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EU lawyers slam Microsoft's IP arguments

'Only here did MS become specific'

The EC (European Commission) and its allies continued their robust defence of the 2004 antitrust ruling against Microsoft yesterday and this morning, tearing apart arguments that the decision trampled on the company's intellectual property rights.

In a three-and-a-half hour monologue that sent many observers in the crowded courtroom to sleep yesterday afternoon, Anthony Whelan, the EC's top lawyer arguing the interoperability side of the case, dismissed claims by Microsoft that its trade secrets amounted to intellectual property.

He also attempted to rubbish Microsoft's arguments that the antitrust ruling effectively forces the company to make four patent-protected inventions inside Windows public property.

Whelan said this argument was invented at the last minute, when the EC was on the point of ruling against Microsoft in March 2004, six years after its antitrust investigation began.

Microsoft mentioned one patent in passing during hearings in Brussels in late 2003, and officially added it to its legal arguments in January the following year, two months before the historic ruling that imposed a fine of €497m (about £345m) on Microsoft and forced it to change its business practices in Europe, Whelan said.

"Microsoft's story changed. Only here [immediately prior to the ruling] did it become specific about its intellectual property rights claims," he said.

The other three patents were first mentioned in the company's submissions to the Court of First Instance in preparation for this week's appeal.

"In January 2004 Microsoft cited one patent; now it talks about four. The patents question seems to be a pretext for Microsoft to justify its position ex post [after the event]," Whelan said.

In a highly complex legal argument, Whelan explained how trade secrets fall short of intellectual property. Patent and copyright claims must be scrutinised by independent bodies before they are granted protection, whereas trade secrets are not, he said.

Yet the bulk of Microsoft's intellectual property argument revolves around the trade secrets inside Windows that the EC wants the company to reveal.

The 2004 ruling ordered Microsoft to supply the necessary interoperability information to competitors in the workgroup server market, to allow them to build servers that work as well with Windows on computers as Microsoft’s own server software.

"Trade secrets are not entitled to the degree of protection that Microsoft claims," Whelan said.

Microsoft yesterday said that in order to force a company to reveal its intellectual property, antitrust regulators must demonstrate that such a move is indispensable to the workings of the whole market.

It argued that this isn't the case in the server software market because Linux-based server systems have succeeded in carving out a niche in the market, despite having no access to the Windows protocols the EC wants Microsoft to reveal.

Whelan countered this argument by pointing out that the indispensability standard, set during earlier antitrust cases, does not need to prove that all competition in the market would be eliminated without the information being made public.

"Not the total elimination, but effective elimination of competition needs to be demonstrated. So niche players can exist, as they do in almost any market," he said.

Whelan told the 13 judges hearing Microsoft's appeal that Linux – or "the mighty Linux, or so you would be led to believe, my lords", in his words – cannot be cited as proof that the information isn’t indispensable for effective competition to exist.

He also shot down Microsoft's claim that the information the EC wants it to reveal would allow competitors, such as Sun Microsystems, to effectively start building Windows server systems, or clones of them.

If this were the case, Whelan said, then Microsoft is itself guilty of encouraging the cloning of its own servers, because before it managed to build its own server software at the end of the 1990s, it allowed Sun's Solaris access to the same information it later chose to hold back.

Reinforcing his argument, Whelan cited Steve Ballmer, Microsoft's CEO, who said at the time of the antitrust settlement with Sun Microsystems in 2004 that the deal, which included granting Sun access to the necessary protocols, "wouldn’t lead to less innovation but to more innovation".

"It appears that alarmist claims of cloning are for your benefit only, my lords," Whelan told the judges.

Whelan's points were reinforced this morning by the European Committee for Interoperable Systems. Representative Thomas Vinje said the cloning argument, which Whelan at one point jokingly referred to as "the attack of the clones", is groundless.

"The only thing Microsoft is being told to disclose is interoperability information, which is a very small portion of the protocols in Windows server software. You can't clone Microsoft's server system with just the interoperability protocols," Vinje said.

Later this morning the judges will question the two sides, which is likely to take up most of the day.


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