March 24, 2004 4:30 PM PST

Intellectual-property precedent could help Microsoft appeal

Will the next stage in Microsoft's European antitrust saga be a case of deja vu?

Industry watchers are wondering whether Judge Bo Vesterdorf, president of the European court that would hear a Microsoft appeal, could take the same path he did in a 2001 intellectual-property case that involved two health information service companies.

For Microsoft, that would be good news.

The software giant is preparing to seek a stay for some of the remedies the European Commission outlined on Wednesday in its high-profile antitrust decision. In that ruling, Competition Commissioner Mario Monti gave Microsoft 90 days to provide a version of its Windows operating system that's stripped of its Windows Media Player multimedia software. A 120-day deadline was set for the company to share enough of its intellectual property with server rivals to allow them to offer machines that can work with Windows.

Vesterdorf is solely responsible for making a decision on whether to lift those orders, pending an appeal by Microsoft in the Court of First Instance against European regulators' decision that it broke EU law.

"We have a sense of deja vu, as we see Microsoft's arguments shape up," said Frank Fine, an antitrust attorney at law firm DLA in Brussels, Belgium. Fine unsuccessfully represented NDCHealth in an antitrust complaint against IMS Health before Judge Vesterdorf.

"Judge Vesterdorf seems to be so rigid in his support of protecting intellectual property, even against a very strong antitrust argument," Fine added.

Health complaint
In early 2000, NDCHealth filed a complaint with the European Commission, alleging that IMS Health had refused to license its intellectual property to rivals in the health information services industry. IMS, which held a copyright on the intellectual property, was then Europe's largest provider of pharmaceutical sales and prescriptions data.

The commission issued a temporary order in 2001 that required IMS Health to immediately issue licenses for its copyrighted intellectual property, while a final decision was reached. Monti based the ruling, in part, on the Magill precedent, which required a dominant company to share its critical services or products with others to bolster competition.

But in late 2001, Judge Vesterdorf issued a suspension on the order in the Court of First Instance.

"In our case, Judge Vesterdorf gave a hard-line view on protecting intellectual-property rights. And that will hurt the commission's server arguments," Fine said. "I don't know how the bundling issues will play out with the judge."

One European antitrust attorney familiar with the Microsoft case and the NDC-IMS court battle disagrees with Fine's assessment.

In the IMS case, Judge Vesterdorf found that if IMS Health shared its intellectual property, its competitors would be able to offer the same product and service, said the European antitrust attorney. But forcing Microsoft to share its intellectual property would not generate the same results, because Sun Microsystems, for example, and Microsoft, would be building two different types of products.

However, those differences aren't likely to stop Microsoft from drawing on that antitrust outcome, according to the attorney.

"Microsoft will rely heavily on the IMS case," the attorney said.

Microsoft's chief lawyer, Brad Smith, stressed the intellectual property implications of the case in a conference call with journalists on Wednesday.

Smith said forcing Microsoft to share its server protocols with rivals was akin to telling a newspaper that it has to make its articles available to run in rival papers.



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"We think that today's decision amounts to the broadest compulsory licensing of intellectual-property rights since the European Community was founded," Smith said. "And given the nature of a compulsory license, once you give things to people, you can't really get them back."

Smith noted the role that intellectual-property issues play in European Courts and even tried to portray the unbundling of Windows Media Player as an intellectual-property issue, saying it basically was forcing Microsoft to dilute the value of its Windows trademark.

"It's clearly going to cause confusion for consumers and dilute the value of our trademark, if we're ordered to apply that trademark to a product that, whatever it is, is clearly not Windows," Smith said.

CNET News.com's Ina Fried contributed to this report.

 

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