Jury Returns Verdict for Microsoft in Bristol Antitrust Case

(July 17, 1999) The federal trial jury in Connecticut sitting in the antitrust case brought by Bristol Technologies against Microsoft returned a verdict for Microsoft on all federal and state antitrust claims on July 16. The jury awarded Bristol $1 on a state unfair trade practices claim.

Bristol Technology, Inc., is a small privately held software development company based in Danbury, Connecticut. It develops software that enables computer application programs originally written for Microsoft Windows operating systems to be converted or recompiled to run on alternative operating systems, such as UNIX, OpenVMS, and OS/390. Its main product is Wind/U.

Bristol alleged in its Complaint that Microsoft's refusal to contract with Bristol to provide Bristol source code for Windows NT 4.0 and 5.0 constituted a violation of various laws. While Bristol leveled a shotgun blast of different legal theories as to why it was entitled to a court ordered redrafting of its contracts with Microsoft, most revolved around the notion that Microsoft has monopoly for network server software, and had illegally exploited this monopoly under federal and Connecticut antitrust law.

Bristol alleged in its Complaint that "Microsoft has monopoly power in the technical workstation operating systems market and departmental server operating systems market."   Yet, Bristol's own Preliminary Injunction Memorandum asserted that Microsoft holds only 19% of the market for department servers.

Microsoft makes, among other things, operating system (OS) software. One line of its OS software is Windows NT. NT has primarily been used on network servers and technical workstations, while Windows 3.X, 95, and 98 has been used by PCs. The OS most commonly used on network servers and technical workstations has been the various versions of UNIX, such as Sun Microsystems' Solaris. Bristol makes Wind/U, a product which allows applications written to run on Windows OS to also run on UNIX OS.

Bristol had a contract with Microsoft that commenced in September 1994, and expired in September 1997, under which Microsoft provided Bristol with source code for Windows NT 3.0 and earlier OS software. Microsoft was not obligated under this contract to provide Bristol with Windows NT 4.0 or 5.0 source code, and Microsoft has not provided it to Bristol. Bristol and Microsoft negotiated, but did not reach, a contract to provide 4.0 and 5.0 source code.

Bristol alleged in this suit that Microsoft refused to provide Bristol with the source code for these newer versions. Microsoft alleged that it has offered these to Bristol, but Bristol has rejected the terms of Microsoft's contract offer. Instead, Microsoft contracted to provide this source code to Bristol's competitor, Mainsoft.

"As the jury’s decision indicates, the record clearly shows that Microsoft offered to license its technology to Bristol under fair and competitive terms," said Tom Burt, Microsoft Associate General Counsel, in a statement released after the verdict. "Indeed, Bristol’s major competitor, Mainsoft Corp. of Sunnyvale, Calif., licensed this same technology under the same terms that Bristol rejected, and Mainsoft testified that Microsoft’s terms were completely reasonable."

Bristol alleged that Microsoft's refusal to give it Win NT 4.0 and 5.0 source code constitutes a plethora of federal and state antitrust violations. Microsoft's position was that this was a matter of contract law. Microsoft owns Windows NT, and is willing to license access to source code to Bristol, but Bristol had rejected its terms. Microsoft contended that Bristol was trying to use claims of antitrust law violation to obtain a court order that essentially would write a license contract that Bristol could not obtain through arms length negotiations, and which would give it a competitive advantage over its rival, Mainsoft.

"Microsoft is extremely grateful to the jury and extremely pleased by today’s outcome," said Tom Burt. "This decision represents an important victory for the entire software industry by upholding the rights of companies that develop intellectual property to license their technology in a fair and equitable manner."

"We’re proud of our mutually beneficial relationships with thousands of small-, medium- and large-business partners around the globe, and we view this litigation as an unfortunate exception that we’re glad to have resolved."

Burt concluded: "We’re pleased to put this case behind us and focus our energy on building great software. Today’s verdict sends a clear signal that the software industry is competitive and healthy, and that business negotiations should take place in a conference room, not a courtroom."

The jury reached its verdict on the third day of deliberations. The case included over a dozen complicated claims for relief.

Microsoft is the defendant in two other antitrust cases. One was brought by the federal government, and the other by Caldera, Inc.