MS to EU: Trust us, we've never seen a loophole we liked

MS to EU: Trust us, we've never seen a loophole we liked

Summary: The court didn't buy the "I'm too smart to have done that" argument, but the Europeans may have just done itto themselves too -and face the same bottom line Apple did: getting exactly nothing from Microsoft.

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TOPICS: Microsoft
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On June 6th the European Commission announced its intent to "market test new proposals it has received from Microsoft outlining how the company intends to implement the Commission's March 2004 Decision in the field of interoperability".

Here's the critical bit from the press release:

The Commission's Decision of March 2004 requires Microsoft to disclose interoperability information to developers of work group server operating systems. Following rejection of Microsoft's application for suspension of this requirement by the Court of First Instance in December 2004 (see MEMO/04/305), the Commission was concerned that the conditions imposed by Microsoft for access to, and use of that information were not reasonable and non-discriminatory.

Microsoft has now agreed to make a number of changes to these conditions. Microsoft has agreed that it will allow development and sale of interoperable products on a worldwide basis. Microsoft has also recognised that a category of the information which it is obliged to disclose will be royalty-free.

Microsoft considers that the software source code developed by recipients of the interoperability information that implements the Microsoft protocols should not be published under a so-called 'open source licence'. The Commission nevertheless considers that, if the Court of First Instance rules in favour of the Commission in the pending application for annulment filed by Microsoft (case T-201/04), this should be possible for the protocols that do not embody innovations.

Notice those last words: "this should be possible for the protocols that do not embody innovations." I guess someone over there doesn't know the company's history.

When Microsoft introduced Windows 1.0 in November of 1985 they had two major problems. First, they could develop on Xenix, but the market was dominated by machines running PC-DOS with the original 64K memory block limitation from the 8088 still built in - and those couldn't run Windows effectively. Secondly, Windows looked so much like a copy of MacOS that Apple eventually sued them.

Microsoft won, but it took until 1994 when the U.S. 9th Circuit Court of Appeals ruled in its favor. Here's part of the court's own summary of the situation:

When Microsoft Corporation released Windows 1.0, having a similar GUI, Apple complained. As a result, the two agreed to a license giving Microsoft the right to use and sublicense derivative works generated by Windows 1.0 in present and future products. Microsoft released Windows 2.03 and later, Windows 3.0; its licensee, Hewlett-Packard Company (HP), introduced NewWave 1.0 and later, NewWave 3.0, which run in conjunction with Windows to make IBM-compatible computers easier to use. Apple believed that these versions exceed the license, make Windows more "Mac-like," and infringe its copyright. This action followed.

With that background, here's the interesting bit:

Apple's further contention that the district court's interpretation of the Agreement must be wrong because it would be unreasonable to suppose that Apple knowingly gave away its most valuable technological asset ignores the fact that Apple itself received valuable consideration under the Agreement: the right, to use and license any new displays created by Microsoft within five years, together with Microsoft's promises to delay release of an IBM-compatible version of Excel and to release an improved version of Microsoft Word for the Macintosh. Under these circumstances, the district court properly concluded that the Agreement is not reasonably susceptible to Apple's interpretation.

The court didn't buy the "I'm too smart to have done that" argument, but the Europeans may have just done it to themselves too -and face the same bottom line Apple did: getting exactly nothing from Microsoft.

Topic: Microsoft

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6 comments
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  • Free but closed.

    Microsoft has agreed to provide some information free of royalties, but will not allow any software using that information to be issued without royalties. Presumably, this is because the software using Microsoft's information would define Microsoft's information so well that anyone could deduce the information.

    The EC's contention is that if they win the Court case, they will insist on open-source acceptance unless Microsoft can prove to them that the information is an innovation. The EC as super patent office.

    This is arrogant and highly favorable to open source of course, but the EC will not change its determination to grab anything it wants from anyone it chooses to satisfy its own purposes. The spirit of Monti lingers on.

    But Microsoft could win the Court case or new people could bring in ideas more comfortable with an "ultra-liberal" market. The complaint by the Judge in the Court of First Instance sounds promising for the gradual evolution of the EU's bureaucratic thinking.

    Damage delayed is not damage forestalled.


    I have to admit, I don't understand the point being made in this commentary. I hope the author will summarize for the benefit of anyone who had trouble following the connection between the EC document and the Apple US Court decision.


    Quoting from the EC document:
    Microsoft has agreed that it will allow development and sale of interoperable products on a worldwide basis. Microsoft has also recognised that a category of the information which it is obliged to disclose will be royalty-free.
    Microsoft considers that the software source code developed by recipients of the interoperability information that implements the Microsoft protocols should not be published under a so-called 'open source licence'.
    Anton Philidor
    • Typo in first sentence

      Should be:

      Microsoft has agreed to provide some information free of royalties, but will not allow any software using that information to be issued under an open source license.

      Sorry.
      Anton Philidor
    • Please explain

      [i]The EC's contention is that if they win the Court case, they will insist on open-source acceptance unless Microsoft can prove to them that the information is an innovation. The EC as super patent office.

      This is arrogant and highly favorable to open source of course, but the EC will not change its determination to grab anything it wants from anyone it chooses to satisfy its own purposes. The spirit of Monti lingers on.[/i]

      It's not clear what you're objecting to. MS isn't being required to give away any of their copyrighted works, nor are they being requied to give away patent licenses, nor are they being required to give up any of their trademarks.

      So what, exactly, are you complaining about in the requirement that Microsoft disclose interoperability requirements?
      Yagotta B. Kidding
      • Protocols as innovations.

        Microsoft does not want to release their protocols unless those obtaining the protocols pay for them. This has been accepted by the EC, though the means of charging for the protocols required negotiations.

        Notice that, whatever terminology you use, the point not in dispute is that Microsoft's protocols are worth money. And that value can be reduced by the release of the protocols.

        For open source users in particular, Microsoft has the objection that what should have to be purchased could be gained for free by looking at the software which connects with the protocols.

        The EC acknowledges that point, too. They have said that the benefit to open source software is more important than Microsoft's loss in money.

        If the Court held against them, Microsoft would be permitted to deny open source access only if they can prove to the EC that the protocol wanted by an open source software outfit is an innovation.
        Now that's a patent office's job, no?!

        Another quote from the EC document:
        The Commission nevertheless considers that, if the Court of First Instance rules in favour of the Commission in the pending application for annulment filed by Microsoft (case T-201/04), this should be possible for the protocols that do not embody innovations.
        Anton Philidor
    • My main point is

      ThatMicrosoft has a long history of manipulating its own ability to innovate if doing so lets the business side of Microsoft take advantage of a legal loophole.

      There should be a word (and I'll bet there is, I just don't know it) for the structure of the title I used - an intentional misquotation of a widely understood saying.
      murph_z
      • Apple received their money's worth

        Paraphrasing the quote from the decision, Apple must have claimed that Microsoft's ahm... reflection of Apple's IP went beyond what Apple could have thought possible when signing the agreement.

        The Appeals Court Judge agreed with the Circuit Court Judge that even with all Microsoft took, Apple did receive sufficient valuable considerations:
        - license and use of Microsoft displays for 5 years
        - delay of a release of Excel for non-Apple pc's
        - an improved version of Word for the Mac.

        So two Judges decided that Microsoft had given value for money to Apple. Must have annoyed Apple that after the humiliation of saying they'd been swindled by Microsoft, they had to hear they had received enough in return for what Microsoft had taken.

        In this case, the EC decided that Microsoft would not be receiving enough in return for their protocols given to a company that used them to produce software issued under an open source license. Not unless Microsoft lost their appeal, at which point the EC would decide which protocols to issue to the open source companies, based on whether or not the EC considered the protocols to be innovations.

        So, while Apple was not able to convince US Judges that their IP was more valuable than Microsoft was willing to pay, Microsoft was able to persuade the EC that the value of their IP was worth more than open source companies could or would pay.

        This does show Microsoft had better lawyering than Apple, in both cases.

        And I suppose it also shows that Microsoft often has to defend the value of its "innovations".
        (Uses the Microsoft definition; what Microsoft hasn't done before is an innovation in Microsoft software.)

        But I'm not sure where the business side comes into it, as in:

        ... Microsoft has a long history of manipulating its own ability to innovate if doing so lets the business side of Microsoft take advantage of a legal loophole.

        Sorry, must be an unusually Monday Monday.


        Quoting:
        Apple's further contention that the district court's interpretation of the Agreement must be wrong because it would be unreasonable to suppose that Apple knowingly gave away its most valuable technological asset ignores the fact that Apple itself received valuable consideration under the Agreement: the right, to use and license any new displays created by Microsoft within five years, together with Microsoft's promises to delay release of an IBM-compatible version of Excel and to release an improved version of Microsoft Word for the Macintosh. Under these circumstances, the district court properly concluded that the Agreement is not reasonably susceptible to Apple's interpretation.
        Anton Philidor