Novell’s Antitrust Claim Against Microsoft Is Reborn Just As Feds’ Oversight Expires

Although Microsoft’s epic antitrust battle with the U.S. Department of Justice officially comes to an end tomorrow, with the expiration of the government’s decade-long oversight of the software giant, Microsoft has learned that another antitrust challenge has just received a new lease on life.

The United States Court of Appeals for the Fourth Circuit has revived the antitrust action Novell filed against Microsoft involving Novell’s office software applications WordPerfect and Quattro Pro.  Last year, the U.S. District Court in Maryland dismissed Novell’s antitrust claims.

The Fourth Circuit has now held that Novell is free to pursue an antitrust claim even though Microsoft settled a related suit with another company, Caldera, Inc., for $280 million.  The Fourth Circuit ruled that Novell’s sale in 1996 of its desktop operating system business to Caldera did not prevent it from seeking damages from Microsoft for allegedly using its monopoly power in the operating systems market to squash Novell’s office applications.

In 1996, Novell made a deal assigning certain rights to sue Microsoft to Caldera.  Caldera sued Microsoft over competition in the operating system market, receiving a $280 million settlement four years later, of which Novell received a $35 million share.  Then in 2004, Novell sued Microsoft in its own right, claiming WordPerfect was the victim of unfair competition by Microsoft, and last year Microsoft won summary judgment against Novell in that case on the grounds that Novell’s claims were subject to the 1996 agreement with Caldera.

But whereas the district court held that Novell signed away its software application claims to Caldera along with the operating system claims, the appeals court refused to abandon distinctions between the products harmed by Microsoft’s allegedly anticompetitive practices and will allow Novell to proceed with its one remaining antitrust claim.

Novell, which was purchased by Seattle-based Attachmate, Inc. last month, is seeking several billion dollars in treble damages under the antitrust laws.