The Microsoft antitrust case may play out for years more, but one small software company that has tangled with the Redmond (Wash.) giant in court hopes Judge Thomas Penfield Jackson's finding that Microsoft is a predatory monopolist will give its lawsuit new life.

For most of the decade, Bristol Technology Inc. in Danbury, Conn., has made software that lets big companies run Microsoft's Windows NT operating system on rivals' Unix-based systems. For that it needed — and for a number of years gained — access to Microsoft's proprietary codes through a license. Then, in August, 1998, Bristol sued Microsoft in a federal court in Connecticut for anticompetitive practices, claiming Microsoft was renegotiating the license in bad faith to drive up the cost and block access to essential parts of the code. Bristol alleged that Microsoft hobbled it because its software helps programmers adapt the ever-more-popular Windows software so it will run on operating systems that compete with Microsoft products.

Bristol's long-shot suit threatened to embroil the company in years of fruitless litigation against an opponent with bottomless pockets. Yet company officials contended they had no choice because without Microsoft's code, they couldn't keep their products technologically current. Its business dwindling, Bristol sought several hundred million of dollars in damages.

REJECTED. Then in fall 1998, the U.S. Justice Dept. sued Microsoft for antitrust violations, claiming, among other things, that it crushed small companies whose products threatened its strategies in the PC and Web browser markets. That sounded promising for Bristol. But in July, 1999, a Connecticut jury rejected Bristol's claims, saying it hadn't demonstrated that Microsoft monopolized the market for large operating systems that Bristol served. The jury did find, however, that Microsoft had violated state fair-practices law in the negotiations and recommended that Bristol get symbolic damages of $1. The court has yet to issue a judgment, though.

With the Connecticut judgment pending, Bristol sees a ray of hope in Justice's case, even though a finding of predatory behavior in one market can't necessarily be used to argue that a company is predatory in other markets. "It certainly should help our case," insists Patrick Lynch, partner at Bristol's law firm O'Melveny & Myers, in Los Angeles. After the judgment is entered, "we can make a request to grant a new trial or ask [the judge] to alter the verdict on the grounds that it was wrong."

At least one antitrust expert doubts that Jackson's rulings will make any difference for Bristol. Ernest Gellhorn, a law professor and antitrust specialist at George Mason University in Arlington, Va., says Jackson's findings aren't applicable to Bristol because they deal with the markets for Web browsers and PC operating systems — not corporate servers. "It is not substantial grounds for appeal or upsetting the verdict," says Gellhorn.

Microsoft certainly agrees. Its spokesman, Thomas Pilla, says, "Friday's findings of fact have no legal signficance until the court actually issues a decision, which we don't expect until next year. Even so, Bristol's claim that such a finding could be applied to their case is totally incorrect."

NEW DIRECTION. Whatever the outcome, Bristol's wrangle with Microsoft has thrown the small company into turmoil. It has run up $10 million in legal fees, says Keith Blackwell, the company's chief executive officer. Since the summer, the company has laid off 20% of its 75 employees. Now, Microsoft lets Bristol use only from 5% to 7% of its source code, not enough for it to develop saleable products, says Blackwell.

That forced the company to move in a new direction. Though it still services old customers such as IBM and Sybase, it now focuses on business-to-business e-commerce software. Bristol's new products won't hit the market until the first quarter of 2000, however. Meanwhile, the company is no longer profitable. Blackwell won't divulge current revenues, but he says they're less than the $8.7 million figure he gave Business Week Online in 1998.

Undermining Bristol's legal argument is the fact that its main competitor, Mainsoft Corp. in San Jose, Calif., was able to successfully renegotiate its earlier code-licensing agreement with Microsoft in 1998. Mainsoft officials say they achieved better ends because they kept talking to Microsoft instead of suing. "I spent the majority of eight months negotiating with Microsoft, and I wound up with a contract that I think is a good one," says William McCarthy, vice-president for business development at Mainsoft. (Bristol says it haggled over the contract for 18 months.) McCarthy says 1998 revenues grew 300%, to more than $24 million, as a direct result of the licensing agreement with Microsoft.

Did Bristol jump the gun and sue too early? Blackwell says he can't look back now. "From our standpoint, it would have been beneficial to have Judge Jackson's statement beforehand, but we did not have the luxury of waiting," he says. While Jackson's findings may embolden other small high-tech companies to challenge Microsoft in court, if Bristol is any example, they'll still have a struggle to make their cases.

By Jeremy Quittner in New York
jeremy_quittner@businessweek.com