The following column was distributed to Oregon newspapers in July, 2000.

July 26, 2000

Microsoft: Latest Target in the Litigation Lottery

The ink has hardly dried on U.S. District Court Judge Thomas Penfield Jackson's ruling that Microsoft be split in two. The appeals process, which could take years and may reach the Supreme Court, has yet to begin. But America's trial lawyers are not waiting for justice to run its course. They smelled blood in the water, and have already filed 139 lawsuits against Microsoft in an attempt to make the software company the latest target in the litigation lottery.

Unlike the Justice Department-which seeks to regulate the software industry through its proposed "remedies"-the trial lawyers want money: lots of it. In one California case, a plaintiff acting as his own lawyer is seeking $2.5 million in compensatory damages, plus $100 million "or more" in punitive damages.

So far judges have taken a dim view of this treasure hunt.

Here in Oregon, Multnomah County Circuit Court Judge John Wittmayer recently tossed out a class action suit that alleged consumers were being overcharged for Windows software. A few days later, a similar case was dismissed in Nevada, and still another in Iowa.

Any examination into the validity of these cases will reveal one of the best-kept secrets about the Justice Department's crusade against Microsoft. In over two years, the federal government called on dozens of economists, academics and technology experts. Yet, in the thousands of pages of testimony, there is no evidence that any actions taken by Microsoft hurt consumers.

The Justice Department's main charge was that Microsoft illegally tried to monopolize the Internet browser market by bundling its Internet Explorer software with Windows, a move designed to shut out rival Netscape and its Navigator program.

During the trial, Judge Jackson himself admitted this effort was unsuccessful. He concluded that Microsoft's actions "did not ultimately deprive Netscape of the ability to have access to every PC user worldwide to offer an opportunity to install Navigator." In fact, in 1998 alone Netscape distributed over 160 million copies of Navigator, helping it more than double the number of users in just two years.

Even more amazing, in his earlier "findings of fact," Judge Jackson agreed Microsoft's launch of Explorer "compelled Netscape to stop charging for Navigator" and "contributed to improving the quality of Web browsing software, lowering its costs, and increasing its availability, thereby benefiting consumers."

This leaves the plaintiffs' bar in the ridiculous position of arguing against actions that a federal judge concluded were beneficial to consumers.

But trial lawyers are not letting facts stand in the way of a potentially lucrative lawsuit. In the mad dash to dip their hands into Microsoft's deep pockets, one Alabama law firm brought suit against Microsoft, which it erroneously claimed was located in the "state of Texas." A California firm filed a complaint that mentioned the API or "Active Pharmaceutical Ingredient" in Microsoft's software-a strange mangling of the common software industry term Application Programming Interface.

These legal bloopers would be funny if they didn't expose such a serious injustice. Microsoft has spent millions defending itself against the government's anti-trust case-funds that could have been invested to develop better software or bring innovative new products to market. They now face a growing list of meritless claims brought by trial lawyers who won't be satisfied until they pick the company clean.

The Oregon, Nevada and Iowa rulings were positive steps, but the battle continues for Microsoft in 31 other states and the District of Columbia. Ironically, if the trial lawyers win and Microsoft is forced to pay millions or even billions, the result will be higher software prices and less innovation-the very situation the Justice Department set out to fight, but could never prove. That's an awful high price to pay to feed the litigation lottery.