BUSINESSWEEK ONLINE: DAILY BRIEFING
October 7, 1998


MICROSOFT CRANKS UP ITS LEGAL WAR AGAINST LEAKS

Over the past few months, news reports about Microsoft's legal troubles have been peppered with references to E-mail and other documents that are under court seal in three separate lawsuits -- including the Justice Dept.'s antitrust case. Microsoft has long complained about what it says are illegal leaks. Now the software giant is doing something about it. On Oct. 6, it served Dan Goodin, a reporter for the Cnet online news service, with a subpoena demanding that he turn over the documents referred to in two stories published on Sept. 23.

Goodin, 33, who writes about Microsoft's legal tangles, was eating breakfast in his San Francisco apartment at 7:30 a.m. when a process server rang his bell. Goodin declined to comment on the matter, but Cnet's attorney, Kent Raygor, with the Los Angeles law firm of Sheppard Mullin Richter & Hampton, says California's strong shield law will protect Goodin from being found in contempt of court for refusing to disclose information used in publishing the stories. "It looks like they're trying to find out where the leaks are coming from," says Raygor.

Microsoft denies that. Company spokesman Mark Murray says Microsoft hasn't asked for information about Goodin's sources. Rather, he says, Microsoft simply wants its documents back. It believes they were among those it filed in a San Jose federal court in connection with a lawsuit brought by Sun Microssystems Inc. last September. The suit accuses Microsoft of violating the terms of its licensing agreement for the Java programming language. Says Murray: "This is information that was designated as confidential by a court protective order. It shouldn't be used outside the court case."

This isn't the first Microsoft action on the leaks -- only the most aggressive. Last summer, the company filed a complaint with Justice's Office of Professional Responsibility charging that documents classified as private in Justice's May 18 antitrust case have been improperly distributed to reporters. And, on Sept. 28, it filed a motion in federal court in Salt Lake City accusing executives of Caldera Inc. and their attorney of leaking documents covered by a protective order. "When will this stop?" asks Murray. "Our competitors have constantly handed out Microsoft's information in clear violation of the protective orders in these three cases."

Caldera's suit accuses Microsoft of violating antitrust laws by pressuring PC makers not to buy its DR-DOS operating system as an alternative to Microsoft's MS-DOS. Caldera CEO Bryan Sparks denies that the company has been leaking information. "We've been very quiet," he says. "We feel our case is so strong we don't have to create publicity."

The Goodin stories describe Microsoft's "holy war on Java," according to one of the headlines. Goodin writes that Microsoft so feared that Java would undermine Windows that it sought alliances with influential computer industry companies to prevent Sun from getting them first. Goodin also cites documents that he says show Microsoft sought to pursuade chipmaker Intel Corp. to not collaborate with Sun.

That's something Justice is focusing on in its case, too. With the Justice case set to start within the next two weeks -- making a veritable sea of documents public -- it may be too late for Microsoft to put a stopper on this leaky bottle.

By Steve Hamm in San Mateo, Calif.

EDITED BY DOUGLAS HARBRECHT


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