Politics and Law

Mozilla and Opera are both unhappy with Microsoft's proposed "ballot screen" to let Windows users in Europe select their default browser, according to a report in The Wall Street Journal.

Microsoft's proposed browser ballot screen is its attempt to satisfy the antitrust investigation from the European Union over Internet Explorer's dominance in Windows. The screen would present the user with a menu to install other browsers, including Firefox, Opera, Google Chrome, and Safari, and let the user pick one as the default.

Microsoft became open to the concept over the summer as an alternative to removing IE from Windows for the European market.

At the time, the idea appealed to Opera CEO Hakon Wium Lie, who declared, "It's a happy day for us. We certainly think the ballot is good news and think it will give users a genuine choice." But Mozilla Corp. CEO John Lilly adopted a more wait-and-see approach, saying he wanted to see the specifics before reacting.

EU officials asked rival browser makers among others for their input on Microsoft's proposal, sending them questionnaires over the summer, according to the report.

After checking out the ballot screen and the proposal from Microsoft, the European Union for Interoperable Systems (ECIS), which includes Opera Software ASA as one of its members, said it presents too many hurdles for the average user.

According to Sunday's Wall Street Journal (subscription required), ECIS and Opera attorney Thomas Vinje said that selecting another browser requires "the user to confirm and answer threatening and confusing warnings and questions. Microsoft has cunningly found a way to accept the Commission's suggestion of a ballot screen, but to do so in a way that will be entirely ineffective."

In response to an e-mail from CNET, Vinje said that Microsoft's current ballot screen falls short of having any effect on competition since it fails to offer users a seamless and unbiased choice of browser. However, he felt the problem could be fixed with some trivial changes.

He said that despite choosing an alternate browser through the ballot, Internet Explorer would remain turned on and that only an additional procedure would allow the user to deactivate IE. So the ballot screen is simply installing another browser in addition to IE rather than offering users a choice of a single browser.

Adding an alternative browser is unnecessarily complex, according to Vinje. The ballot screen, set up as a Web page in IE, requires many unnecessary clicks, displays threatening warnings, and poses confusing questions before another browser can be downloaded and set up. He believes users will be discouraged from selecting an alternative browser.

The ECIS feels that a powerful, yet trivial change to Microsoft's proposal is needed: the ballot screen must be designed to offer users a seamless choice in which a single click for an alternative browser is sufficient to download and install that browser, without warnings or questions, and without leaving Internet Explorer active and visible.

"Choosing an alternative browser must not be more cumbersome than choosing Internet Explorer," said Vinje, "which can only be accomplished in a real ballot screen application--not in a Web page."

Countering with suggestions
Mozilla has said that a ballot screen is a good step, but as currently proposed, it's not good enough. A blog written August 18 by Mozilla's general counsel, Harvey Anderson, examined Microsoft's specific language and functionality in the ballot screen proposals. Anderson addressed several concerns and countered with his own suggestions.

Anderson praised Microsoft's effort to not include links or shortcuts to IE inside Office 2007 but said it should be expanded to include all Microsoft software. "If Microsoft applications need to launch a browser, they should only launch the user's default browser," he wrote. "The proposal should be modified such that this provision applies to all Microsoft desktop software, and certainly to the already announced Office 2010."

Anderson also expressed concerns about the ballot screen itself, saying IE could automatically become the default browser in a number of scenarios. It could end up as the default if the user ignores the ballot or can't figure out how to use it. It could also wind up the default if the user runs into problems trying to install one of the other browsers. But in this case, his only suggestion was that the ballot require the user to make a choice.

Finally, Anderson said that the ballot doesn't educate the user as to what a Web browser is or how each browser differs. "The ballot should introduce the user to at least a simple definition of what a browser is before offering the user a choice in browsers," he wrote. "It should probably go one step further and explain that the different browsers compete for superiority in the areas of ease of use, security, and customizability. "

Other voices have chimed in to criticize the ballot screen. Mitchell Baker, chair of the nonprofit Mozilla Foundation, detailed her concerns in a blog on August 17. Despite the user's ability to choose a different default browser, Baker said she believes IE would still have the upper hand with a prominent position on the Windows desktop and Taskbar.

"Choosing another browser as a 'default' does NOT mean that the other browser takes the place of IE," stated Baker in her blog. "For example, the IE logo ("shortcut") still remains unchanged on the desktop. The shortcut/logo of the browser the user has selected does not replace this, it is added elsewhere. As a result, the familiar location remains IE, not the user's choice."

Baker also expressed concern that the average nontechnical user may have trouble navigating the different screens required to choose a different browser. She said she believes the ballot screen only helps users download alternative browsers and should be designed to help them install, open, and make other browsers the default. "As proposed, we expect to see many people who want other browsers get lost in the process before they actually succeed in making an alternative browser their main browsing tool," she wrote.

The EU had hoped to wrap up this final phase of its investigation into IE, especially since all parties have agreed at least in principal to the idea of a ballot screen. But the competition could stall final approval if Microsoft is forced to wrestle with the finer points of the complaints.

Vinje believes that Microsoft only superficially accepted the EU's suggested remedy and that the ballot screen as designed does not restore competition. He said the EU will be careful to make sure that any proposed solution would be effective. And in this case, the ECIS would be surprised if Microsoft's proposal were accepted without "significant modifications."

On Tuesday, Microsoft spokesman Kevin Kutz said: "In July, we made a new proposal to address EU competition law issues related to Internet Explorer and interoperability. The Commission welcomed our proposal and announced it would assess its effectiveness. We continue to look forward to the next steps in this process."

Requests for comments from Opera and Mozilla were not immediately returned.

Update 12:15 p.m. PDT: Added comments from attorney Thomas Vinje.

A federal appeals court on Friday affirmed a lower court ruling that Microsoft infringed on a patent owned by Alcatel-Lucent, but said the jury award of $358 million in damages was excessive.

The U.S. Court of Appeals for the Federal Circuit in Washington, D.C., upheld a ruling that the patent at issue was valid and had been infringed on, but said there was not sufficient evidence to support the calculation of damages. The question of damages was sent back to the district court.

The patent, whose application was originally filed by engineers at AT&T, covers a method of entering information into fields on a computer screen without using a keyboard. Lucent initially sued computer maker Gateway for the patent infringement in 2002 and Microsoft subsequently intervened. Dell is listed as a third defendant in the case.

The trial court found that the "date-picker" calendar tool in Microsoft Outlook, and similar features in Microsoft Money and Windows Mobile, infringe on what the court refers to as the "Day patent." However, for damages purposes, the court said there was no evidence of widespread use of the infringing tool by customers and questioned the calculation of damages.

Alcatel-Lucent argued that it was owed damages representing 8 percent of the revenue of Microsoft's sales. The jury apparently arrived at its sum based on that percentage of Microsoft's sales or the entire market value of the software products that contain the feature, the opinion said. Microsoft, meanwhile, had suggested a sum of $6.5 million. The appeals court did not suggest a method for calculating the damages, but said the amount chosen by the jury was out of proportion to the potential for infringing use.

The infringing feature is a tiny piece of a large software program, and thus "the portion of the profit that can be credited to the infringing use of the date-picker tool is exceedingly small," the ruling said.

"In short, Outlook is an enormously complex software program comprising hundreds, if not thousands or even more, features. We find it inconceivable to conclude, based on the present record, that the use of one small feature, the date-picker, constitutes a substantial portion of the value of Outlook," the court said.

Representatives from both Microsoft and Alcatel-Lucent said they were pleased with the ruling.

"We are pleased that the court vacated the damages award, and we look forward to taking the next step in the judicial process," Microsoft spokesman Kevin Kutz said in a statement.

"We are very pleased with this decision by the U.S. Court of Appeals for the Federal Circuit affirming the jury's decision that Microsoft infringed the Alcatel-Lucent Day patent and that the Day patent is a valid patent," Alcatel-Lucent spokeswoman Mary Ward said in a statement.

"While we are disappointed that the court did not affirm the jury's decision on damages, we look forward to an upcoming proceeding to determine the compensation to which Alcatel-Lucent is entitled based on the court's finding that Microsoft did use our patented invention, which Microsoft included in each of the infringing products, presumably because they recognized that it added real value for their customers," she said.

The case is just one of a number of patent infringement cases the two companies have filed against each other over the years including cases involving the MP3 format, as well as communications technology, and digital speech compression.

The U.S. Department of Justice has furthered its investigation into the proposed search engine deal between Microsoft and Yahoo by asking both companies to provide more information.

The two companies received an additional request for information earlier this week as expected, Microsoft spokesman Jack Evans told CNET News. He said he couldn't reveal the specifics of the request, citing it as a confidential inquiry from the Justice Department. But he said Microsoft is in the process of providing the requested information.

Yahoo spokesman Adam Grossberg also confirmed to CNET News the Justice Department's request. He couldn't comment on the specifics either but added that Yahoo is cooperating fully.

"We confidently believe the information we'll provide will confirm that the deal is not only good for Yahoo and Microsoft, but also good for advertisers, publishers, and, ultimately, consumers," said Grossberg.

The request for additional information doesn't come as a surprise to either Microsoft or Yahoo.

Under the Hart-Scott-Rodino Act, mergers or other business deals that meet certain requirements must be reviewed by the government before they can close. Companies have to file the necessary paperwork with the government and then wait 30 days before given clearance to move forward. In some cases, the government requests additional information before making a decision.

Both Microsoft and Yahoo were anticipating a close review of the deal given its scope, said Evans. At a press conference when the deal was announced, the companies said the review would be a matter of months, not weeks, taking it through the fall.

Despite the Justice Department's request for more details, both Microsoft and Yahoo are hopeful the deal will close as expected in early 2010.

Still, the Justice Department is only one battle. The agreement may also require regulatory clearance by the European Commission, which has been tough in its current probe of Oracle-Sun and in past probes of both Intel and Microsoft. Microsoft is currently trying to determine what formal notification, if any, needs to occur in Europe.

But a Microsoft-Yahoo search combination may be seen as less of a competitive threat in Europe where Google enjoys a 90 percent share of the search engine market versus its U.S. share, which ranges anywhere from 63 percent to 72 percent based on recent estimates.

Yahoo and Microsoft announced the deal in July, under which Bing's search engine technology would power Yahoo Search, and Yahoo would sell ad space next to search results, with the two companies splitting the sales.

Microsoft has at times alleged patent infringement in its attempts to stifle certain Linux-based applications. But one group is hoping to fight back by using Microsoft's own former patents.

The Open Invention Network (OIN), a group made up of Microsoft competitors and Linux advocates,said it's close an agreement to buy 22 patents that Microsoft sold to another organization earlier this year. According to Tuesday's Wall Street Journal, the patents may relate to Linux.

The OIN believes that getting these patents is critical to protecting Linux developers from costly lawsuits, according to the Journal. The concern is that otherwise the patents could be grabbed by patent trolls, which will then try to make money from patent-infringement lawsuits.

The group that currently owns the patents, Allied Security Trust, buys them to protect its members from lawsuits. Composed of such companies as Google, Hewlett-Packard, Verizon Communications, and Cisco Systems, Allied Security Trust bought the patents in a private auction held by Microsoft. The Journal reports that Microsoft presented the patents to potential bidders as relating to Linux.

Microsoft has said that it holds more than 50,000 patents, according to the Journal, and that it believes 200 of those are violated by Linux applications.

Over the past few years, Microsoft has signed deals with several open-source companies in which they pay Microsoft money to protect themselves from intellectual property claims.

The OIN's goal is to promote and protect Linux by using patents that allow for free and open collaboration. The group says its patents are available to any company or individual that agrees not to assert those patents against Linux. The idea is to help developers use Linux without having to worry about violating existing patents.

The OIN is trying to use such cases as the recent lawsuit between Microsoft and GPS-maker Tom Tom to prevent similar actions against Linux-based apps. Although Tom Tom settled with Microsoft, the OIN is concerned that the case may establish a precedent.

Started in 2005, the OIN counts among its members IBM, Sony, and Red Hat. Over the years, other powerhouses have joined, including Oracle, Google, and most recently Tom Tom.

Microsoft late Tuesday filed its formal appeal of a patent infringement ruling that threatens to halt sales of Word in its current form.

In May, a jury ordered Microsoft to pay $200 million for infringing on a patent held by Canada's I4i. Earlier this month, a federal judge increased that monetary award and also issued an injunction barring sales of Word that include the custom XML code found to infringe on I4i's patents.

"We believe the court erred in its interpretation and application of the law in this case and look forward to the September 23 hearing before the U.S. Court of Appeals," Microsoft spokesman Kevin Kutz said in a statement.

In its papers, Microsoft makes a number of arguments for overturning the infringement finding, saying that the judge made several procedural errors and failed to live up to his role as "gatekeeper."

"In patent cases, even more than most, the trial judge's role as a gatekeeper is crucial," Microsoft argued in its appeal. "As gatekeeper, the judge must define the metes and bounds of a patent through claim construction and then ensure that the evidence presented by the parties' numerous experts is both reliable and rooted in the facts of the case at hand. And after the jury has rendered its verdict, it is the judge who, before allowing that verdict to become an enforceable judgment, must ensure that the verdict is adequately supported by the evidence and supportable under the law...This case stands as a stark example of what can happen in a patent case when a judge abdicates those gatekeeping functions."

For its part, I4i has praised the ruling and said that it is not seeking to torpedo Word, but does want the infringing custom XML code removed.

"We're not seeking to stop Microsoft's business and we're not seeking to interfere with all the users of Word out there," I4i Chairman Loudon Owen told CNET News earlier this month.

In a statement on Wednesday, Owen called Microsoft's document "extraordinary."

"It captures the hostile attitude of Microsoft toward inventors who dare to enforce patents against them," Owen said. "It is also blatantly derogatory about the court system."

Owen said that the company is counting on the court system to help it prevail even in the face of Microsoft's massive legal firepower.

"We do not have the gargantuan financial resources of Microsoft, but i4i has the protection of fairness under the U.S. justice system. Microsoft is not above the law. It cannot privately expropriate I4i's patented invention."

Owen said that I4i's response brief is due to be filed by Sep. 7. "We firmly believe the decision of the jury and judge in the United States District Court for the Eastern District of Texas was correct on the facts and we shall prevail on appeal," Owen said.

Microsoft has already gotten the appeals court to set a September 23 hearing to weigh an appeal of the case and potentially hold off the injunction, which is slated to go into effect in October.

In addition to pursuing its appeal, Microsoft has other options including creating a technical workaround, removing the XML function, or reaching a settlement with I4i.

A federal appeals court has scheduled a hearing next month to decide whether to uphold a ruling that would force Microsoft to stop selling Word in its current form.

A district court judge last week issued an injunction that would halt sales of any version of Word that includes a custom XML function that was found by a jury to infringe on a patent from Canada's I4i. In May, that jury also dinged Microsoft with $200 million in damages, an amount that the judge hiked to more than $290 million at the same time he ordered the injunction, which he scheduled to go into effect 60 days after the Aug. 11 ruling.

In a statement, I4i said that Microsoft's appeal will be heard on Sept. 23. Microsoft had asked for an expedited hearing on the matter.

"We firmly believe that the U. S. District Court made the right decision on the merits of the case," I4i Chairman Loudon Owen said in a statement. "We are confident that we will prevail on the appeal."

Owen said that I4i welcomes the speedy hearing. "This is a vital case for inventors and entrepreneurial companies who, like i4i, are damaged by the willful infringement of their patents by competitors; particularly competitors as large and powerful as Microsoft."

In addition to the appeal, Microsoft could also pursue a technical workaround that allows the custom XML function to work in a different way that doesn't infringe on I4i's patent, remove that feature from word, or pursue a settlement.

For its part, Owen told CNET News last week that I4i isn't seeking to see Word pulled from the market, but rather just to get Microsoft to stop infringing on his company's patents.

Microsoft was not immediately available for comment.

Microsoft on Tuesday asked an appeals court to halt an injunction that would force the company to stop selling Microsoft Word in its current form.

A judge last week issued an injunction that would force Microsoft to stop selling versions of Word with a custom XML function that a jury found infringes on a patent held by Canadian software maker I4i. The judge had ordered the injunction to go into effect 60 days after the ruling.

(Credit: Microsoft)

In its "emergency motion," made Tuesday, Microsoft asked an appeals court to halt that injunction and also to speedily hear the company's appeal, once it is filed.

Microsoft said that it is trying to remove the functionality found to infringe on I4i's patents, but unless it can do so, it would be forced to stop distributing Word in the U.S. market. "Already, Microsoft is expending enormous human and financial capital to make its best effort to comply with the district court's 60-day deadline," Microsoft said in the appeals court motion.

The software maker said the injunction could potentially keep Word and even Office off the shelves for months. "Unless Microsoft is able to redesign Word and push that redesigned version through its entire distribution network by October 10th...Microsoft and its distributors (which include retailers such as Best Buy and OEMs such as HP and Dell) face the imminent possibility of a massive disruption in their sales," Microsoft argues in the court papers.

Microsoft's motion is expected to be assigned to a three-judge panel that would consider the request. The software maker is also expected to file its full appeal shortly. On Friday, Microsoft made a motion to the trial judge in the case to allow the company to appeal the verdict without having to post a bond.

As noted in our earlier coverage, Microsoft has several options, including seeking remedy from the courts, creating a technical workaround that ensures Word is not infringing on I4i's patent, and settling with I4i.

In Tuesday's filing, Microsoft noted that, in the period since the jury's verdict, the U.S. Patent and Trademark office has provisionally rejected the patent in question upon a reexamination and said that the company meets the standard for staying the injunction because it is likely to win its appeal, will be irreparably harmed by the injunction, that i4i won't be harmed by the stay and that the public will "face hardship" if Word or Office is absent from the market for any period of time.

Earlier this year, in the same patent case, a federal jury also awarded I4i $200 million in damages in the case. That amount, in part, was reached by determining that a reasonable royalty for the XML feature was $98 per copy of Word, a figure that Microsoft noted in Tuesday's court filing is more than the retail price of some editions of Word.

For its part, I4i chairman Loudon Owen said last week that his company isn't seeking to crush Word, but rather just to get Microsoft to stop infringing on his company's patents. Owen declined to say what, if any, settlement talks have been taking place between the two companies.

Updates:
In a statement Tuesday, Owen added that the appeal was "fully expected given the significance of the case and the flagship status of Microsoft Word to the defendant. I4i will continue to vigorously enforce its patent," he added. "We firmly believe the jury verdict and judgment were both fair and correct and we have been vindicated through this process."

Microsoft spokesman Kevin Kutz added the following statement:

Today, Microsoft filed a motion with the Court of Appeals for the Federal Circuit to seek an expedited review of its appeal and to stay the permanent injunction while the appeal is pending. These filings are not unusual in patent cases. As we've maintained throughout this process, we believe the evidence clearly demonstrates that we do not infringe and that the i4i patent is invalid. We look forward to filing our appeal and to Court of Appeals review.

In a reversal on Friday, Microsoft said it is now open to allowing users in Europe to select competing browsers in Windows 7.

Essentially, Microsoft is offering to put into Windows a way for consumers to easily install a rival to Internet Explorer. PC makers, as they can today, could still install a rival browser and could also disable Internet Explorer, if they choose.

"Under our new proposal, among other things, European consumers who buy a new Windows PC with Internet Explorer set as their default browser would be shown a 'ballot screen' from which they could, if they wished, easily install competing browsers from the Web," Microsoft general counsel Brad Smith said in a statement.

As first reported by CNET News earlier this month, Microsoft had hoped to comply with Europe's objections to the inclusion of a browser in Windows simply by removing the browser entirely from Windows 7. However, the European Union indicated that such a move might not satisfy its concerns.

Microsoft has had "preliminary talks" with European Union officials with the hopes of settling several regulatory probes, according to a Bloomberg report.

According to the report, Microsoft is aiming to settle the matters before EU Competition Commissioner Neelie Kroes steps down at the end of the year. One issue is the EU's well-publicized concern over the bundling of Internet Explorer into Windows, while the other pertains to Office software, Bloomberg said.

The EU earlier this year issued a preliminary finding that the inclusion of a browser in the operating system violated European antitrust law and has been exploring a variety of potential remedies, including forcing Microsoft to distribute rival browsers with its operating system.

Last month, CNET News reported that Microsoft was planning to ship Windows 7 in Europe only in versions that had the browser feature removed, aiming to sidestep regulatory action. However, both the EU and rivals issued concern over that approach.

As for the Office inquiry, Microsoft has said it was opened in January 2008 and resulted from complaints filed by a trade association of Microsoft's competitors.

An EU spokesman did not immediately respond to a request for comment on the report of settlement talks and a Microsoft representative declined to comment. Both Microsoft and an EU spokesman declined to comment in the Bloomberg report.