Monday WSJ article on the suit. It's accompanied in the WSJ's online and print editions by a chart that shows MSFT shares in a shallow upward trend and SUNW shares in a downward trend.
--QS
Sun Files Suit Against Microsoft
Seeking Damages in Java Fight
By LEE GOMES and NICHOLAS KULISH
Staff Reporters of THE WALL STREET JOURNAL
Sun Microsystems Inc. is once more entering the courtroom against Microsoft Corp., this time with a 71-page antitrust suit taking aim at some of the Microsoft products that are increasingly hurting Sun's core business and future growth plans.
It is Sun's second big suit against Microsoft and could become a multiyear headache for the Redmond, Wash., software company. Though Sun is making a series of new allegations that might not be easy to prove, some legal experts say the computer maker seems to be in a strong position to seek damages based on past Microsoft business practices that courts have already deemed illegal.
Sun's first suit, filed in 1997, was a contractual dispute involving the Java programming language, which Sun invented and Microsoft licensed. While Sun scored many legal points during those proceedings, the suit ultimately did little to boost the fortunes of Java, which failed to become a threat to Microsoft in personal-computer software. Sun blames Microsoft's business practices for that; Microsoft counters that Java was simply never the computing revolution Sun said it was. The two companies eventually settled the matter out of court.
The new suit by Sun, of Santa Clara, Calif., seeks, potentially, billions of dollars in damages and sweeping controls on numerous aspects of Microsoft's operations. It asks for an injunction that requires Microsoft to distribute the latest versions of Sun's Java technology, to disclose technical information so other companies can make compatible programs and to stop bundling some Microsoft products.
Microsoft, in response, said most of the allegations were old ones, and criticized Sun for competing in the courtroom and not the marketplace.
Separately, in a positive sign for Microsoft, a federal judge in Washington, D.C., expressed impatience with last-minute changes to tough demands by a group of state attorneys general pursuing their own case against the company. The judge postponed the start of a trial in the matter for a week.
The latest Sun suit was filed in U.S. District Court in San Jose, Calif., and leans heavily on rulings against Microsoft in the government antitrust case against Microsoft. In January, AOL Time Warner Inc. filed a suit against Microsoft similar to Sun's, but involving the manner in which Microsoft competed against the Netscape Internet browser, which AOL eventually acquired. Be Inc. also has filed a private antitrust suit against Microsoft since the ruling.
Sun executives rejected the idea they were afraid to compete head-on with Microsoft. "Anyone even passingly familiar with this company knows that we are a fierce competitor," said Michael Morris, Sun's general counsel.
Sun's complaint builds on the issues raised in the government's case but goes much further. An appeals court ruled that Microsoft has a monopoly in PC operating systems and illegally protected it; as such, Sun argues, Microsoft should be prevented from taking advantage of that position to move into new markets. Sun is especially worried about Microsoft ".NET" software initiative, which could hurt Sun's sales of large computers known as servers and reduce Java's popularity in that field.
The complaint alleges that Microsoft kept more than 20 technologies secret, impeding Sun and others making servers that need to work with Microsoft's PC software. The reality Sun faces in the marketplace, however, is a cost disadvantage of its servers compared with machines that use Microsoft's Windows and chips from Intel Corp.
The overall remedies Sun is seeking are wide indeed, and would subject Microsoft to extraordinary restrictions. One of the provisions -- an attempt to block Microsoft from extending Internet technologies in proprietary ways -- would bar Microsoft from distributing any new product that "subsets or supersets" any published technology standards approved by industry organizations.
In the separate Washington case, U.S. District Court Judge Colleen Kollar-Kotelly grilled Microsoft opponents, who want her to impose tough sanctions on the company, including in new areas such as hand-held devices and interactive television. Nine states, led by California, Connecticut and Iowa, are in court fighting for stricter remedies than those agreed to by the Justice Department in the proposed settlement in November. Opponents contend that agreement is riddled with loopholes.
But the judge told lawyers for the states that she had "some concerns" about the expanded remedies they were seeking, suggesting they may be asking for more than the law allows.
While the judge made no specific statements about her intentions, the tone of the proceedings seemed to favor Microsoft. The company's attorneys fielded few questions, and even shared a laugh or two with the judge. In stark contrast, the attorney for the states, Steven Kuney, faced hard questions from the bench, and seemed put off balance from the outset of the hearing, when Judge Kollar-Kotelly started off by expressing her displeasure with the changes requested by the states.
A trial had been scheduled to open Monday, but Judge Kollar-Kotelly agreed to give Microsoft more time to respond to the new demands by the states. The company had initially sought two weeks.
Write to Lee Gomes at lee.gomes@wsj.com4 and Nicholas Kulish at nicholas.kulish@wsj.com5 |
