Software Firm Puts Ruling Against Microsoft to Test

Buoyed by Microsoft Corp.’s stunning rebuke by a federal judge in a landmark antitrust case in Washington, a small Connecticut software firm will ask another court to overturn a recent jury verdict absolving the software giant of antitrust violations.

Keith Blackwell, president of Danbury, Conn.-based Bristol Technology Inc., said his software company plans to petition Connecticut U.S. District Judge Janet C. Hall for a new trial or to file a motion for summary judgment against Microsoft once she issues her final order in the case, which is expected within weeks.

Bristol sued Microsoft last year, contending that it illegally withheld information on its Windows NT computer operating system and prevented Bristol from making compatible software products.

In the federal government’s antitrust case, U.S. District Judge Thomas Penfield Jackson two weeks ago found that Microsoft had a predatory monopoly in computer operating systems.

Bristol’s legal bid will be the first test of whether Jackson’s findings in the government’s landmark antitrust case can influence other suits already filed by Microsoft’s rivals.

If Judge Hall sides with Bristol, it would overturn a verdict reached in July by a nine-member jury that found Microsoft did not break antitrust law in its dealings with Bristol. The jury, however, did find Microsoft guilty of a single count of violating Connecticut’s unfair trade practices law.

The federal government’s antitrust case differs from four other major lawsuits that Microsoft faces from rivals alleging breach of contract and anti-competitive behavior. But the Bristol case is being closely watched for signs of how those private antitrust cases against Microsoft will fare.

“While there are subtle differences [between our case and the government’s], they both dealt with the question of whether Microsoft is a monopoly, and we felt the jury was wrong,” Blackwell said. “When Judge Jackson came back with his findings, we felt vindicated.”

Microsoft also has been sued by Sun Microsystems Inc. over the Java programming language; Caldera Inc. sued Microsoft earlier this year over rival versions of the DOS operating system; and Blue Mountain Arts Inc. went to court this year contending Microsoft made software that blocked transmission of Blue Mountain’s electronic greeting cards.

Microsoft has strongly fought all of the cases, branding Caldera’s antitrust lawsuit “pulp fiction.”

But legal experts say Microsoft risks devastating legal and financial exposure from other cases if, as expected, Jackson’s findings of fact are followed by an equally tough final ruling against Microsoft.

That’s because federal antitrust laws award an important tactical advantage to individuals and companies who file private lawsuits against defendants that violate antitrust laws under the Sherman Act of 1890. Plaintiffs can use the federal government’s case against a company to bolster their own anti-competitive litigation.

“Private plaintiffs can use the government’s case to establish their own case. They effectively start at the 50-yard line. . . . Basically, the only major issue to be decided is the issue of damages,” said Andrew Gavil, a professor of antitrust law and procedure at Howard University.

Gavil said he is not aware of any case that would support Bristol’s motions for a new trial or summary judgment based on Jackson’s findings. But he said other Microsoft rivals, notably Netscape Communications Corp., may eventually be in a strong position to successfully sue Microsoft. Indeed, many experts say that Netscape, which was purchased last year by America Online Inc., has a fiduciary duty to recover damages from Microsoft for its shareholders after Microsoft decimated Netscape’s once-commanding share of the Internet software browser market.

“I think AOL has a huge bargaining chip against Microsoft with its ownership of Netscape,” Gavil said. When AOL negotiates with Microsoft over any future software licensing agreement, “they would probably offer to drop any potential lawsuit in exchange for big concessions,” he said.

However, because Judge Jackson has chosen to split his final ruling into a two-part process, it is far too early for such negotiating tactics.

After Jackson’s final ruling, “I would expect there to be some litigation [by rivals],” said Ronald A. Cass, dean of the Boston University School of Law and a one-time consultant to Microsoft. “A lot of people probably think that there’s enough money to be gotten out of a very wealthy target [such as Microsoft] to make [a lawsuit] a worthwhile investment.”

Although legal experts think Bristol faces an uphill fight to win a new trial or get the jury’s verdict overturned, the nation’s appeals courts and legal experts are divided about whether any judicial declaration short of a final order can influence another case.

But judges have been known to take note of outside events when making a ruling.

In a 1982 Texas case, which involved a stock scandal, the U.S. 5th Circuit Court of Appeals sided with a plaintiff who wanted to buttress his own case with preliminary findings of fact issued in a separate court proceeding.