WordPerfect Case : U.S. Supreme Courtrejects Microsoft antitrust appeal

The U.S. Supreme Court on Monday denied a Microsoft appeal to an antitrust case that dates back to Novell's desktop PC software business in the mid-1990s.

The move leaves standing a lower court ruling that says Novell can sue Microsoft under federal antitrust laws. Novell argued that Microsoft used its monopoly power to sink Novell's QuattroPro spreadsheet and WordPerfect word processor.

Microsoft and Novell are partners now, but the companies used to be fierce competitors in the office software space. We know how that war turned out: Word and Excel gradually squeezed WordPerfect and Quattro Pro out of the market, and Novell eventually got out of the office software business. Today, the Supreme Court rejected Microsoft's attempts to halt an antitrust lawsuit filed by Novell, ruling that the case can proceed to trial (Chief Justice John Roberts, a Microsoft shareholder, recused himself from the case.
Novell sued Microsoft in 2004, accusing the software giant of anticompetitive practices in the office software market. According to Novell, Microsoft withheld technical information necessary to get WordPerfect and Quattro Pro up and running under Windows 95.

A key piece of evidence comes from a 1994 e-mail from outgoing Microsoft chairman Bill Gates in which he ordered that some details on Windows' inner workings not be provided to his company's competitors. "I have decided that we should not publish these extensions," wrote Gates. "We should wait until we have away to do a high level of integration that will be harder for likes of Notes, WordPerfect to achieve, and which will give Office a real advantage... We can't compete with Lotus and WordPerfect/Novell without this."

Novell also accuses Microsoft of improperly using the operating system monopoly that got it in trouble with the Department of Justice. In order to raise the profile of Word and Excel, the software giant reportedly used its OS clout with manufacturers to keep WordPerfect and Quattro Pro from being bundled with new machines
Microsoft argued unsuccessfully that the statute of limitations over its conduct had expired, and that Novell should be barred from bringing an antitrust lawsuit because it did not compete in the operating system market. The software giant has consistently blamed Novell for WordPerfect's woes, saying that the company's mismanagement was the real issue. "WordPerfect deliberately chose not to develop a version for early versions of Windows in the hope that depriving Windows of a key application would limit the success of Windows," argued Microsoft in 2004.

At the beginning of the 1990s, WordPerfect had almost half of the word processor market, while Word had about 30 percent between the DOS and Windows versions (the next-most-popular app was IBM's DisplayWrite). By June 1994, when Novell purchased WordPerfect, the application's market share had dipped below 20 percent while Word for Windows soared past the 50 percent mark. Novell unloaded WordPerfect to Corel in 1996 for $186 million, a mere fraction of the $855 million it had paid less than two years previous.

Microsoft expressed its disappointment in the Supreme Court's decision in a statement given to Ars. "We realize the Supreme Court reviews a small percentage of cases each year, but we filed our petition because it offered an opportunity to address the question of who may assert antitrust claims," a company spokesperson said. "We look forward to addressing this and other substantive matters in the case before the trial court. We believe the facts will show that Novell's claims, which are 12 to 14 years old, are without merit."

Microsoft and Novell's 2006 interoperability and patent cross-licensing agreement allowed Novell to continue pursuing the WordPerfect case, and the Supreme Court's ruling clears the way for an eventual trial. Microsoft may choose to settle this case out of court, as US antitrust laws allow for damages to be trebeled.