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Daily Wrap and Flow

Reading the Daily Wrap and Flow is a quick and easy way to follow the ebb and flow of the trial. This link will always contain the latest commentary making it easy to bookmark. This column is updated throughout the day with the latest commentary placed at the top. If you prefer external links to use a full screen see help.

August 24, 1999 - The Sun vs. Microsoft Java case gets additional attention.

What does all this mean (I have quoted below the critical text of the appellate decision)?

Actually it means very little except that the trial judge needs to write a more precise opinion on his reasoning. Of course, once he does that, another appeal can be filed questioning whether the injunction can be sustained as a matter of law.

Do trial judges resent having to re-write their opinions due to an appeal by one side or the other? I suppose they do. But, a certain number of appeals are to be expected even though in the end they only seem to waste the courts time. The truth is that they do clarify the issues and make certain that the process is correct. Both Sun and Microsoft can easily afford the legal bill to get it right.

The really interesting issue about this appeal (and to a larger extent the entire case) is the effort by Microsoft to limit the applicability of copyright law to the Java issue. Right now Microsoft only wants to limit copyright law from supporting an injunction. But, in the end, Microsoft is likely to argue that their act of writing a incompatible version of Java did not violate Sun's copyright in the first instance. This argument will be interesting because in the antitrust case, Microsoft wants to greatly strengthen copyright law to permit them to either excuse their antitrust behavior or at least permit them to require all OEMs to sell precisely the package of goods as defined by Microsoft. (Of course, that selection is specifically designed to preclude competitors in direct violation of antitrust law.)

Watch Microsoft on this issue. They will argue that Sun can not limit what they do via copyright law but Microsoft should be able to limit OEMs via the same law. (And, for the same reasons, I might add.)

In the end, it is really the combination of contract law, copyright law and trademark law that will decide this issue. And, of course, the whole issue will also rub up against the "Fair Practices Act" of California. The Fair Practices Act prevents unfair competition. In a lay sense, what Microsoft has done is clearly unfair. I fully expect the courts to decide that their acts are also unfair in a legal sense.

OPINION

SCHROEDER, Circuit Judge:

Overview

This case illustrates how fast technology can outdistance the capacity of contract drafters to provide for the ramifica-tions of a computer software licensing arrangement. The license in question runs from plaintiff-appellee Sun Microsystems to defendant-appellant Microsoft. It involves Java, a computer programming language Sun developed to enable the writing of programs that work on any computer operating system. The license agreement was negotiated on a rushed basis in 1996, and by 1997 both Microsoft and Sun had developed what they believed to be significant improvements to Java.

Sun filed this suit for copyright infringement, claiming that Microsoft had exceeded the scope of its license by creating an enhanced version of Java that was fully operable only on Microsoft's operating system, and further, by not adapting its implementation of Java to be compatible with Sun's addition to Java of a component known as the "Java Native Interface" ("JNI"). Sun sought an injunction barring Microsoft from including incompatible Java technology in its products. The district court granted a preliminary injunction to Sun, and Microsoft appeals. The underlying facts, the details of the negotiations, and the nature of the software involved are all more fully described in the district court's detailed opinion. See Sun Microsystems v. Microsoft Corp., 21 F. Supp. 2d 1109 (N.D. Cal. 1998).

Before the district court, the parties bitterly contested the proper interpretation of the terms of the license agreement. Microsoft maintained that the agreement fully authorized all of the conduct that Sun challenged as infringing. Sun's interpretation was, of course, to the contrary. After a careful analysis of the parties' contentions, the district court held that Sun was likely to prevail on the merits of its claim that Microsoft had violated the license agreement.

The parties also disputed whether Sun's suit was properly considered as one for copyright infringement, as Sun contended, or as one for breach of contract, as Microsoft contended. The district court concluded that the claim was properly considered as an infringement action, thereby entitling Sun to a presumption of irreparable harm. See Cadence Design Systems v. Avant! Corp., 125 F.3d 824, 826-27 (9th Cir. 1997), cert. denied, 118 S. Ct. 1795 (1998) (copyright plaintiff that demonstrates likely success on the merits entitled to a presumption of irreparable harm). The district court did not elaborate on why the case was a copyright infringement rather than a contract interpretation dispute, and it is on this point that Microsoft expends most of its ammunition on this appeal. It contends that the disputed compatibility requirements of the license agreement are affirmative covenants rather than limitations on the scope of the license, and that accordingly contractual rather than copyright remedies are appropriate if there has been any breach. The district court apparently did not expressly rule on this issue.

We review the grant of a preliminary injunction generally for abuse of discretion, and "that discretion is abused where the district court based its ruling on an erroneous view of the law or on a clearly erroneous assessment of the evidence." Roe v. Anderson, 134 F.3d 1400, 1402 (9th Cir. 1998) (internal quotations and footnote omitted). We agree with Sun that significant evidence supports the district court's holding that Sun is likely to prevail on its interpretation of the language of
the agreement and to prove that Microsoft's conduct violated it. We agree with Microsoft, however, that the district court should not have invoked the presumption of irreparable harm applicable to copyright infringement claims before it determined that the compatibility requirements were a limit on the scope of the license rather than independent contractual covenants. We therefore vacate the preliminary injunction and remand for further proceedings.

There is also a claim of unfair competition under California law. The district court entered an injunction on that claim solely on the basis of past conduct. Microsoft correctly contends that under California law an injunction must be based on the prospect of future conduct. We therefore also vacate the injunction insofar as it relates to the unfair competition claim and remand for consideration of that issue.

(end of first part of opinion ... read here for the whole opinion )

August 19, 1999 - Thursday

8:39 AM PDT - The Register lets you know they think Microsoft thinks that PR wins law suits.

I doubt anyone in the industry believes Microsoft's version of the facts. I doubt the judge will either.

Clearly there are a lot of wishful thinkers. Clearly there are a lot of stockholders who wish Microsoft was a bit more upstanding. But, they are just riding the financial. Clearly there are a lot of OEMs and ISVs dependent upon Microsoft as well. But, they are just afraid of writing true cross platform applications. Sure that is more difficult. But, supporting a monopolist with all the harm it is causing just to lower your own costs hardly deserves any reward.

This is not a sporting event where you always cheer on your favorite team even when they foul the other players. And, it is not a sporting event where you falsely report the athleticism of your team just so you can write a more positive sports article.

Call it like it is. If the representations made by Microsoft are false, they should be labeled publicly as such.

August 11, 1999 - Wednesday

10:45 AM PDT - What? Microsoft Corporation forces DELL to sell a copy of windows with all of its PCs?

Microsoft Corporation just does not care which laws it violates.

August 10, 1999 - Tuesday

11:46 AM PDT - The DOJ and Microsoft Corporation both release their respective proposed "finding of facts".

Of course, the judge will eventually release his own version.

In the meantime, take the time to read both versions of the "facts". Compare the suggestions with your own knowledge and experience in this industry.

Over the foreseeable future I will try to put the findings of fact into some context. Most important will be how the so-called "facts" relate to antitrust law and the other laws Microsoft is charged with violating.

The burden of proof is also important. The DOJ must prove the basic elements of the violations and Microsoft must prove any defense it wants to raise.

August 9, 1999 - Monday

10:33 AM PDT - The San Jose Mercury News also helps put the upcoming releases into some kind of perspective

Before you decide which set of facts are supposed to be true or believable, you must first be aware of your own motives. Do you just want one side or the other to win "at any cost or violation of law"? Or, are you looking at the facts without any bias? Do you have any financial benefit to be derived from one side or the other being successful? Do you own any Microsoft stock? Do you have any contracts or agreements with Microsoft? Do you depend upon Microsoft technology? Do you depend upon a competitor's technology? All of these possibilities count and can influence any view you might take.

Are you a developer, work for a company in the industry or just a consumer?

If you are only a consumer, you can not be "pulling" for Microsoft unless you are just trying to impose your personal choices upon others.

If you are a developer or work for a company in the industry, it is going to be very hard not to have a bias of some kind.

10:14 AM PDT - ProComp releases their view of what they expect Microsoft to suggest the "facts" are in this case.

Let me guess too ... Microsoft is going to suggest that every single consumer today taking home a copy of IE weighed the price and features of Navigator and IE but choose IE? 100% of them choose IE, right? Microsoft lawyers are going to argue that?

Even the most ardent Microsoft supporters can not prove they themselves did that. Even they did not have any choice but to purchase IE again and again. (Have a copy of IE at home? Does not matter. You buy it again.)

The real issue is not whether IE is a forced sale. It clearly is. The real issue is "Just how much is Microsoft charging consumers for IE?". $140? $35? .. More? ...Less? (By the way, the DOJ is letting Microsoft argue that IE is free simply because "free is predatory pricing". Even the economist from Microsoft could not get the cost of IE down to zero to avoid predatory pricing charges. Oh. He tried. But, he did not apply the same logic to the price of Windows itself. For an economist to suggest one product costs $1 or so and another hundreds or more is a bit silly and proves his testimony is dishonest, deceitful and false.)

No corporation spends half a billion developing a product if they do not intent to make consumers pay for it.

If consumers can leave the product at the store and not take it home, they half a billion in R&D is a normal business risk. But, when 100% of all consumers (including all Microsoft supporters) are required to purchase another copy of IE (even though they may already have one at home), then investing half a billion is a very easy decision to make. A monkey could make that decision.

"Well just make the consumers buy and pay for it.", is Microsoft's business plan.

But, Microsoft in court will say and argue that a ruined market for browsers is no excuse to accuse them of anything. No body believes that. Some claim they do. But, I doubt it.

Anyone who has a job that they think they would keep after their company can no longer sell products is more than welcome to speak up.

Home - Lewis A. Mettler, Esq.