Microsoft Readies EU Appeal

Microsoft is headed back to court in Europe, where it will next week appeal the European Commission’s $613 million fine and order to sever Media Player from Windows, the company said Thursday.

The Redmond, Wash.-based software vending giant told it will file its brief in the European Court of First Instance in Brussels.

“As we indicated in March when the Commission issued its decision, we will appeal the ruling,” Microsoft spokesperson Jim Desler said. The company will file its appeal some time next week, just before the deadline. The Court of First Instance is the court established by the EU in 1989 to handle actions brought against the EU or its commissions, including requests for annulment of its rulings.

On March 24, the European Commission, the EU body charged with monitoring community issues including fair trade and competition, imposed a $613 million fine against Microsoft for anti-competitive behavior and abusing its market dominance. It also ordered the company to sell a version of Windows that does not include its Windows Media Player and to open its APIs to rival server software makers.

Microsoft’s attorneys likely will base their arguments on two key points: that the European Commission’s decision snatches away Redmond’s intellectual property rights, and that the Commission forbids Microsoft to engage in practices common among its competitors.

Microsoft attorney Brad Smith has characterized the requirement to open its server APIs to rivals as “a compulsory licensing of our copyright.” A position paper posted on Microsoft’s corporate Web site asked, “When does a firm with a dominant position have a legal duty to license its proprietary technology and intellectual property rights to its competitors so that they can incorporate that very same technology into their own directly competing products? The Decision goes well beyond established legal precedents by asserting a broad and ill-defined duty on dominant firms to share the fruits of their research and development with other companies in the same product market.”

The company claims the decision, if it stands, would lead to intrusive regulation of product design. Regarding the integration of Media Player with Windows, the position paper read, “We live in a world in which most products result from combining a variety of individual components. Indeed, product innovation results in no small measure from such integration.”

Microsoft has lobbied the court of public opinion since the EU ruling was released. The company has contacted members of congress, complaining that a foreign court should not be able to exert so much authority over a U.S. business.

“Microsoft is an American company, the complainants are American companies, the software is designed in the U.S., and the U.S. government already dealt with these issues,” Microsoft CEO Steve Ballmer told reporters in a press conference following the release of the ruling.

While Desler provided no specific information about whether U.S. politicians or agencies such as the Department of Justice would file amicus briefs along with Microsoft’s appeal, he said, “It’s important to take into account the potential impact on industries and companies beyond just Microsoft, so there may be additional companies that choose to weigh in on this matter.”

The EU’s investigation began five years ago with a complaint by Sun Microsystems . Sun and Microsoft finally buried the hatchet in early April, with Microsoft paying Sun $1.95 billion to settle Sun’s patent infringement and anti-trust claims; the companies also inked a ten-year technology sharing alliance.

Microsoft’s appeal of the EU’s ruling could take as long as five years. Desler said that later this month, the company would separately file a motion to suspend the remedies imposed by the Commission until the appeals trial concludes.

If the court stays the judgment, Microsoft can go about its business while the appeal process runs its course. A suspension of remedies, besides being in essence a “stay out of jail free for five years” card, might indicate that the Court of First Instance was inclined to tip the court’s hand about whether its thinking diverges from that of the Commission.

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