Bloomberg News

Microsoft’s Gates Faces More Questions in Novell Monopoly Case

November 24, 2011

Nov. 22 (Bloomberg) -- Microsoft Corp. Chairman Bill Gates faced more cross-examination on allegations that the world’s largest software maker undermined Novell Inc.’s WordPerfect program.

Novell said in its 2004 complaint that Microsoft unfairly restricted competition by using its monopoly on personal computer operating systems to suppress a rival word-processing program. Jeffrey Johnson, Novell’s lawyer, is to continue his questioning of Gates, 56, today in federal court in Salt Lake City.

Johnson began his cross-examination yesterday by asking Gates about the U.S. government’s landmark antitrust case against Microsoft that was settled more than eight years ago. In that case, the Redmond, Washington-based company was declared an illegal monopolist.

Gates acknowledged that “there was a lawsuit” and “findings” concluding Microsoft engaged in anticompetitive conduct.

Gates told Microsoft lawyer Steven Holley yesterday that he “absolutely” denied the central allegation of Novell’s suit, that in 1994, in developing the Windows 95 operating system, Microsoft withdrew an element of the software to thwart Novell’s WordPerfect and Quattro Pro programs.

‘Pretty Irrelevant’

While the elements withdrawn from the operating system may have been useful to companies developing e-mail programs, they were “pretty irrelevant” to word-processing, Gates testified.

Novell, which was bought by Seattle-based Attachmate Corp. in April, has argued that WordPerfect’s share of the word- processing market fell to less than 10 percent in 1996 from almost 50 percent in 1990.

Its value dropped from $1.2 billion in May 1994 to $170 million in 1996 when it was sold to Ottawa-based Corel Corp., said Novell. The company settled separate antitrust claims against Microsoft for $536 million in 2004.

In May, the U.S. Court of Appeals in Richmond, Virginia, revived the case, which had been dismissed by a lower court. The appeals court ruled that Novell, which briefly owned WordPerfect in the mid-1990s, didn’t cede its rights when it transferred claims related to its personal-computer operating system products to Caldera Inc. in 1996.

The appeals court ruling sent the case back to U.S. District Judge J. Frederick Motz in Baltimore, who had originally rejected it. Motz is conducting the trial in Salt Lake City, where the original lawsuit was filed.

The case is Novell Inc. v. Microsoft Corp., 04-01045, U.S. District Court, District of Utah (Salt Lake City).

--With assistance from Margaret Cronin Fisk in Detroit, and Tom Schoenberg and Jim Rowley in Washington. Editors: Andrew Dunn, Charles Carter

To contact the reporter on this story: Joel Rosenblatt in Salt Lake City federal court at jrosenblatt@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net


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