July 24, 1996 6:00 PM PDT

Microsoft hit with antitrust suit

In an attempt to reignite a government investigation into Microsoft's business practices that stalled two years ago, operating system vendor Caldera has filed an antitrust lawsuit against the software giant.

Caldera today acquired the DR-DOS operating system from Novell and, along with it, an outstanding claim against Microsoft alleging anti-competitive practices. But unlike Novell, Caldera appears to be taking the case more seriously.

"Lots of private parties were injured by what Microsoft has done," said Steven Susman, a lawyer representing Caldera. "And none of the parties have stepped forward to claim monetary damages--and they have perfect reason to do so. So Caldera is doing that and seeking broader relief so that Caldera can re-enter the OS market."

A Microsoft representative said lawyers at the company have neither received nor reviewed a copy of the Caldera complaint. Microsoft said it would issue a statement on the case today, but the initial reaction of a company representative is that the suit is a rehash of past allegations that have already been addressed.

Microsoft settled a Justice Department antitrust investigation in 1994 by signing a consent decree that neither admitted nor denied guilt. The company did agree to end certain practices, including per-processor license agreements on MS-DOS, which forced PC makers to pay a royalty to Microsoft for every computer shipped, regardless of whether they contained copies of the operating system.

Although several competitors have tried to push the department to pursue new investigations into Microsoft's business practices, the department hasn't come up with anything conclusive against the company. The closest the department came was when it blocked the attempted acquisition of Intuit on the grounds that the purchase would give Microsoft a monopoly in the personal finance software market.

That practice locked DR-DOS out of the marketplace and forced then-owner Novell to withdraw the software from the market in 1994, according to Caldera's suit, filed Tuesday in U.S. District Court in Salt Lake City.

Susman speculated that Novell did not pursue legal action because "Microsoft is such a 2,000-pound gorilla that nobody could afford to get up on the wrong side of the bed from them."

Caldera, on the other hand, can afford to "because we are a very small company and we are not reliant on them for technology," added CEO Bryan Sparks.

Now, the company intends "to reintroduce the full line of DR-DOS products to the market and to offer additional product features," according to the complaint, and is seeking both damages from Microsoft and a permanent change in business practices.

Caldera is seeking a court order requiring that Microsoft refrain from per-processor license agreements "on MS-DOS or any other operating system...including Windows 95 and Windows NT." Caldera says the consent decree covers MS-DOS and Windows 3.1 but doesn't specify Windows 95 or NT, although the deal was widely interpreted as covering all of Microsoft's future operating systems.

"We asked that so we will have the right to enforce injunction, should they breach," Susman said. "Right now, only the government can enforce it. No private parties can."

Caldera is also seeking to put an end to all of Microsoft's licensing practices and pricing policies that could prompt hardware vendors to rely exclusively on Microsoft. Further, the suit requires the company to disclose to Caldera the APIs for all of its operating systems for ten years and seeks to prohibit Microsoft from including code in its products that could create real or perceived incompatibility between Microsoft's and Caldera's products.

It was not clear whether other companies would join Caldera's suit. "We have not contacted any other vendors to join in--this has all come together fairly quickly," Sparks said. "But we will most likely not involve other vendors."

The majority of Caldera is owned by Raymond Noorda, former Novell CEO. Novell purchased DR-DOS creator Digital Research under Noorda's watch. Caldera now sells an Internet-optimized version of the Linux operating system called the Caldera Network Desktop, as well as applications that run on it.

Caldera intends to package DR-DOS as a retail product, bundle it with existing and future operating systems, expand compatibility with third-party shrink-wrapped applications, and enhance DOS technologies by adding on Internet features, much as it as done with Linux.

 

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