Judge Denies Bristol's Motion for Preliminary Injunction

(January 7, 1998)  U.S. District Court Judge Janet Hall denied Bristol Technologies' Motion for Preliminary Injunction against Microsoft on December 30.   However, she set an early trial date for this antitrust suit -- June 1, 1999.

The judge wrote a lengthy ruling denying Bristol's motion for a preliminary injunction, entitled "Memorandum of Decision on Motion for Preliminary Injunction" (PI Ruling).  She also issued a shorter ruling denying Microsoft's motions to dismiss for failure to state a claim, and for summary judgment (SJ Ruling). 

Judge Hall decided several issues, and suggested how she would decide others.   Bristol demonstrated that it will suffer irreparable harm (lost income and reputation).  Bristol has "monopoly standing."  Also, Bristol has shown "monopoly injury."  However, Bristol was denied a preliminary injunction because it failed to demonstrate a Sherman Act Section 2 monopolization claim.

Bristol Technology filed its Complaint against Microsoft in federal court in Connecticut on August 18, 1998 alleging that Microsoft violated the Sherman Antitrust Act by allegedly refusing to provide Bristol with source code to Windows NT 4.0 and 5.0 operating system (OS) software.  Bristol makes Wind/U, a product which enables applications written for UNIX OS to run on Windows OS.

Bristol also filed a motion for a preliminary injunction, seeking immediate access to NT source code. Judge Hall held a hearing on this motion which spread over several days in October.

In a memorandum filed with the court on September 25, Microsoft alleged that there was no antitrust law violation.  Microsoft further argued that this suit is really contract negotiations by other means.  That is, Microsoft owns Windows NT, and is willing to license access to source code to Bristol, but Bristol has rejected its terms.  Microsoft contends that Bristol is trying to use claims of antitrust law violation to obtain a court order that essentially writes a license contract that Bristol could not obtain through arms length negotiations, and which would give it a competitive advantage over its rival, Mainsoft.

The ruling was a setback for Bristol to the extend that it obtained no injunctive relief, and it currently has no contract with Microsoft.  It main competitor, Mainsoft signed contract with Microsoft last summer.   However, Bristol did succeed in getting an accelerated trial schedule.   Moreover, the Court rejected Microsoft's efforts to terminate the case, and made favorable rulings on the "monopoly standing" and "monopoly injury" issues.

Bristol representatives spoke favorably about the rulings. "Microsoft continues to try to obfuscate the facts to attract attention away from the central issue which is the anticompetitive behavior of a monopolist. While the judge denied the injunction, her Memorandum of decision foreshadows victory for Bristol," said Keith Blackwell, CEO of Bristol in a press release. "We are thrilled with a June 1, 1999 trial date and the judge’s findings of antitrust standing."

"The judge recognized that Bristol has made an important contribution to the viability of UNIX as a competitor to Windows NT," said Patrick Lynch, lead attorney for Bristol. "We believe a jury will agree that Microsoft has abused its monopoly power."  Lynch is a partner in the huge law firm of O’Melveny & Myers.

Meaghan Moody, of Bristol, told Tech Law Journal that Bristol has no plans to file an interlocutory appeal of the denial of the preliminary injunction.

Denial of Bristol's Motion for PI

One necessary element of a request for injunctive relief is a showing of irreparable harm if the injunction is not granted.  Judge Hall found that Bristol will suffer such irreparable harm.  She wrote that "The bulk of Bristol’s business will disappear without access to the new Microsoft source code before trial."  She also found that Bristol "will clearly suffer significant if not complete loss of goodwill if it does not obtain the NT 5 source code immediately."  (See, Irreparable Harm section of PI Ruling.)

Microsoft had argued that Bristol could not maintain an antitrust claim because it lacks standing to bring an antitrust action, since it is not a competitor of Microsoft in the various operating system markets in which it alleges Microsoft holds monopolies.   Bristol does not produce operating system software.  However, Judge Hall ruled that Bristol is a competitor, and does have antitrust standing.  She reasoned as follows:

"... Microsoft ... argues that Bristol does not have standing because it is not a consumer or competitor of Microsoft’s. This court is not persuaded that only competitors and customers, as traditionally understood, have standing. ... However, based on the evidence before it at this time, the court finds that Bristol has clearly shown that it is indeed a competitor of Microsoft.

By providing an extension to the UNIX-based operating system, Bristol competes with Microsoft directly.  In selling Wind/U to OEMs and ISVs, Bristol theoretically makes all Windows applications operable on UNIX systems. Given that 60,000 applications will be available when the NT 5 operating system reaches market, and given the consumer acceptance generally of the Windows "environment", Bristol must be recognized as more than a mere supplier. Bristol offers a product that makes a UNIX operating system competitive with Microsoft’s operating systems in a way that a UNIX operating system alone is not. ... Thus, Bristol has standing to assert its claims under the antitrust laws.   (Footnotes omitted.  See, Antitrust Standing section of PI Ruling.)

Microsoft had also argued that Bristol had not suffered "monopoly injury."   Antitrust injury is injury of the type the antitrust laws were intended to prevent and that flows from that which makes defendants’ act unlawful.  Judge Hall wrote that:

"The gravamen of Bristol’s claim is that Microsoft has used its monopoly power in one market to gain an unfair competitive advantage over Bristol in two other, related markets. Bristol further alleges that Microsoft’s refusal to license its full source code is an anticompetitive act that will serve to diminish the level of competition in those two markets.

The harm caused by a monopolist’s anticompetitive acts, such as those alleged here, constitute precisely the type of injury that the antitrust laws were designed to prevent."  (See, Monopoly Injury section of PI Ruling.)

The court then addressed the monopolization claims.  This is where Bristol's request for a preliminary injunction failed.  She wrote that "this court finds that Bristol has not made a clear showing of likelihood of success on any of its monopolization claims which is required for the issuance of the preliminary injunction sought in this case."

First, she examined the relevant markets.  Bristol argued that there are three: technical workstation, departmental server, and personal computer.  Microsoft argued that there is only one.  Judge Hall did not definitively rule, but wrote that "... this court finds that Bristol has made a clear showing that it is likely to establish at trial that there are now three relevant operating system markets at issue."  Also, at the outset, she wrote that Microsoft had 44% of the technical workstation OS market, and 28% of the departmental server OS market at the end of 1997.

However, Bristol failed to make the necessary showing that Microsoft had either engaged in monopoly leveraging, or monopolization of the technical workstation or departmental server operating systems markets.  Nor had it engaged in attempted monopolization.

Judge Hall first addressed Bristol's leveraging theory.  "Even if this court assumes that, with more than 90% of the personal computer operating system market, Microsoft has monopoly power in that market, Bristol is not entitled to a preliminary injunction on this claim. It is not clearly shown that it will likely establish at trial that Microsoft leveraged that monopoly power to gain an unfair advantage in either of the other two markets."  (See, Monopoly Leveraging section of PI Ruling.)

She then addressed the monopolization claim.  "Microsoft’s 28% share in the technical workstation operating system market precludes a finding that Bristol has clearly shown a likelihood that it will establish that Microsoft has monopoly power in that market at trial. ... The percentage of the departmental server operating system market controlled by Microsoft, however, falls in that range of 40% to 70% where courts have split over whether market share alone will establish market power."

However, she concluded that "Bristol has not demonstrated a substantial likelihood that Microsoft possesses monopoly power in either the technical workstation or departmental server operating system market. Because proof of monopoly power is an essential element of Bristol’s monopolization claims (citation omitted) no mandatory preliminary injunction can issue on Bristol’s monopolization claims."   (See, Monopolization section of PI Ruling.)