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Microsoft Cleared in Class-Action Lawsuit

Consumers who bought PCs with Microsoft software preinstalled on systems or on purchased PCs from resellers can't sue for antitrust violations, says federal appeals court.

(Richmond, Virginia) Businesses and consumers who purchased computers with Microsoft Corp. software preinstalled or bought the company's programs through a reseller can't sue for antitrust violations, a federal appeals court ruled Tuesday.

A unanimous three-judge panel of the 4th Circuit Court of Appeals affirmed rulings made in 2001 and 2004 by the U.S. District Court in Baltimore. The lower court had ruled that plaintiffs could not seek damages because the software was not purchased directly from Microsoft.

The 26 plaintiffs were seeking as much as $10 billion in damages.

Under federal law established in a 1977 antitrust ruling, indirect purchasers are not entitled to "overcharge" damages based on a company's settlement with the U.S. Department of Justice. Microsoft, which had been declared a monopoly, settled with the DOJ in late 2001.

The plaintiffs in the latest case claimed they were overcharged for Windows and other Microsoft programs because of the monopoly. They also claimed the monopoly barred consumers from the benefits of software that may have been potentially superior to those made by the company.

Christopher Lovell, a lawyer representing the plaintiffs, did not immediately return phone calls seeking comment.

David B. Tulchin, who represented Microsoft during arguments in the case, said the appellate court "made the absolutely correct decision," in dismissing the claims.

"It is not only proper under the law, but a case of justice," he said.

Tulchin said most users do not buy Windows directly from Microsoft, and that it has always been the company's view that "the software it produces is sold at a very low price."

"Given what you get in Windows, it's a great bargain for the money," he said, adding that the company spends "billions of dollars" developing the software.

Microsoft spokesman Mark Murray said the decision is a "significant milestone" that "essentially marks the end of this case."

The company has already agreed to pay out billions of dollars in cash and rebates in a settlements of class-action suits brought under state laws.

In a published opinion, Judge H. Emory Widener, Jr., ruled that the lower court did not err in its decision to dismiss the suits. Judges Paul V. Niemeyer and Roger L. Gregory joined Widener in the opinion.

Plaintiffs can appeal their case to the U.S. Supreme Court.

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