Microsoft besieged by civil suits

Will the five class-action suits -- and more undoubtedly to come -- cause the software giant any pain?

Published November 29, 1999 5:00PM (EST)

The gold rush has begun: In the weeks since U.S. District Judge Thomas Penfield Jackson released his findings of fact stating that Microsoft abused its monopoly power, several civil lawsuits have been filed against the software giant, in five different states. An awful lot of lawyers seem to think that it's their chance to claim a piece of the Microsoft antitrust pie.

On Wednesday, for example, two lawsuits were filed in Ohio by a lawyer named Stanley Chesley -- known for his work on cases against the tobacco and breast implant industries -- claiming that consumers had been overcharged by Microsoft, to the tune of $10 billion. On Tuesday, three lawyers filed similar suits in San Francisco courts, following the example of a similar state case in New York and federal cases that were filed the week before in Alabama and Louisiana.

The allegations are rooted in Jackson's findings from the Justice Department lawsuit charging the company with leveraging its operating system dominance to force computer makers to bundle Microsoft's browser with the software on new machines. Jackson determined in his findings that Microsoft is, in fact, a monopoly; the lawsuits allege that Microsoft used that power to make software prices artificially high.

However, while Microsoft has been ruled a monopoly, it hasn't been found guilty of anything illegal yet: The findings of fact are merely preliminary; the "findings of law," due in early 2000, will determine whether or not Microsoft actually broke antitrust laws. Still, that's not stopping the lawyers who view the judge's findings as a green light for their own suits, thanks to a 1977 Supreme Court ruling which decided that consumers could sue for personal loss in antitrust cases.

"The civil suits are a little early in the game," comments Mark Radcliffe, a partner and chairman of the licensing group at Silicon Valley law firm Gray Cary Ware & Freidenrich. "While we have the findings of fact, the law hasn't been applied to them. And even if the judge rules against Microsoft, there's still the possibility that the appellate court will overturn that decision."

The civil litigators should be prepared for a nasty fight, Radcliffe adds, pointing out that Microsoft is "traditionally a very tough litigator ... The people who are in the process of suing Microsoft now better have very, very deep pockets."

Even if Microsoft beats the Department of Justice suit, an endless string of civil suits could potentially damage the company. IBM, for example, faced numerous lawsuits after it was ruled a monopoly in the 1980s -- and although it won many of those cases, some industry observers believe that it was being in court for 13 years that caused the computer Goliath to lose its top-dog position. "What I do think is clear is that this is going to be an enormous distraction to Microsoft," says Radcliffe. "A lot of people think the sky is going to open and rain cash on them."

Meanwhile, there is a chance that the Microsoft antitrust trial won't even make it to a decision. With Judge Jackson's assignment of a mediator last week, a settlement looks more likely, which would make it even harder for the civil suits to make a good case. Still, those who currently see dollar signs -- believing this could be as lucrative as the tobacco settlements -- might tough it out anyway.

They should be prepared. As Radcliffe sighs, "Taking on Microsoft is like [taking on]
the Russian front in World War II -- you better have lots of battalions, otherwise it isn't going to last."

By Janelle Brown

Janelle Brown is a contributing writer for Salon.

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