After Java, le Deluge?
Sun Microsystems' early victory in its case against Microsoft could spark a torrent of similar private suits

This week, for a change, the most important legal news for Microsoft Corp. came from someplace outside of Judge Thomas Penfield Jackson's Washington (D.C.) courtroom. On Nov. 17., a federal judge in California issued a preliminary injunction requiring Microsoft to make its version of Java software comply with the standards set by the product's maker, Sun Microsystems Inc. It was a huge victory for Sun, which has accused Microsoft of trying to sabotage Java -- a program designed to work with any operating system software -- by creating different versions of it.

Perhaps more significant, the decision also raises a frightening specter for Microsoft: that the software giant will one day be hit with a torrent of private suits filed by the many companies that feel they have been wronged by Bill Gates & Co. So far, most of the business rivals who would be in a position to file private suits like Sun's have refrained from doing so -- largely out of fear of angering the software giant.

But if the Justice Dept. prevails in its antitrust case, dozens of Microsoft's bitter rivals could be emboldened to follow in Sun's footsteps and file private suits against Gates's colossus. "If the government wins, they [private plaintiffs] will be coming out of the woodwork," predicts George Mason University antitrust professor Ernest Gellhorn.

The financial consequences for Microsoft could be huge. Not only might it be forced to compensate rivals for lost revenues but it would even face the possibility -- under a unique provision of antitrust law -- of having to pay out triple damages.

HUGE HEAD START. Why would a Justice Dept. victory trigger private litigation? For one simple reason: Any findings that Judge Jackson made against Microsoft could be used later against the company by other plaintiffs. For example, if Jackson concludes that Microsoft is a monopoly, other companies suing the software giant would not have to prove this claim in their suits. Instead, the burden would shift to Microsoft to disprove that it held monopoly power in the particular market under consideration in the case.

That also holds true for any of the important legal and factual issues Jackson is considering, such as whether Microsoft unfairly integrates new products into its operating systems, bullies distributors into ignoring rivals' products, or sabotages other company's software. Having these issues decided would give companies suing Microsoft a huge head start and dramatically increase the odds of winning a private suit against Microsoft, says New York City antitrust attorney Richard Steuer. Executives at other companies might say, "'Gee whiz, I should have had more success than I did, and I didn't because of what they did,'" says Steuer.

The Sun victory also offers a bit of encouragement for companies considering suing Microsoft. While the California judge's decision isn't binding legal precedent -- because he made only a "preliminry" ruling -- it does give potential plaintiffs a bit of ammunition. They're allowed to cite it as "persuasive" authority that Microsoft commits predatory practices.

What may be more important about the Sun decision is that it's a barometer of Microsoft's potential legal vulnerability. In antitrust litigation, judges tend to have a herd instinct, according to Washington (D.C.) antitrust attorney James Loftis. "The more of them that make the same findings, the more persuasive it becomes," he says. In addition to Sun, other companies that have filed private antitrust suits against Microsoft include Bristol Technologies and Caldera Inc.

THINKING TWICE. But it's still too soon to say Microsoft will drown in private antitrust litigation. Several important factors could serve to limit the company's liability. First, it could very well beat Justice in the antitrust battle. Second, a four-year statute of limitations would cut off many companies' claims. Finally, any company that has a thriving business relationship with the software giant would want to think twice about suing them. "It's largely a business decision. If you have to do business with Microsoft, then you have to make a calculation of what the trade-off is between the likelihood of a damage recovery and what you would do to your business relationship," says Loftis.

This wouldn't be a hard decision for companies that are bankrupt or already have terrible relationships with Microsoft, such as Netscape. But for closer business partners, such as Apple, the calculation would be much harder.

How many companies might sue Microsoft if Justice won? It's hard to say. But the rivals Bill Gates has hurt through his aggressive business practices make up a long list. You can bet that Microsoft doesn't relish the possibility of having to take them on in court.

France is Business Week's Legal Affairs editor. His weekly commentary will appear each Friday during the trial