Appeals Court Vacates Java Injunction

(August 23, 1999) The U. S. Court of Appeals issued an opinion today vacating the preliminary injunction issued by District Court Judge Whyte last November in Sun Microsystem's Java licensing suit against Microsoft.

A three judge panel of the Ninth Circuit of the U.S. Court of Appeals issued its Opinion on Monday, August 23. The decision vacates the November 17, 1998 Order of U.S. District Court Judge Ronald Whyte granting Sun Microsystems a preliminary injunction against Microsoft.

That injunction required Microsoft to modify all its software products that ship with Java technologies to pass Sun's Java compatibility test suite. The order affected MS Internet Explorer, Windows 98, and the development tool, Visual J++.

A Microsoft spokesman said after the ruling that "Microsoft is not at this time anticipating making any substantial product changes in reaction to this positive ruling."

However, the Appeals Court's holding is very narrow. The ruling turned on Judge Whyte's failure to identify in his Order whether he based his injunction on a violation of Sun's rights under copyright law, or contract law.

A preliminary injunction is available only upon a showing that irreparable harm will result to the moving party absent injunctive relief. In contract disputes an award of injunctive relief is rare. Most often, the injured party's remedy is recovery of monetary damages. In contrast, there is a presumption of irreparable harm when a copyright is infringed.

The Appeals Court described the case. "Sun filed this suit for copyright infringement, claiming that Microsoft had exceeded the scope of its license by creating an enhanced version of Java that was fully operable only on Microsoft's operating system, and further, by not adapting its implementation of Java to be compatible with Sun's addition to Java of a component known as the "Java Native Interface" ("JNI"). Sun sought an injunction barring Microsoft from including incompatible Java technology in its products. The district court granted a preliminary injunction to Sun, and Microsoft appeals."

The Appeals Court continued that Judge Whyte "did not elaborate on why the case was a copyright infringement rather than a contract interpretation dispute, and it is on this point that Microsoft expends most of its ammunition on this appeal. It contends that the disputed compatibility requirements of the license agreement are affirmative covenants rather than limitations on the scope of the license, and that accordingly contractual rather than copyright remedies are appropriate if there has been any breach. The district court apparently did not expressly rule on this issue."

The Appeals Court agreed with Microsoft on its technical point regarding injunctive relief. However, the Court also agreed with Sun Microsystems that other elements of its claim for injunctive relief were present.

The Court wrote: "We agree with Sun that significant evidence supports the district court's holding that Sun is likely to prevail on its interpretation of the language of the agreement and to prove that Microsoft's conduct violated it. We agree with Microsoft, however, that the district court should not have invoked the presumption of irreparable harm applicable to copyright infringement claims before it determined that the compatibility requirements were a limit on the scope of the license rather than independent contractual covenants. We therefore vacate the preliminary injunction and remand for further proceedings."

The ruling affects only the November 17, 1998 preliminary injunction, and likely will have no effect on either the pending summary judgment motions, or the trial.

Moreover, the ruling still leaves Sun Microsystems opportunity to seek reinstatement of the preliminary injunction. First, Sun Microsystems can go back to Judge Whyte and seek reinstatement of the preliminary injunction under the presumption of irreparable harm theory upon a showing that the Microsoft's violation was in the nature of copyright, and not contract.

Alternatively, Sun Microsystems can return to Judge Whyte and seek reinstatement of the preliminary injunction under the traditional standard for preliminary injunctions. The Court noted the Sun Microsystems "may still be able to demonstrate that an injunction is warranted under the traditional standard for preliminary injunctions, in which the court balances the likelihood of success against the relative hardships to Sun and Microsoft. This too is an issue the district court has not yet considered."

The Appeals Court also commented that "This case illustrates how fast technology can outdistance the capacity of contract drafters to provide for the ramifications of a computer software licensing arrangement."

The three judge panel was comprised of Mary Schroeder, who wrote the opinion, Robert Boochever, and Cynthia Hall.

Sallie McDonald, a spokesman for Microsoft at Waggener Edstrom, commented on the ruling. "Yesterdays ruling on  Sun's copyright infringement claims and Sun's unfair competition claims is a positive step in a long case. We continue to believe we have lived up to our contract with Sun, and that our actions have provided more choices and better technology for consumers."

McDonald continued: "Yesterdays ruling reaffirms our belief that this disagreement is about the contract signed between Microsoft and Sun, and we look forward to continuing to present our case."

"We are still reviewing the ruling. However, Microsoft is not at this time anticipating making any substantial product changes in reaction to this positive ruling. We will continue to provide the technologies and support that serve the best interests of our customers," said McDonald.