Novell Files Antitrust Suit Vs. Microsoft

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Novell Files Antitrust Suit Vs. Microsoft - 11/14/04 11:22 PM

Less than a week after a collecting a $536 million settlement from Microsoft Corp. over antitrust complaints in Europe, Novell Inc. filed a lawsuit accusing the software giant of violating U.S. antitrust laws.

The suit, which dovetails with the U.S. Justice Department's antitrust case against Microsoft, claims the company used its market dominance in the mid-1990s to keep the WordPerfect word processing program and Quattro Pro spreadsheet application from gaining wider commercial acceptance.

"We intend to pursue aggressively a goal of recovering fair value for the harm caused to Novell's business by Microsoft's anticompetitive actions," said Joseph A. LaSala, Jr., Novell's senior vice president and general counsel, in a written statement Friday.

The lawsuit, filed Friday, alleges that Microsoft withheld technical information about Windows to prevent Novell from updating its software, made its operating system inhospitable to WordPerfect and other Novell programs and leveraged its own ubiquity to prevent Novell from offering its programs to customers.

Microsoft officials argue that antitrust laws don't require the company to disclose technical intricacies, and say Novell is trying to blame others for its own bad business decisions.

Tom Burt, Microsoft corporate vice president and deputy general counsel, also accused Novell of latching its lawsuit to the federal complaint against the company to avoid the statute of limitations which would be four years.

The law allows leniency when a government complaint against a company is involved. Burt said the federal complaint is irrelevant, but Novell is invoking it because the company sold WordPerfect eight years ago double the amount of time provided for in the statute.

"It's a very, very old claim," Burt said. "If it were true, they should've filed a lawsuit for that half a decade ago."

Novell spokesman Bruce Lowry said the company is including the Justice Department case because it demonstrates Microsoft's history of anti-competitiveness.

"The bottom line is, this isn't a specious filing on our part," he said.

On Monday, Microsoft announced it would pay Novell to pull out of a European Union lawsuit accusing the company of abusing its industry dominance. The company had not formally sued Microsoft in Europe, but its claims fueled the EU's lawsuit against Microsoft.

Microsoft previously spent $2.4 billion settling antitrust and other claims by AOL Time Warner Inc. and Sun Microsystems Inc., both significant supporters of the European case. Microsoft has cash reserves of about $64.4 billion.

In financial disclosure reports issued after the Monday settlement, the company estimated it still could face up to $950 million in exposure for remaining antitrust claims, including the new case from Novell.

However, Burt wouldn't specify what portion of that figure accounted for a potential payment on the new Novell suit.

Novell bought WordPerfect and Quattro Pro in 1994 for more than $1 billion, and planned to bundle the software for sale in a suite. Just four years earlier, the word processing program controlled 50 percent of the market.

But the bottom dropped out of WordPerfect demand while in Novell's hands, and the company dumped the software just two years later for $195 million a fraction of the cost it had originally paid.

In trading Friday, Microsoft shares closed down 1 cent, or 0 percent, at $29.97 on the Nasdsaq Stock Market, while Novell shares finished down 5 cents, or 0.7 percent, at $7.15.

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