The European Commission has dismissed Microsoft's arguments that the 2004 antitrust ruling against Microsoft trampled on the companys intellectual property rights.
Microsoft's trade secrets did not amount to intellectual property, said Anthony Whelan, the Commissions top lawyer arguing the interoperability side of the case. He also rubbished Microsofts arguments that the antitrust ruling effectively forces the company to make four patent-protected inventions inside Windows public property, in a three-and-a-half hour monologue that unfortunately sent many observers in the crowded courtroom to sleep on Wednesday afternoon.
Whelan said Microsoft's patent argument was invented at the last minute, when the Commission was on the point of ruling against Microsoft in March 2004, six years after its antitrust investigation began.
Microsoft mentioned one patent in passing during hearings in Brussels in late 2003, and officially added it to its legal arguments in January the following year, two months before the historic ruling that imposed a fine of 497 million (US$662 million) on Microsoft and forced it to change its business practices in Europe, Whelan said.
Microsofts story changed. Only here (immediately prior to the ruling) did it become specific about its intellectual property rights claims, Whelan said. The other three patents were first mentioned in the companys submissions to the Court of First Instance in preparation for this weeks appeal.
In January 2004 Microsoft cited one patent, now it talks about four. The patents question seems to be a pretext for Microsoft to justify its position ex post (after the event), Whelan said.
In a highly complex legal argument, Whelan explained how trade secrets fall short of intellectual property. Patent and copyright claims must be scrutinised by independent bodies before they are granted protection, whereas trade secrets are not, he said.
Yet the bulk of Microsofts intellectual property argument revolves around the trade secrets inside Windows that the Commission wants the company to reveal.
The 2004 ruling ordered Microsoft to supply the necessary interoperability information to competitors in the workgroup server market, to allow them to build servers that work as well with Windows on personal computers as Microsofts own server software.
Trade secrets are not entitled to the degree of protection that Microsoft claims, Whelan said.
Microsoft argued on Wednesday that regulators could only force a company to reveal its intellectual property, after demonstrating such a move is indispensable to the workings of the whole market.
It argued that this isnt the case in the server software market because Linux-based server systems have succeeded in carving out a niche in the market, despite having no access to the Windows protocols the Commission wants Microsoft to reveal.
Whelan countered this argument by pointing out that the indispensability standard, set during earlier antitrust cases, does not need to prove that all competition in the market would be eliminated without the information being made public.
Not the total elimination, but effective elimination of competition needs to be demonstrated. So niche players can exist, as they do in almost any market, he said.
The mighty Linux, or so you would be led to believe, my lords, cannot be cited as proof that the information isnt indispensable for effective competition to exist, he told the 13 judges hearing Microsoft's appeal.
He also shot down Microsofts claim that the information the Commission wants it to reveal would allow competitors, like Sun Microsystems, to effectively start building Windows server systems, or clones of them.
If this were the case, Whelan said, then Microsoft is itself guilty of encouraging the cloning of its own servers, because before it managed to build its own server software at the end of the 1990s, it allowed Suns Solaris access to the same information it later chose to hold back.
Reinforcing his argument, Whelan cited Steve Ballmer, Microsofts chief executive, who said at the time of its antitrust settlement with Sun Microsystems in 2004, that the deal, which included granting Sun access to the necessary protocols, wouldnt lead to less innovation but to more innovation.
It appears that alarmist claims of cloning are for your benefit only, my lords, Whelan told the judges.
Whelans points were reinforced Thursday morning by the Commission's ally the European Committee for Interoperable Systems. Thomas Vinje said the cloning argument, which Whelan at one point jokingly referred to as the attack of the clones, is groundless.
The only thing Microsoft is being told to disclose is interoperability information, which is a very small portion of the protocols in Windows server software. You cant clone Microsofts server system just with the interoperability protocols, Vinje said.
The judges will now question the two sides, which is likely to take up most of today.