European Judge Grills Microsoft

A European judge weighing whether to force Microsoft Corp. to divulge some of its most closely held secrets challenged the software giant’s claim that doing so would inflict permanent damage.

The sharp questioning Thursday by Bo Vesterdorf, president of the European Union’s Court of First Instance, came in the first of two days of hearings on Microsoft’s request to have sanctions suspended while it appeals a March order by the European Commission.

The commission concluded after a five-year investigation that Microsoft had improperly withheld information in order to extend its monopoly on personal computer software into the adjacent market for server software, in which the company has gained ground.

Europe’s governing body also fined the company more than $600 million and decreed that Microsoft used unfair leverage to promote its Windows Media Player for audio and video files.

Microsoft had been expected to fare better in Thursday’s proceedings, which dealt with the commission’s landmark directive that Microsoft reveal details about how its dominant Windows operating system for personal computers interacts with its software for running networks of machines. The commission also demanded that Microsoft sell a version of Windows without Media Player.

Vesterdorf will decide within the next two months whether to impose the sanctions immediately or put them on hold while Microsoft appeals, a process that could take years. The case is the last known legal hurdle faced by Microsoft, which has spent years battling antitrust accusations in the U.S. as well as in Europe.

The high-stakes drama played out before a crowd of about 200 in the court’s modern building on the outskirts of the city of Luxembourg. Although the court is an institution of a united Europe, evidence of the continent’s historic differences were abundant -- including the traditional garb of lawyers from various countries and accents that bore hints of Scotland, Denmark and Italy.

In its oral arguments and in earlier written filings, Microsoft said it would suffer “serious and irreparable harm”-- a key legal standard -- if it had to disclose about 2,000 pages of technical specifications explaining how PCs talk to server computers and how computer servers talk to each other.

But commission attorney Walter Moells said Microsoft failed to spell out how much market share it might lose or why it would be unable to recover lost business should it ultimately prevail in its appeal.

Vesterdorf picked up the theme in more than three hours of questioning of both sides, asking Microsoft lawyer Ian Forrester why the company wouldn’t be able to take advantage of its lock on PCs despite the lengthy appeals process.

“What is the irreparable harm?” the blue-robed Danish judge asked. “Is it the position of Microsoft that after winning the case, it would not be in a position to regain market share?”

“No, my lord,” said Forrester, who was clad in the black robe and pigtailed white wig traditional in his native Scottish courts. He agreed that Microsoft could regain its market position but said insights competitors might gain into Microsoft’s technology would give them a leg up.

Forrester elaborated during his closing argument, comparing Microsoft to an ingenious architect who manages to build 100-story skyscrapers while rivals can reach only 40 stories. Once given away, the secret to the extra 60 floors could not be erased from the rest of the industry, and the architect’s future advances might be much less dramatic.

“This is the first time in antitrust history where a company has been ordered to draw up a description of secret technology and deliver it to competitors,” Forrester said.

James Flynn, a lawyer for the Computer & Communications Industry Assn., retorted that a better parallel would be a major airport owner who also controls a fleet of jumbo jets. He said his clients build small planes, and “they want to know what the landing lights mean.”

Vesterdorf is expected to rule in the next two months, after which his decision could be appealed to the Court of Justice, the highest in the European Union.