Appeals court sides with Microsoft over Utah-based Novell's antitrust claims
The 10th U.S. Circuit Court of Appeals has sided with Microsoft in a long-running antitrust lawsuit brought by Novell Inc. The decision may put an end to 20 years of legal actions stemming from the time Microsoft rose to nearly completely dominate the personal computer industry.
My how times have changed.
A panel of the 10th Circuit upheld a lower-court decision that had tossed out legal claims by Provo-based Novell over Microsoft's introduction of Windows 95, a decision that comes after a Utah jury had deadlocked 11-1 in favor of Novell at a 2011 trial.
"As we've maintained since it was filed over eight years ago, this case was meritless and should never have been brought," David Howard, Microsoft corporate vice president and associate general counsel, said in a statement. "We're pleased that the Court of Appeals has put it to rest once and for all."
Novell had claimed Microsoft cost it as much as $1.2 billion. The company said Monday it was considering its options.
"Ultimately this decision will have no effect on our day-to-day operations nor our company's vision for current and future Novell customers," Jim Lundberg, Novell's vice president for legal matters, said in a statement.
The case was the last major antitrust action pending from the 1990s when Windows 95 helped Microsoft maintain a virtual monopoly among personal computer operating system and reach dominance in word processing and other applications such as spreadsheets with its Office suite of products.
Microsoft has had to defend itself from a flurry of actions stemming from that era, including a 1998 Department of Justice antitrust lawsuit.
In 1994, Novell had bought Utah-based WordPerfect, then the dominant word processing program, and the QuattroPro spreadsheet, only to see its $1.5 billion investment turn into a huge loser when Microsoft issued Windows 95 and its Office suite package of software.
Novell had alleged that Microsoft made last-minute changes to the operating system that meant Novell had to delay a new version of WordPerfect and QuattroPro, costing it critical market share.
But Novell waited to sue until 2004, and that delay proved its weak point, according to the decision released Monday.
Unable to argue that its WordPerfect sales had been hurt by Microsoft's conduct because it had waited too long to sue, Novell was forced to come up another legal theory. This one argued that Microsoft's conduct was aimed at maintaining its operating system monopoly as opposed to trying to gain unfair market advantage for its applications such as Word.
To back up its theory, Novell would have had to show that Microsoft sacrificed short-term profit for long-term gains, the appeals court said. It wasn't able to do that and, in fact, Microsoft was merely acting as an aggressive competitor to increase its profits, the decision said.
"There's no evidence that Microsoft took any course other than seeking to maximize the company's net profits in the short as well as long term," the three-judge panel wrote.
Novell's prime evidence was an email that Microsoft Chairman and then-CEO Bill Gates wrote in 1994 in which he said a delay in providing software vendors with access to a Windows 95 feature "will give Office a real advantage."
But Gates was merely acting as a fierce competitor and not to lessen short-term profits, the appeals court panel ruled.
"This may suggest a hard-nosed intent to undo rivals in the applications field, to assure Microsoft a leg up, but it doesn't suggest Microsoft intended to forgo profits," the 10th Circuit panel said.
Novell now is a unit of the Attachmate Group Inc. of Houston and no longer dominates in networking software as it once did. But it still is one of Utah's leading high-tech companies, with 750 employees at its Provo offices.
Microsoft's recent announcement of the retirement of cofounder and CEO Steve Balmer, who succeeded Gates in that post, brought to the fore questions about Microsoft's relevance in a world quickly being dominated by smart phones, tablets and cloud computing at the expense of the tradition personal computer.
1994 Â» Novell merges with WordPerfect and buys Quattro Pro.
1995 Â» Microsoft releases Windows 95.
1996 Â» Novell sells WordPerfect, Quattro Pro.
2004 Â» Novell sues Microsoft, alleging it damaged WordPerfect and Quattro Pro business.
2011 Â» Novell-Microsoft trial ends in hung jury, judge later dismisses Novell's lawsuit.
2013 Â» 10th Circuit Court upholds dismissal of case.