A Sweet Victory for Microsoft

A Connecticut jury's decision makes it one down, two to go for the software giant.
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And you thought this was going to be a sleepy Friday afternoon before everyone headed for the Hamptons. Then, boom, the Connecticut jury in the Microsoft (MSFT) - Get Report-Bristol Technology case -- a distinct sidebar to the big one in Washington but an important finger in the wind, nonetheless -- comes in.



good news for Big Red(mond).

If you haven't been following this case, here's a summary. Bristol, a tiny Danbury, Conn., firm, makes a nice cross-platform product, Wind/U, which allows companies to run some workstation applications written for Unix on both Windows and Unix platforms. Nice, huh? To get things working right, Bristol needed access to some of the innermost code in Windows NT. So Bristol entered into a contract with Microsoft, common in the software business, for access to Windows NT "source code." The contract ran its course and expired in September 1997. Microsoft would renew, but not on the original terms: It wanted a higher license fee.

Bristol, claiming Microsoft was illegally flexing its monopoly power in the operating-systems market, sued in

U.S. District Court

in Bridgeport, Conn., asking for $263 million in damages. The case went to trial June 3, and then went to the jury two days ago. The judge in this one, Janet Hall, played the instructions to the jury pretty much straight down the middle.

Given the home-turf jurisdiction and that jury trials often favor the underdog, rather than delivering the kind of (presumed) straight-arrow, by-the-book decisions we are supposed to get from judges, many observers predicted a Microsoft thrashing and a huge win for Bristol. A tiny company with just $7.6 million in sales last year was suddenly likely to make far more in the courts than it has in the marketplace.

Such a decision could also deal Microsoft a stinging blow in other antitrust proceedings it's now defending -- even

Judge Thomas Penfield Jackson

in the big D.C. trial reads the papers, eh? -- and maybe tilt the table a little.

Then things got real.

Just after lunch today, the jury came in with a one-two punch for the Microsoft-bashers. First, it found that Microsoft hadn't violated federal statutes in this matter. Second, it found that Microsoft had violated Connecticut state fair-trade laws and slapped Microsoft with a stinging fine of $1.

So much for the "beginning of the end for the Evil Empire" strategists.

Me, I never thought the Connecticut trial was going to affect the

Justice Department's

action against Microsoft in Jackson's D.C. court either way. Federal judges in D.C. have a certain, umm, attitude about their hegemony and, unless bound by clear precedent, do not much sniff the wind for hints of how things are going elsewhere. A lawyer-friend with long experience in the D.C. courts calls this the "Little Prince Syndrome," and I think that captures it pretty well:

Stay outta my face, huh?

But I'm thinking now, in these first moments after the Connecticut jury has come in, that I may have been wrong. Because there


a momentum issue here, whether Jackson acknowledges it or not. To be sure, the Bridgeport jurors were examining one narrow set of facts, not the broad issues that DOJ lead attorney David Boies has so effectively paraded before the court in Washington.

But a decision against Microsoft in Connecticut would have been, could have been, the start of a groundswell of anti-Microsoft sentiment that would have found expression in court decisions.

Will this decision, effectively in favor of Microsoft, turn things the


way? Probably not. Jumping on a corporate defendant when he's down is a long-standing if ignoble principle in U.S. courts; joining the "Bridgeport Nine" in whacking Microsoft would have been an easy and popular thing to do.

But I don't think Judge Jackson is going to take much direction from the Bridgeport decision. Neither is Dee Benson, the federal judge hearing the other big out-of-town trial for Microsoft now, the action against it in U.S. District Court in Salt Lake City by tiny

Caldera Systems

, alleging Microsoft tried to illegally damage the market prospects of DR-DOS after Caldera bought the failing product in the late '80s.

Benson has been giving Microsoft a pretty hard time -- most recently throwing out a week ago four Microsoft requests for summary judgments on trial issues -- and in fact, the Salt Like City trial has been a lot more interesting of late than the snoozefest in Washington.

Looking to concurrent but dissimilar cases for clues to the outcome of the DOJ proceedings in Jackson's court is probably a fool's game. No precedents are being set; the fact sets are completely different; and the three judges are very different in attitude and background.

But today was a sweet win, indeed, for Microsoft. I'm reminded of the old business-school maxim for marketers: Don't worry about giving buyers reasons to buy, but instead, take away their reasons


to buy.

As Microsoft cleans up the slate on the legal actions against it, it's doing exactly that. Antitrust cases are rarely won by defendants in the sense of big, declaratory, not-guilty decisions; rather, they're not lost.

And Microsoft scored a big non-loss up in Connecticut today.

Jim Seymour is president of Seymour Group, an information-strategies consulting firm working with corporate clients in the U.S., Europe and Asia, and a longtime columnist for PC Magazine. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. At time of publication, neither Seymour nor Seymour Group held positions in any securities mentioned in this column, although holdings can change at any time. Seymour does not write about companies that are consulting clients of Seymour Group, or have been in recent years. While Seymour cannot provide investment advice or recommendations, he invites your feedback at