Microsoft Lawsuits to Continue
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It's been a busy week for Microsoft's legal eagles and not in a good way with a small raft of lawsuits all coming to a head at once, and all of them, to one degree or another, going against the company.
The U.S. Supreme Court turned away an appeal Monday by Microsoft and retailer Best Buy in a lawsuit where a northern California man sued after being charged for an MSN subscription he never agreed to sign up for.
That means that the suit, which was reinstated by the Ninth U.S. Circuit Court of Appeals in May after a lower court dismissed the case, will be allowed to go forward.
If that weren't enough, Microsoft also confirmed it has asked to drop its pending appeal of an antitrust ruling against it in South Korea.
In the Best Buy case, Microsoft and the computer retailer are accused of tricking customers who bought products like computers and cell phones into being unknowingly signed up for MSN Internet service that was automatically billed to their credit cards after the trial period elapsed.
The legal sticking point for the courts was that the plaintiff's attorneys sued under civil provisions of the Racketeer Influenced and Corrupt Organizations Act, otherwise known by its acronym RICO. The act, which was originally meant to target criminal "enterprises," lets successful plaintiffs sue to win triple damages. A lower court had tossed the case out because it felt that the plaintiffs had not proven clear RICO violations.
However, the appeals court decided that the suit does indeed meet the act's requirements and reinstated the case in May. The suit was initiated by James Odom of northern California, and later amended to include Katherine Moureaux-Maloney of Nevada. Microsoft and Best Buy appealed and, Monday, the Supreme Court denied Microsoft's and Best Buy's petition to overturn the appeals court ruling.
"The [Supreme Court's] ruling was not unexpected," Daniel Girard, managing partner of the plaintiff's law firm Girard Gibbs LLP and lead attorney on the case, told InternetNews.com. He added that he hopes the case which has been certified as a class action suit will go to trial sometime next year. The original suit was filed in 2003. The suit claims that a joint marketing agreement between the two companies in 2001 and 2002 led to the alleged abuses.
Microsoft said the company is confident the Best Buy case will end in its favor. "The record will show that co-marketing agreements of the sort Microsoft entered into with other companies were completely legitimate," Microsoft spokesperson Jack Evans told InternetNews.com in an e-mailed statement.
The same day, the Fourth U.S. Circuit Court of Appeals affirmed a lower court ruling that stated Novell's antitrust complaint against Microsoft regarding the company's former productivity applications that competed with Office can go forward. Novell eventually sold the WordPerfect word processor and the Quattro Pro spreadsheet to Corel in 1996, but sued Microsoft in 2004 for anticompetitive practices it alleges Microsoft engaged in while Novell still owned the products.
The lower court ruled that four of Novell's claims had passed the statute of limitations and were no longer valid. In affirming the other two claims, however, the appeals court ruled that, since they were both named in the U.S. Department of Justice's own antitrust complaint, they were not subject to the same time limits.
A separate suit regarding Netware, Novell's network operating system, was settled in 2004 when Microsoft paid out $536 million to Novell.
"They paid us $536 million as a settlement [on the operating system claim] but we had been unable to reach a settlement on WordPerfect," Bruce Lowry, Novell's director of global public relations, told InternetNews.com.
Though pleased with the result, however, Novell has not yet decided how to proceed, although the company left the door open for a settlement.
"We don't know whether we'll move into litigation or settlement [but] this ruling clears the path for litigation," Lowry said.
Finally, on Tuesday, Microsoft confirmed it has requested it be allowed to drop its appeal of a 2005 antitrust ruling by the Korean Fair Trade Commission. That ruling ordered Microsoft to offer a version of Windows for sale without Windows Media Player and Windows Messenger, as well as to decouple Windows Media Server from Windows Server. Microsoft was also fined nearly $32 million.
A Microsoft spokesperson declined to comment further on the South Korean case since its request is currently before the Seoul High Court. However, the request comes on the heels of last month's ruling by the European Court of First Instance that upheld the European Commission's 2004 decision that the company was in breach of European competition law through the abuse of its dominant market position.