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Microsoft Wins Conn. Antitrust Case

July 16, 1999

BRIDGEPORT, Conn. (AP) _ Microsoft Corp. was absolved by a federal court jury Friday of abusing a small software company, a legal victory that could discourage others from challenging its dominance in the industry.

The jury rejected a claim by Bristol Technology Inc., of Danbury _ a one-time Microsoft business partner _ that Microsoft improperly withheld software code that Bristol contended is vital for its survival.

The jury did find that Microsoft committed a ``deceptive act″ that violated a state antitrust law. It didn’t specify what the act was, but awarded Bristol just $1 in damages.

Antitrust experts said Microsoft’s victory was clearly important but was expected to have little impact in the much larger antitrust case in Washington, D.C., brought by the Justice Department and 19 states.

``It’s a boost to the company principally because it’s going to discourage other private parties from taking a swing at it for the same type of behavior,″ said William Kovacic of George Washington University. ``It will slow down others who thought it was time to pile on.″

Microsoft stock gained more than 5 percent in heavy Friday trading on the Nasdaq Stock Market, and breached a historic milestone. As the stock rose $5.06 1/4 to close at $99.43 3/4, the total value of the shares topped $500 billion, the first time that’s happened. Helping push the shares higher was enthusiasm over a report that Microsoft might create a separate stock that would track the performance of its Internet properties.

Steven Aeschbacher, senior corporate attorney for Microsoft, called the verdict in the Bristol case ``an important victory for the whole software industry.″

``This protects the rights of people who developed intellectual property to be able to license it in a fair and equitable way,″ he said.

Bristol had not decided whether it would appeal the decision.

``We’re extremely disappointed and surprised, and will be exploring all of our options,″ said John Altieri, a lawyer for Bristol.

The lawsuit pitted Bristol, a little-known company with 70 employees and $8.7 million in revenues, against the Redmond, Wash.-based Microsoft with 27,000 employees and $14.48 billion in fiscal 1998 revenues.

Bristol sued Microsoft last year, contending the maker of the Windows computer operating system had stifled competition by preventing access to the source code _ the software blueprints _ of Windows NT, its system for powerful machines that run computer networks.

Bristol makes a software product called Wind/U, which allows programs written specifically to work with Windows to be converted to run on computers with different operating systems such as Unix.

In order to create Wind/U, Bristol had signed a contract with Microsoft giving Bristol access to the source code for Windows NT.

During the six-week trial in U.S. District Court, Bristol contended that Microsoft said it would continue providing such access as it created new versions of Windows, but later reneged on those promises. That, in effect, severed 200 customers of Bristol from the latest Windows technology, Bristol contended.

But Microsoft’s lawyers argued that the smaller company’s lawsuit was motivated by greed. They told the jury that while Microsoft executives continued to try to negotiate a new contract with Bristol, the smaller company’s executives were contacting lawyers, a public relations firm and an economic damages expert to prepare their lawsuit against Microsoft.

Bristol made two antitrust claims, first, that Microsoft illegally refused to negotiate a new contract. Secondly, Bristol asserted that Microsoft illegally leveraged its monopoly in personal computer operating systems in an attempt to monopolize markets for operating systems for powerful network computers.

The jury found, however, that Bristol failed to prove that because of Microsoft’s actions there is a dangerous probability that it will acquire monopoly power in those markets.

It did find that Microsoft had committed a deceptive act that violated the Connecticut Unfair Trade Practices Act, resulting in the tiny fine. It wasn’t immediately clear what the act was; the jury ruling was released in the form of a response to a list of charges and jurors were not immediately available for comment.

In the larger antitrust case, the federal government contends that Microsoft illegally wielded monopoly power from its dominant Windows product to expand into new markets, such as Internet software, attempting to crush a number of competitors.

``The evidence in Washington is broad, a broad pattern and a huge amount of deception going on,″ said Ed Black, president of the Computer and Communications Industry Association, a trade group that has been critical of Microsoft.

The Justice Department declined to comment on the Bristol decision, saying it would be inappropriate.

Testimony ended last month in the Microsoft trial in Washington, but the judge may not issue a final verdict until after January.

Microsoft is also facing an antitrust suit filed by another software company Caldera Inc. of Orem, Utah. That case is scheduled to go to trial in January.

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