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Novell Sues Microsoft over WordPerfect

Just days after a $536 million settlement with Microsoft over its NetWare operating system, Novell filed a federal lawsuit in Utah seeking damages from Microsoft for alleged efforts to eliminate competition in the office productivity applications market.

The lawsuit stems from Novell's ownership of the WordPerfect word processing software and the Quattro Pro spreadsheet software and covers the period of 1994 to 1996. Novell and Microsoft conspicuously failed to resolve their legal differences over the WordPerfect episode in their settlement last week.

Novell acquired WordPerfect when it merged with WordPerfect Corp. in June 1994. The company bought Quattro Pro in a related transaction from Borland International. The combined value of WordPerfect and Quattro Pro at the time of the transactions was more than $1 billion. Novell sold WordPerfect and Quattro Pro to Corel Corp. in March 1996 for about $170 million.

According to Novell, WordPerfect's share of the word processing market was almost 50 percent in 1990. It had fallen to less than 10 percent by the time Novell sold WordPerfect in 1996. By comparison, Microsoft Word's share of the word processing market rose from 20 percent before 1990 to about 90 percent by 1996.

Novell's lawsuit claims that Microsoft withheld critical technical information about Windows from Novell; integrated certain technologies into Windows designed to exclude WordPerfect and other Novell applications; and used its monopoly power to prevent hardware partners from offering WordPerfect and other applications to customers.

Novell's lawsuit is based in part on facts established by the U.S. Department of Justice in its antitrust case against Microsoft.

"While this lawsuit is unrelated to Novell's current business, the claims are important and hold considerable value for Novell," Joseph A. LaSala Jr., Novell's senior vice president and general counsel, said in a statement. "We intend to pursue aggressively a goal of recovering fair value for the harm caused to Novell's business by Microsoft's anticompetitive practices."

Novell seeks unspecified damages. The company contends that the WordPerfect claims were a central part of the negotiations with Microsoft that resulted in the Nov. 8 settlement. In that deal, Microsoft agreed to pay Novell $536 million while Novell agreed not to pursue antitrust litigation related to its NetWare operating system and other current products or participate in the European Union antitrust litigation.

In its own statement, Microsoft brought attention to what it called "fundamental flaws" in Novell's claims, including a charge that the eight years since Novell owned WordPerfect constitutes a violation of the Statute of Limitation on legal actions.

According to Microsoft, "Novell seeks to blame Microsoft for its own mismanagement and poor business decisions." The Microsoft statement points out that Novell's stock dropped 15 percent the day after it announced the acquisition of WordPerfect.

Microsoft blames the decline in popularity of WordPerfect on WordPefect Corp.'s decision not to support Windows in the hope of limiting Windows' success by depriving the operating system of a key application and "other missteps." The Microsoft statement also called "surprising" Novell's effort to use the court's findings in the Department of Justice case. "That case had nothing to do with WordPerfect or any other office productivity software, and focused almost exclusively on other markets and technologies," Microsoft said.

About the Author

Scott Bekker is editor in chief of Redmond Channel Partner magazine.

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