Small Software Developer Sues Microsoft

(August 20, 1998)  A small Connecticut software developer filed suit in federal court in Bridgeport, Connecticut on Wednesday, August 18, claiming that Microsoft has violated antitrust laws in connection with its Windows NT network server operating system.   Bristol wants the source code.

Bristol Technologies, a privately held company based in Connecticut, claims that it is entitled to get from Microsoft both money and Windows NT source code.

Bristol develops software that enables computer application programs originally written for the Windows operating system to be converted or recompiled to run instead on alternative operating systems, such as UNIX, OpenVMS, and OS/390.  Bristol's main product is Wind/U.

Wind/U is a set of libraries and utility programs that enable application developers to compile, link, and execute Microsoft Windows-based applications on UNIX, OpenVMS, and OS/390 platforms. Wind/U accomplishes this by supporting the Microsoft Windows programming interfaces on non-Windows operating systems such as UNIX, OpenVMS, and OS/390.

Bristol alleges that when Microsoft initially offered its NT operating system, "UNIX-based operating systems were dominant in the technical workstation operating systems market and the departmental server operating systems market. Microsoft was beginning to enter these markets with its Windows NT product. As the new entrant, it was advantageous to Microsoft to encourage users of UNIX-compatible computers to utilize and rely on Windows-compatible applications programs because such use and reliance would enhance the long run appeal of Windows NT in the technical workstation operating systems market and the departmental server operating systems market."  (Complaint, ¶ 51.)  Hence, Bristol was given liberal access to NT source code.

However, Bristol continues, over time "the acceptance of Windows-family in the technical workstation operating systems market and the departmental server operating systems market had grown and was growing so rapidly that it would no longer be beneficial to Microsoft to facilitate translation of programs written using the Windows programming interface so that they could run on the UNIX programming interface. Accordingly, Microsoft callously decided to restrict Bristol's access to source code."  (Complaint, ¶ 58.)

Bristol now seeks to use the courts to compel Microsoft to give to Bristol its Windows NT source code under terms that it can no longer get in free negotiations.  While Bristol leveled a shotgun blast of different legal theories as to why it is entitled to a court ordered redrafting of its contracts with Microsoft, most revolve around the notion that Microsoft has monopoly for network server software, and has illegally exploited this monopoly under federal and Connecticut antitrust law.

Bristol alleges that "Microsoft has monopoly power in the technical workstation operating systems market and departmental server operating systems market."   (Complaint, ¶ 24.)  Bristol's Preliminary Injunction Memorandum asserts that Microsoft holds 19% of the market for department servers.

Bristol described its lawsuit in a press release as follows:

The complaint accuses Microsoft of entangling Bristol in a charade to stifle competition from other operating systems: UNIX, Compaq's OpenVMS and IBM's OS/390. After initially approaching Bristol in 1991 and creating a dependency for Bristol and its customers on the Windows programming interfaces, Microsoft is now seeking to end access to this technology on all but Windows operating systems. Microsoft is doing so by refusing to provide Bristol with current and future Windows source code, and offering only a license that Microsoft knows is oppressive, unworkable and unreasonable.

In the lawsuit, Bristol seeks unspecified damages for and injunctive relief from Microsoft’s anticompetitive behavior. The injunction would require Microsoft to provide Bristol with source code for future versions of Windows operating systems, including Microsoft Windows NT 4 and Windows NT 5.

Bristol's lawsuit relies on a rule that a monopolist may not stop dealing with its competitors if that refusal injures competition. The suit also draws on the principle that a firm that monopolizes an essential facility of competition, like the Windows programming interface, may not arbitrarily withhold it from competitors. It also relies on the basic equity principle that a person can be enjoined from making commitments for the purpose of having other people rely on them, and then arbitrarily break those commitments after other people have relied on them.

The Complaint alleges fourteen claims for relief:

• Monopolization of the Personal Computer Operating Systems Market (Monopoly Leveraging).
• Monopolization of the Technical Workstation Operating Systems Market (Refusal to Deal).
• Monopolization of the Departmental Server Operating Systems Market (Refusal to Deal).
• Monopolization (Denial of An Essential Facility To Compete).
• Attempted Monopolization of the Technical Workstation Operating Systems Market.
• Attempted Monopolization of the Departmental Server Operating Systems Market.
• Monopolization of the Personal Computer Operating Systems Market (Monopoly Leveraging) (Conn. General Stats. §35-27)
• Monopolization of the Technical Workstation Operating Systems Market (Refusal to Deal) (Conn. General Stats. §35-27)
• Monopolization of the Departmental Server Operating Systems Market (Refusal to Deal) (Conn. General Stats. §35-27.
• Monopolization (Essential Facilities) (Conn. General Stats. §35-27)
• Attempted Monopolization Technical Workstation Operating Systems Markets (Conn. General Stats. §35-27)
• Attempted Monopolization of the Departmental Server Operating Systems Markets (Conn. General Stats. §35-27)
• Unfair Trade Practices.
• Estoppel.

The case has been assigned to U.S. District Court Judge Janet Hall, a recent appointment to the bench.

According to Bristol, the company was incorporated in Delaware in 1991, and is based in Danbury, Connecticut.  It had sales of $8.7 Million in 1997, and an unbroken string of profits, until recently.  It has 80 employees, mostly in the U.S.

Bristol is represented by the law firm of O'Melveny & Myers.