Microsoft-EU case heats up in court

/ Source: The Associated Press

An EU judge asked Microsoft Corp. and the European Commission to explain how much lines of code were worth as the company challenged an order requiring it to give rivals information to make their server software work more smoothly with Windows.

Judge John D. Cooke, in a terse exchange Thursday with Commission lawyer Anthony Whelan, asked whether Microsoft’s proprietary information, including patent details, should be given away to rivals.

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“The information, which forms interoperability, is hugely valuable commercial information. ... That’s why it’s difficult to understand the attitude of the Commission that these are mere trade secrets,” the judge said.

Whelan said the value Microsoft placed on the code was merely a reflection of the amount of time and effort it had put into creating it, nothing more.

The exchange came on the fourth day of a weeklong hearing on Microsoft’s challenge to a 2004 EU antitrust ruling that found the company had taken advantage of its position as the leading supplier of operating systems to defeat rivals.

The world’s largest software maker maintains that it has worked strenuously to comply with the ruling that also ordered the company to pay a record 497 million euro ($613 million) fine.

On Thursday, European Commission supporters told the Court of First Instance that the software maker’s claims of interoperability between its Windows system and other companies’ servers were simply not accurate.

Judges also quizzed EU regulators on how long Microsoft would be expected to share code as it gears up to launch the next generation of Windows in 2007.

Cooke, who will write the court’s draft decision in the coming months, wanted to know if “competition rules require that be taken away from Microsoft, conveying a huge commercial advantage.”

James Flynn, a lawyer for the European Committee for Interoperable Systems — an industry group that includes Sun Microsystems Inc., IBM Corp. and Oracle Corp. — said that Microsoft’s “information is not kept secret because it is valuable. It is valuable because it is kept secret.”

Other commission proponents agreed.

“Microsoft could easily have provided us with a very large part of the information required by the Commission” on a single floppy disk, said Andrew Tridgell, founder of the Samba Project.

Samba is open-source software that offers file and print server services to users of non-Windows operating systems so that they can communicate with Windows-based machines.

But Tridgell said that because of Microsoft’s reluctance to make available some of the information as ordered by the Commission, Samba is always trailing.

“We’re forever relegated to playing catch up,” he said. “We are more than 10 years behind.”

Redmond, Wash.-based Microsoft argued that the Commission forced it to effectively give rivals a “free ride” on the work the company did to acquire new customers and develop new technologies.

Microsoft lawyer Ian Forrester rejected any suggestion that the company had deliberately exaggerated the importance of certain algorithms it would have to disclose.

Microsoft and EU officials are still discussing just what needed to be handed over, he said, explaining that Microsoft believed that to meet the terms of the Commission order and hand over “complete and accurate” information, it would have to give access to key parts of its code.

The Commission has never asked Microsoft to open up its source code — the recipe for Windows — but Microsoft offered earlier this year to grant some access to rivals under certain conditions if it would appease both EU and U.S. regulators.

Forrester said software engineers could work around the patented material if they wanted.

But Ronald Alepin, the former chief technology officer of Fujitsu Software Corp. and an expert witness for Microsoft’s rivals, said the company was wrong to claim that describing how its software works could help other software makers clone Microsoft products.

“It is axiomatic in our industry that specifications, properly written, do not reveal the design and should not reveal the design,” he said. “We just want to be able to connect.”

The Commission has said the degree of interoperability Microsoft allowed was simply not viable for most customers.

A decision backing the commission could force Microsoft to change the way it does business in the future and endorse the EU’s ability to hold back aggressive corporate behavior. A ruling, however, is not expected for months.

An appeal is not certain since Microsoft would need strong legal arguments to protest the ruling to the EU’s highest court, the European Court of Justice.