In-Depth

10 Legal Lows for Microsoft

• By Kurt Mackie
• 12/01/2010

Microsoft is known for protecting its patent rights in quiet ways, often settling out of court with companies by establishing intellectual property licensing deals. Here are 10 notable cases where Microsoft ended up on the losing end of the law.

• Microsoft Guilty of Wielding Windows Monopoly Against Netscape: In the famous United States vs. Microsoft case, Microsoft was found to have used its OS monopoly to push Internet Explorer over competing browsers. The case was filed on May 18, 1998, and settled on Nov. 12, 2002. Today it continues in a different form. The U.S. Department of Justice oversees Microsoft's APIs and documentation efforts to enable interoperability.
• European Commission (EC) Tackles Windows: The EC's legal investigations of Microsoft began in 1998 when the EC investigated complaints by Sun Microsystems Inc. about server interoperability problems with Windows. On March 24, 2004, Microsoft was ordered by the EC to disclose such interoperability information to rival vendors. The EC didn't find Microsoft in compliance and hit the company with a number of financial penalties. The EC also looked at anticompetitive behavior by Microsoft in 2000 when Windows Media Player was included with Windows. On Jan. 15, 2009, the EC issued a "statement of objections" that Microsoft had unfairly tied Internet Explorer to Windows. Microsoft settled with the EC in December 2009, agreeing to unbundle Internet Explorer from Windows in European Union markets and offer a "browser ballot" screen displaying multiple browser choices. Microsoft also renewed its "interoperability pledge" with the EC. The pledge promises open APIs and documentation for competing software companies making products that interact with Microsoft products.
• Apple Sues Microsoft over "Stolen" QuickTime Code: Apple originally sued the San Francisco Canyon Co. on Dec. 6, 1994, alleging breach of contract and theft of intellectual property. San Francisco Canyon was working with Apple on making QuickTime run on Intel-based computers. Later, Apple alleged that Intel Corp. and Microsoft had stolen QuickTime code.
• Microsoft Messes with Java, Pays Fine: Sun sued Microsoft in 1997 for releasing noncompliant Java 1.1 products and corrupting the standard. The lawsuit was settled in January 2001. Microsoft agreed to phase out its products using the patent-infringing Microsoft version of Java and paid Sun $20 million.
• Slugfest with Alcatel-Lucent: Litigation between Alcatel-Lucent and Microsoft stemmed mostly from MP3 audio encoding patents acquired by Alcatel when it bought AT&T's Lucent Technologies holdings. The original lawsuits were aimed at Dell Inc. and Gateway Inc., but Microsoft later joined the case. At stake was Windows Media Player, with Microsoft contending it had licensed MP3 technology for Media Player from the German research company Fraunhofer-Gesellschaft. The court disagreed. Microsoft was hit with $1.5 billion in damages in February 2007, but the penalty was dismissed on appeal in August 2007.
• Novell's WordPerfect Claims: Novell and Microsoft settled a lawsuit concerning Novell NetWare network management software on Nov. 8, 2004, for $536 million, and Novell dropped out of an antitrust case against Microsoft in return. However, Novell's lawsuit over its WordPerfect and Quattro Pro products filed against Microsoft apparently continues. Microsoft went to the Supreme Court to block that lawsuit, but the Supreme Court rejected Microsoft's appeal in March 2008.
• Microsoft's Intuit Plans Thwarted: The U.S. Department of Justice, in a case filed in April 1995, argued against Microsoft's proposed acquisition of Intuit Inc., maker of the Quicken personal finance program. Many years later, in June 2009, Microsoft announced that it was discontinuing sales of its own personal finance software, Microsoft Money.
• VirnetX Draws Blood: VirnetX Holding Corp. settled two lawsuits against Microsoft. One of those lawsuits was filed in February 2007 and concerned VPN technology in Windows and Office Communications Server products. The other lawsuit was filed in March 2010, claiming that the same VirnetX patents were violated by Windows 7 and Windows Server 2008. In the settlement, announced on May 17, 2010, Microsoft agreed to license technologies patented by VirnetX and to pay that company $200 million.
• "Eye for Eye" Judgment: The final judgment in the case of i4i LLP vs. Microsoft was decided on Aug. 11, 2009. Microsoft was found to have "willfully violated" i4i's patented custom XML technology in certain Microsoft Word products. i4i was awarded more than $290 million in damages and penalties. Microsoft today is appealing this court loss all the way to the Supreme Court. It's even arguing that the legal standard for disproving patents is too high. Hammurabi's Code may have been effective in its day, but Microsoft, no stranger to enforcing its patent rights, seems to be now saying that when it comes to litigation, "an eye for an eye makes the whole world blind."
• Bursting the Multimedia Bubble: Burst.com and Microsoft settled a lawsuit in March of 2005 in which Microsoft agreed to license Burst.com's patented Internet multimedia streaming technology for a one-time licensing fee of $60 million. Microsoft was accused of stealing this technology. Burst.com also alleged that Microsoft had destroyed evidence that might have been used in the case. In a March 11, 2005, letter to Burst.com shareholders, Richard Lang, the company's cofounder, chairman and CEO, claimed that Microsoft had set up short e-mail retention policies to destroy potential evidence that could be used in litigation against Microsoft.