claims Microsoft broke antitrust laws in a 1994 decision by company chairman Bill Gates concerning the Windows 95 computer operating system.

After weeks of mostly technical testimony and evidence, the jury deadlocked 11-1 in favor of Novell, attorneys for the company said.

"One juror had strongly held technical views and he wasn't going to budge," Novell's lead trial attorney, Jeffrey Johnson, told reporters after speaking with jurors. "It's gratifying the jury by and large saw our point of view."

Novell Legal Vice President Jim Lundberg said the company will continue the legal battle and push for a new trial.

"We look forward to retrying the case and for the opportunity to convince all 12 jurors," Lundberg said.

Late Friday afternoon, the jury foreman sent a note to presiding U. S. District Judge J. Frederick Motz saying,``I'm sorry, very sorry we cannot come to one accord. I've done the best I know how.''

Looking haggard and distraught as they assembled in the courtroom, the seven-woman, five-man jury shook their heads when Motz asked them if there was any chance of reaching a verdict. One woman dabbed her eyes with a handkerchief as she cried. After dismissing the panel, Motz went into the jury room to talk with them.

After speaking with Motz behind closed doors, jurors came back into the courtroom and shook hands and chatted with attorneys, the one still crying as she made her way across the room.

With the hung jury, Microsoft escaped a verdict that it had engaged in anti-competitive conduct as well as nearly $1 billion in potential damages Novell asked the jury to assess.

Microsoft attorneys said it wasn't clear that jurors had deadlocked 11-1 because they had stalled part way through filling out the verdict form. Steven Aeschbacher, associate general counsel for Microsoft, said the company was confident in its case in any further legal proceedings.

Novell, based in Provo, filed its lawsuit in November of 2004, alleging that Gates' decision in 1994 to withdraw support for a previously announced feature of the Windows 95 operating system violated antitrust laws because it was intended to harm the word processor WordPerfect. Novell — back then the dominant provider of networking software — had purchased WordPerfect that year in an effort to compete with Microsoft in areas beyond networking.

During his testimony during Thanksgiving week, an at-times combative and acerbic Gates denied he made the decision in order to slow Novell's effort to produce a Windows 95 version of WordPerfect in a suite of software that would compete with Microsoft's Office. Instead, Gates said, developers feared the feature dealing with file management could crash Microsoft's computer operating system Windows NT that was to share codes with Windows 95.

Gates' withdrawal of support for the feature meant Novell had to rewrite code that would make its applications such as WordPerfect work together as a suite on Windows 95, a development that made it so late to get its product on the market that Microsoft's Office surged insurmountably ahead.

Novell put on a technical expert and used additional documents to assert that Gates' explanation had been later fabricated by Microsoft to cover anticompetitive behavior at a time when it had a virtual monopoly on personal-computer operating systems.

Indeed, Novell's Exhibit No. 1 was Gates' email of Oct. 3, 1994, to Microsoft development teams in which he announced his decision, citing competition with WordPerfect and Lotus.

"We should wait until we have a way to do a high level of integration that will be harder for [the] likes of Notes, WordPerfect to achieve, and which will give Office a real advantage," Gates wrote.

Gates testified that he was not even aware that Novell was planning to use the software code feature in its planned suite. That part of his email referred to his disappointment with the technical aspects of the feature and also concerned email applications and his hopes that his own developers would do a better job in the future, the software billionaire said.

Novell countered with evidence it said showed Gates was well aware that Novell planned to use the Windows 95 feature and that Gates, in an internal email shortly before his decision, had said some innovations Novell planned for a new release of its products were way ahead of what Microsoft had for Office.

Novell's attorneys also pointed to an executive retreat at Gates' compound where he apparently gave the go-ahead to a plan that would have reserved certain features in Windows 95 for Microsoft's Office and denied them for other software makers. Though it was never carried out, Novell said the plan pointed to Gates' antitrust mind-set in the run-up to his Windows 95 decision at issue in the case.

Novell bought WordPerfect and the spreadsheet Quattro Pro in 1994 for $1.5 billion only to sell them less than two years later for $146 million, a loss of more than a billion dollars, around the amount it asked the jury to award it.

But Microsoft contended that Novell made a poor decision to buy WordPerfect and Quattro Pro and then mismanaged the conversion of those products into a suite of applications on Windows 95 at a time when suites were soaring in popularity as the preferred way of buying word processing and other applications.

Microsoft attorneys said Novell was unfocused and slow to start building Windows 95 versions and, as a result, did not have a suite ready to sell within the critical first months of the launch of the wildly successful operating system. As evidence of Novell's poor decision, they also pointed to the billion-dollar drop in market value that Novell's shares suffered after the company announced the WordPerfect and Quattro Pro purchases.

For Microsoft, the trial represents the last of an expensive string of legal actions against it over antitrust allegations that stretch back to the 1998 Department of Justice lawsuit contending the company had engaged in anticompetitive behavior to maintain its monopoly on personal-computer operating systems.

Microsoft paid out billions of dollars to settle some of the claims, including $536 million to Novell in 2004. Novell claimed then that Microsoft illegally used its market dominance in the mid-1990s to muscle in on the Utah company's NetWare-related computer server market and stall development of competing operating systems.

The Utah-founded Novell is now a unit of Attachmate Corp., a company which has its main office in Seattle.

Judge declares hung jury in antitrust case against Microsoft.
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