Antitrust lawsuits continued to occupy Microsoft's legal team in the first part of 2003, as the company fought an order to bundle Sun Microsystems' version of Java with Windows, agreed to make minor changes to Windows to satisfy its antitrust settlement with the U.S. Department of Justice (DoJ), and reached a proposed settlement in a Florida class-action suit.

Microsoft also joined OEM partners in a patent dispute against Lucent Technologies, part of an industry trend toward patent litigation that is likely to take precedence at Microsoft as its antitrust troubles wane, and filed a lawsuit against unknown entities who use its free Hotmail e-mail service to send unwanted commercial messages, or "spam."

Antitrust News

Java injunction stayed. The 4th Circuit Court of Appeals has stayed an injunction that would have required Microsoft to bundle Sun's version of Java with Windows XP by June 2003, and one member of the court, Judge Paul Niemeyer, appeared inclined to get rid of the injunction completely. During a hearing before a three-judge panel in Apr. 2003, Niemeyer suggested that the injunction did not address competition in the desktop OS market, where Microsoft was previously found to have injured Sun through anticompetitive tactics, and said "in order to get relief, you have to be injured in the relevant market." The injunction was levied in Dec. 2002 by Judge Frederick Motz of the federal district of Maryland, who is overseeing a consolidated private antitrust suit filed against Microsoft by Sun, AOL, Be, Burst.com, and individual consumers.

Class-action status denied. Addressing another aspect of the same antitrust case, Judge Motz denied class-action status to more than 60 individual consumers in Apr. 2003, saying they could not sue Microsoft as a class because their suits were too dissimilar; they are free to pursue individual claims if they wish. Motz did grant class-action status to a smaller group of consumers who bought software through a Microsoft Web site.

Windows changes planned. In Apr. 2003 Microsoft agreed to make the "Set Program Access and Defaults" feature of Windows XP a top-level item in the "Start" menu, rather than burying it one level down under "Programs." Raising the profile of the feature (which enables users to choose the default application to open certain types of files, such as digital audio) will help satisfy the terms of its antitrust settlement with the DoJ, which called for Microsoft to make it easier for consumers to use non-Microsoft browsers, media players, and other court-defined "middleware." Microsoft did not say when the change would be effective, but the feature first appeared in Windows XP Service Pack 1 and the more prominent version is likely to appear in the next Windows XP service pack.

Florida settlement proposed. A judge has granted preliminary approval to a proposed US$202 million settlement that would end a class-action antitrust and unfair competition suit filed in Florida. Under the settlement, Microsoft would offer affected consumers and businesses vouchers worth between US$5 and US$12 off hardware or software from any manufacturer. After a certain time period (not yet defined), Microsoft would add up the dollar amount of the unclaimed vouchers, then donate one-half of that amount to approximately 1,600 Florida schools in underprivileged areas; the schools could use this money for hardware, software, or training from any vendor.

The Miami-Dade circuit court will consider final approval of the proposed settlement in Nov. 2003. The settlement is very similar to one proposed for a California class-action suit which drew complaints from Apple Computer and other vendors, who argued that it would enhance Microsoft's position in the education market. (At press time, preliminary approval had not yet been granted in the California case. For background, see "Antitrust Fallout Continues; Sendo Sues" on page 30 of the Feb. 2003 Update.)

Other Legal News

Lucent patent suit joined. In an escalation of a patent dispute, in Apr. 2003 Microsoft filed a suit asking to invalidate 13 patents obtained by Lucent Technologies (formerly Bell Laboratories). Lucent originally sued Gateway and Dell in 2002 over patents related to audio and video codecs, position-sensing styluses, and touch-screen form-entry technology. Because several of the products used Microsoft technologies, Judge Barry Moskowitz of the U.S. District Court for Southern California ordered Microsoft to intervene as a counterclaimant in Feb. 2003. Lucent had previously asked Microsoft to license 16 similar patents; Microsoft refused.

Anti-spam suit filed. Microsoft filed several "John Doe" lawsuits against unknown parties who have targeted Hotmail members with commercial e-mail messages. The company alleges that somebody sent messages to randomly generated Hotmail addresses, obtained valid addresses by checking to see which messages did not bounce, then sold these addresses to spammers. Although the lawsuits, filed in Feb. 2003 in the U.S. District Court for Northern California, do not name any specific defendants, they allow Microsoft to collect evidence and issue subpoenas to try to root out the alleged perpetrators.