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Software giant balks at penalties

The European Union appears set to keep its hard-line stance against Microsoft’s allegedly anticompetitive tactics, and it is insisting on imposing a €899 million ($1.36 billion USD) fine on the company to keep its future actions in line.

Microsoft’s lawyers disagree, however, and entered a variety of arguments last May that the fine is too high, and was entered based upon “manifest errors” in the EU’s process. With copies of the arguments released publicly earlier this week (PDF), its demands to annul the fine are now available for perusal worldwide:

  • The EU “erred” in its decision to subject Microsoft to regular, periodic fines while the company released copies of its interoperability specifications, due to the fact that Microsoft’s pricing for the documentations was not in line with the EU’s definition of “reasonable,” – the EU never explicitly stated what it considered a “reasonable” price to be.
  • Further, licensing rates for information on its proprietary protocols – despite not passing the EU’s benchmark of reasonability – were more than 30 percent lower what industry experts PriceWaterhouseCoopers determined to be a fair price for “comparable technology.” (Ars Technica questioned this finding early last year, noting that in many cases ‘comparable technology’ was open source, and therefore free.)
  • Microsoft should not have been subjected to a “heightened patentability test,” where the innovation of its trade secrets was placed under scrutiny in order for the EU to decide whether or not Microsoft should have charged royalties for the use of its trade secrets.
  • The EU based some its assessment reports on documents obtained that courts later determined to be “unlawful.”
  • Microsoft was denied its “right” to be heard due to the EU’s failing to give Microsoft the opportunity to speak up after the period for which it was fined, preventing the company from “commenting on all relevant aspects of the case.”
  • And, simply, the fines imposed are “excessive and disproportionate,” particularly due to the fact that the EU chose to challenge its licensing practices.

Additionally, Microsoft previously appealed the fine to Europe’s Court of First Instance last May – however little has developed in the appeal since its filing.

The company’s trouble began in 2004 when the EU demanded Microsoft provide competitors the ability to connect to software running under its Windows platform (applications like Exchange and Active Directory). Third-party attempts to connect to Microsoft technologies have, typically, been written by reverse engineering the company’s communications protocols.



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RE: Fight and win
By Some1ne on 7/9/2008 3:37:20 PM , Rating: 2
While you may have a point, it's hard to agree with you given the piss-poor arguments that Microsoft is using in its appeal. For example:

quote:
The EU “erred” in its decision to subject Microsoft to regular, periodic fines while the company released copies of its interoperability specifications, due to the fact that Microsoft’s pricing for the documentations was not in line with the EU’s definition of “reasonable,” – the EU never explicitly stated what it considered a “reasonable” price to be.


Um, if the courts order you to submit copies of your interoperability specs, you'd damn well better not try to charge them for it. If you do, you're just asking for them to drop the hammer on you.

quote:
Further, licensing rates for information on its proprietary protocols – despite not passing the EU’s benchmark of reasonability – were more than 30 percent lower what industry experts PriceWaterhouseCoopers determined to be a fair price for “comparable technology.”


Their argument admits that they failed to meet the benchmark. That's not going to work, regardless of what PriceWaterhouseCoopers says. If MS feels that the benchmark is unreasonable, and has evidence to back it up, then they should challenge it in a seperate suit instead of trying to make the complaint as part of their appeal. Flat out admitting that you failed to meet the benchmark is not the way to win an appeal, no matter how unfair you think the benchmark was. Next.

quote:
Microsoft should not have been subjected to a “heightened patentability test,” where the innovation of its trade secrets was placed under scrutiny in order for the EU to decide whether or not Microsoft should have charged royalties for the use of its trade secrets.


Why shouldn't they have been? Because it didn't play out in their favor? If you patent something, it needs to be novel and innovative, and you need to be able to prove that it is such. I don't see the issue here, and in fact I support the idea of having a "heightened" review process, as it sounds like it's intended to help blunt the damage caused by people obtaining overly broad and/or obvious/frivolous patents. If Microsoft's argument is that they should not have been subjected to the test, because they ended up failing it, then that's not going to fly either.

quote:
The EU based some its assessment reports on documents obtained that courts later determined to be “unlawful.”


This one has some minor chance of working, though how much depends entirely on how many documents were deemed inadmissable, and how much of a role those documents played in the decision process. I don't have this information, though I'm guessing that if it were really substantial, Microsoft would be playing up this aspect a lot more than they are. Thus, this argument seems unlikely to succeed as well.

quote:
Microsoft was denied its “right” to be heard due to the EU’s failing to give Microsoft the opportunity to speak up after the period for which it was fined, preventing the company from “commenting on all relevant aspects of the case.”


You don't have any right to respond after the response period has expired. Microsoft should have completed its response in a more timely manner.

quote:
And, simply, the fines imposed are “excessive and disproportionate,” particularly due to the fact that the EU chose to challenge its licensing practices.


Of course Microsoft is going to say that, but unless they can somehow prove it, all this argument boils down to is Microsoft saying "we dont want to have to pay a fine". That won't work, as the judge is probably already well aware of the fact that the losing party in any given case would prefer not to lose.

Seriously, if that's the best their legal team can come up with, then they deserve to lose $1.4 billion. And then they should get some better lawyers.


RE: Fight and win
By DragonReach on 7/10/2008 12:51:16 AM , Rating: 2
There are some misconceptions here.

1. The charges for the interoperability documents was not for the court but for competitors of MS.

2. Subjecting one company to more stingent patentability tests than other companies is straight out wrong and an obvious measure to ensure a pre-determined outcome.


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