March 11, 2002 6:20 AM PST
Experts: Sun lawsuit reaches too far
Sun filed the private antitrust lawsuit with a California federal court on Friday, seeking damages that could exceed $1 billion. The Palo Alto, Calif.-based company also wants injunctions forcing Microsoft to carry Sun's own version of Java in its Windows XP and Internet Explorer software, to give away the source code--or blueprint--for IE and to disclose the application programming interfaces (APIs) developers use to write software for Windows.
But beyond the merits of the lawsuit, or the fact that it can ride the coattails of U.S. District Judge Thomas Penfield Jackson's earlier findings of fact and final ruling against Microsoft, Sun has presented a lawsuit that is too broad and, in many respects, too difficult to prove, experts said.
"The breadth of this suit is tremendous," said Bob Lande, an antitrust professor with the University of Baltimore Law School. "It's broader than the U.S. suits and the European suits put together." Besides the U.S. case settled in November by the Justice Department and nine of 18 states, the European Union is investigating whether Microsoft used its dominance in desktop operating systems to gain unfair advantage in the server-software market.
The lawsuit is so large, legal experts warn, that Sun could be embarking on a course that will require a decade or more of resources without any certain beneficial outcome.
"If they don't quickly narrow it to something more manageable, they could be fighting this suit forever," Lande said. "This brings us back to the specter of the old IBM suit."
The Justice Department filed a series of failed antitrust lawsuits against IBM in the 1960s and 1970s, eventually giving up after 13 years of court losses.
"Sun doesn't want to get bogged down the way the government did with IBM," Lande said.
Other private lawsuits filed to date against Microsoft, including those by Be Inc. and by AOL Time Warner subsidiary Netscape Communications, have followed a script laid down by the Justice Department's settlement with the software giant. It is a strategy seen as the easiest way to reap quick damages for Microsoft's anti-competitive behavior.
But Joseph Angland, an attorney with Dewey Ballantine in New York said that this was "very different from the traditional so-called tag-along suit. This is much, much broader than the government's case. There are completely different markets here and different conduct involved. The way this case is pled, Sun will not be able to take a free ride on the basis of the government's findings. It will have a major, serious lawsuit to litigate here," he said.
Reaching too far
Sun filed a whopping 12 claims against Microsoft, including illegal maintenance of monopoly; attempted monopolization of the browser market; tying of Internet Explorer to Windows; tying Windows to Microsoft server software; tying Web server software to server operating systems; tying Microsoft's .Net framework to the Windows desktop and server operating systems; monopolization of the office productivity software market; violation of the Cartwright Act, which is California's version of the Sherman Antitrust Act; unfair competition; and copyright infringement.
Gartner analysts Daryl Plummer and David Smith say Sun must demonstrate that Microsoft's desktop monopoly damages Sun's server
business. That may be tricky.
In its June 2001 decision, a federal appeals court upheld only one of five claims the Justice Department brought against Microsoft: using anti-competitive means to maintain a monopoly in Intel-based operating systems.
Sun's claim in that area is strongest because of what the courts already found, but other areas of the case are shakier.
"Sun is proceeding on issues where the Department of Justice did not prevail," Angland said. "For example, the tying claims. The law of tying is somewhat confusing and is not at all clear if you look at the facts found by Judge Jackson that there was illegal tying."
The Justice Department attempted to show that Microsoft illegally tied, or integrated, Internet Explorer to Windows. Sun has added three additional tying claims, all of which will be tough to prove in court. The server claim involving the similar market is similar to the investigation now under way in Europe.
Even if Sun prevailed on any of the tying claims, some of the remedies it is seeking "would change the way Microsoft would develop products," Angland said. "That is generally an area where courts are more conservative about interfering."
On that point, precedent could work strongly against Sun. The Ninth Circuit Court of Appeals, which would handle any appeal in this case, heard a series of cases against IBM in the 1970s. Many of those cases alleged that IBM used hardware interfaces, in much the same way Microsoft uses software interfaces, to thwart competition. They alleged that IBM designed the products specifically to make it more difficult for other companies to compete.
"The court showed a great deal of deference about how companies designed their own products," Angland said. The court decided not to second-guess and "accept they had good reason for changing their interfaces."
Sun faces other challenges, too. The Justice Department lost its browser claim, so Sun must essentially re-litigate the issue. The office software claim is similar to one dropped by the 19 states in 1998, again taking Sun onto new legal ground.
"For the claims that go beyond the government case, they must prove those claims from ground one," said Emmett Stanton, an antitrust attorney with Fenwick & West in Palo Alto, Calif.
But four of the lawsuit's claims, which stem from California law, could work in Sun's favor, experts said.
"It's a strategy that they want to use California law, because they think California law is friendly to them," said Jeffrey Shohet, an antitrust attorney with Gray Cary in San Diego. He noted that California's Cartwright Act is more "liberal to plaintiffs than the Sherman Act."
A local jury trial could also work for Sun. "Eventually, they will get a Santa Clara jury, and most people like to think jurors in their town are more favorable than one out of town," Stanton said.
Sun's best shot is California's Unfair Competition Act, which played a crucial role in another lawsuit the company filed against Microsoft over the use of Java.
But a crucial mistake going back to the Java lawsuit settlement could hurt the anticompetitive claim. Depending on the agreement's terms, Sun may have forfeited its rights to sue under this law.
Sun's best strategy is to ask the court to divide the case into more manageable chunks, which could make getting quick damages easier and also clear the way to several injunctions the company wants entered immediately against Microsoft.
But preliminary injunctions and, later, permanent injunctions still are long shots for Sun, said legal experts. The two are related. When Sun and Microsoft settled the Java lawsuit in January 2000, the two sides agreed that Microsoft could license for seven years an older version of the Java Virtual Machine (JVM). A JVM converts programs written in the Java language into machine code that computers can read.
"I'm sure Microsoft thought it was buying peace of mind when they settled this breach of contract issue," said Robert Christopher, an antitrust attorney with Courdet Brothers in San Jose, Calif.
In April 2001, while testing Windows XP, Microsoft decided not to ship the JVM with the operating system but offer it as an immediate download the first time Internet Explorer 6 required use of Java. Microsoft in part said the decision was necessitated by indications that Sun might otherwise sue to prevent the launch of Windows XP.
Sun now wants injunctions to stop Microsoft from offering the JVM downloads and to compel the software giant to carry a newer version of the virtual machine. One question Sun will have to answer in court is why it didn't license the newer JVM in the first place rather than the four-year-old version Microsoft got.
Christopher said, "it doesn't seem likely" the court will grant either injunction, particularly the first because it is a "mandatory injunction. Courts don't like mandatory injunctions," because they force a company to do something rather than stop behavior that might hurt another company.
"One of the injunctions they're seeking is the mandatory injunction of exposing (Microsoft's) protocols and APIs," Angland said. "That is not something a court will do lightly."
The issue is also covered in the Justice Department's settlement with Microsoft, which would further make a judge cautious about issuing such an injunction.
In any event, Microsoft will be hard pressed fighting the preliminary injunctions, which would stretch thin its legal resources.
"They're looking to have a preliminary injunction hearing in May," Stanton said. "If the Microsoft legal team is busy in the District of Columbia between now and May fighting the litigating states' case, they've got a resource-allocation problem up in Redmond (Washington)."
Asked whether such action might be deliberate on Sun's part, Stanton responded, "I don't believe in coincidences."