Novell Files WordPerfect Suit Against Microsoft

Novell filed a 68-page civil lawsuit
against Microsoft in the U.S. District Court in Utah
Friday.

The complaint, filed in Salt Lake City, charges Microsoft violated Sections
1 and 2 of the Sherman Act when it leveraged its dominating market share in
the operating system sector to restrict OEMs and other resellers from
bundling competing applications with the OS.

“Microsoft abused its monopoly power in the PC operating systems market to
suppress the sales of WordPerfect and Novell’s related office productivity
applications,” the complaint reads. “Microsoft targeted these applications
because of their potential to provide Microsoft’s competitors with a way
across the barriers to entry that protected Microsoft’s existing operating
systems monopoly.”

Novell, which bought WordPerfect for $1.2 billion in 1994 and sold it
two years later to Corel for $170 million, claims its office productivity
suite business was damaged because it stood in direct competition with
Microsoft Office.

Novell’s complaint blames Microsoft’s
anti-competitive behavior for taking its 40 percent market share to less than
10 percent during the time it owned the software division.

Microsoft, however, doesn’t see it that way, claiming WordPerfect’s slump in
sales was the result of “mismanagement and poor business decisions,”
according to a statement.

“The record is clear that bad decisions and business mistakes are the
reasons WordPerfect fell out of favor with customers,” the statement read.
“It’s also unfortunate, and surprising, that Novell has just now chosen to
litigate over a business it owned for a very short time and that it sold
more than eight years ago.”

The statement points out Novell’s shares dropped 15 percent on the day the
company announced its acquisition of WordPerfect; also, early WordPerfect
versions were not available on the Windows platform “in the hope that
depriving Windows of a key application would limit the success of Windows,”
the statement stated.

While officials didn’t say so, the announcement indicates Microsoft lawyers
will likely try to get the judge to dismiss the case because of the statute
of limitations, as Novell hasn’t owned the company for eight years.

The filing was expected, though perhaps not so soon. Only four days ago,
Novell signed a $536 million settlement
with Microsoft over anti-trust issues related to its NetWare
operating system.

The suit is essentially an extension of the landmark anti-trust suit filed
against Microsoft and settled
with the Department of Justice (DoJ) in 2002. It charged the Redmond
giant with bundling its software with Windows and
requiring resellers to sign restrictive exclusivity licenses in order to
sell Microsoft products.

It is also surprising that Novell seeks to use the court’s findings in the
[DoJ] case against Microsoft,” the Redmond statement said. “That case had
nothing to do with WordPerfect or any other office productivity software,
and focused almost exclusively on other markets and technologies.

“In fact, Novell was barely mentioned during the U.S. antitrust trial,” it
continued. “Moreover, the U.S. antitrust laws do not support Novell’s
claims that a company is required to share its inventions and trade secrets
with its competitors.”

Joseph LaSala, Novell senior vice president and general counsel, said in a statement
that while the lawsuit is unrelated to Novell’s business today, the claims hold considerable
value for the company.

“We intend to pursue aggressively a goal of recovering fair value for the harm caused
to Novell’s business by Microsoft’s anti-competitive actions,” he said in the statement.

Novell’s complaint stated Bill Gates, “targeted Novell’s applications by name in documents
recording Microsoft’s anticompetitive schemes, in which he explained that
the integration of browsing functions into Windows, coupled with
Microsoft’s refusal to publish certain of these functions, was a primary
strategy for excluding Novell’s applications from the markets.
He candidly admitted that Microsoft’s own products could
not compete without the benefits of these anticompetitive acts.”

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