US Supreme Court will not hear Microsoft appeal on Novell case

By Scott M. Fulton, III, BetaNews

March 17, 2008, 12:55 PM

It's a very quiet ending for one of the important antitrust cases in the history of the software industry, as justices were apparently satisfied that a decision in Novell's favor on the WordPerfect matter was justified.

If Microsoft had one last chance to redeem itself after last October's decision in a 2004 court case brought against it by Novell, it was to get just four US Supreme Court justices to sign on to its writ of certiorari, or "cert petition." Would they please hear its case for an appeal? This morning, the high court dismissed the petition without even a comment.

Novell was the publisher of WordPerfect at the time Microsoft did the most damage to it, as upheld by the Fourth Circuit Court of Appeals last October (PDF of the decision available here), it stood up on behalf of itself as well as its predecessor, WordPerfect Corp., for having maintained a very dominant player in the word processing market. That dominant player was hoisted down from that lofty position by a competitive argument that was difficult to refuse -- an argument which history now shows to have largely been artificial. (Corel is WordPerfect's current publisher.)

In 2004, Novell made the case that Microsoft had intent to specifically destroy WordPerfect, not just beat it in market share. It had many of Microsoft's internal communications to prove its point, including one that was an admission from then-CEO Bill Gates that his company couldn't actually beat WordPerfect on quality.

Suggesting for perhaps the first time that Microsoft find a way to tie its own applications into Windows, Gates suggested prior to the release of Windows 95, according to the Fourth Circuit citation, "We have a way to do a high level of integration [between Microsoft Office and Windows 95] that will be harder for [the] likes of...WordPerfect to achieve...We can't compete with WordPerfect/Novell."

A later e-mail from Microsoft executive (now its outgoing Business Division president) Jeff Raikes to investor Warren Buffett was cited as saying, "If we own the key 'franchises' built on top of the operating systems, we dramatically widen the 'moat' that protects the operating system business...We hope to make a lot of money off these franchises, but even more important is that they should protect our Windows royalty per PC."

While last October's affirmation by the Fourth Circuit of a lower court decision was largely a defeat for Microsoft, the question of if and how Microsoft should be punished ended up being a defeat for Novell. First of all, federal antitrust law imposes a statute of limitations for certain claims of injurious conduct. That limitation is four years, and Novell waited eight.

There's also the problem that many of the same arguments have been raised by the earlier Justice Dept. case against Microsoft, which -- at least at first -- it won outright. Since Microsoft is, under federal law, making reparations for its actions in that case, it may not be possible for the government to take action against Microsoft again for largely or somewhat the same actions.

So while the decision remains a victory for Novell, it may be a mostly symbolic one.

The only added information to today's denial from the Supreme Court was that Chief Justice John Roberts was not among those participating in the cert petition hearing. As an attorney, Roberts previously argued on behalf of states in their joint antitrust action against Microsoft.

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3:50 pm EDT March 17, 2008 - A Microsoft spokesperson contacted BetaNews this afternoon to say it continues to pursue what remains of the case brought against it by Novell, in US District Court in Baltimore. According to the spokesperson, this case is actually far from concluded.

"We realize the Supreme Court reviews a small percentage of cases each year, but we filed our petition because it offered an opportunity to address the question of who may assert antitrust claims," Microsoft's David Powermaster told BetaNews. "We look forward to addressing this and other substantive matters in the case before the trial court. We believe the facts will show that Novell's claims, which are twelve to fourteen years old, are without merit."