If Microsoft’s legal eagles hoped to cut the company’s litigation load in the new year, it certainly doesn’t seem to be turning out that way.
A federal judge in Seattle late Friday granted “class action” status to a lawsuit regarding the way Microsoft and its hardware partners marketed new PCs during the 2006 Christmas season, after the company was forced to delay shipment of Windows Vista until early 2007.
The suit, which was filed last March, alleges that Microsoft advertised less-powerful PCs as being “Vista Capable,” although the company knew many of those PCs would only run the most basic edition of Vista – one that does not include Vista’s signature Aero Glass 3-D user interface.
Still, although she certified the suit as a class action, the judge put restrictions on who can qualify as a member of the class and what claims they can make. For instance, the plaintiffs cannot claim that Microsoft used deceptive advertising to induce consumers to buy machines that they would not have otherwise purchased.
[cob:Related_Articles]”But Plaintiffs may bring their class claims on a ‘price inflation’ theory, i.e. that Plaintiffs paid more than they would have for their PCs had Microsoft’s ‘Windows Vista Capable’ marketing campaign not created artificial demand for and/or increased prices of PCs only capable of running Vista Home Basic,” U.S. District Court Judge Marsha Pechman said in her ruling.
Some potential members of the class may be excluded though, specifically consumers who participated in Microsoft’s “Upgrade Express” program which enabled consumers to later upgrade to Vista Home Basic for little or no additional cost. Since neither of the original two plaintiffs in the case participated in the upgrade plan, they have 30 days to find a plaintiff who did and is willing to join the suit.
The PCs branded “Vista Capable” shipped with Microsoft’s aging Windows XP installed and were certified to be able to run Vista Home Basic, the lowest-end version of the new system. The point of the marketing campaign was that users could purchase a PC during the 2006 Christmas season and later upgrade it to Vista.
However, in many cases, those PCs could not be easily upgraded to run what the plaintiffs claim are the “real” editions of Vista – those that support Aero Glass. The suit was originally filed in March by a woman in Washington State, and later joined by a man in California. Last summer, the plaintiffs requested that the judge certify the suit as a class action.
Microsoft has argued repeatedly, that it clearly labeled the differences between “Vista Capable” and “Premium Ready,” beginning long before the 2006 Christmas season. Judge Pechman declined to dismiss the suit last summer.
“We believe the facts will show that Microsoft offered different versions of Windows Vista, including Windows Vista Home Basic, to meet the varied needs of our customers purchasing computers at different price points,” Microsoft spokesperson Jack Evans said in a statement e-mailed to InternetNews.com.
Even some company executives were dismayed by the customer confusion that the “Vista Capable” program caused, according to news reports of internal Microsoft e-mails that were sealed by the judge but were partially read aloud during a recent hearing on the case’s class action status.
Upgrading operating systems on existing PCs has always been a dicey proposition for Microsoft. Typically, every new or upgraded version of Windows pushes older hardware to the limit and beyond, often discouraging consumers from putting a new version of Windows on an aging PC.
However, the plaintiffs claim, concern at Microsoft and among hardware vendors that Vista’s lateness could scuttle new PC sales during Christmas 2006, led to consumers being tricked into buying hardware that could not run higher-end editions of the system. More capable hardware that could run those editions was instead labeled “Premium ready.”
Analysts who track Microsoft weren’t particularly surprised by Judge Pechman’s ruling.
“The legal filing says nothing new about the facts of the case, merely that there’s legal precedent for granting class-action status,” Matt Rosoff, lead analyst for consumer products and services at Directions on Microsoft told InternetNews.com, in an e-mail.
Dwight Davis, vice president at market research firm Ovum, agreed. “I’m not surprised that [the suit] has achieved class action status,” he told InternetNews.com, citing “marketing excess” on Microsoft’s part. Still, Davis wonders whether the suit will really have much of an impact on the software giant.
“On a purely literal interpretation of what [Microsoft] said, I wouldn’t be too surprised if they were found to be being quite honest,” Davis added.
Given that Microsoft has been striving in the past few years to rid itself from its burgeoning legal hassles, however, the judge’s grant of class action status may encourage Microsoft to avoid further litigation.
“This might make Microsoft more willing to strike a settlement deal, but it won’t have any effect on Windows development or marketing,” Rosoff added.
If the case is not dismissed or terminated via a settlement in the meantime, it is currently slated for a tentative trial date of October 28, 2008.
