Tenth Circuit Rules Microsoft Had No Duty To Deal With Novell’s WordPerfect

The U.S. Court of Appeals for the Tenth Circuit has rejected Novell, Inc.’s bid to resurrect its antitrust claims accusing Microsoft Corporation of maintaining its monopoly in the operating systems market by withdrawing its support for WordPerfect and other Novell applications.

The Court affirmed the decision of the U.S. District Court for the District of Utah in Novell v. Microsoft Corp. granting Microsoft judgment as a matter of law on Novell’s antitrust claims after a hung jury failed to return a verdict at trial.

In November 2004, Novell filed its antitrust complaint alleging that in the 1990s Microsoft engaged in anticompetitive conduct that caused WordPerfect—a dominant word processor in the 1980s and early 1990s—to lose market share to Microsoft Word.  Novell claimed that Microsoft’s conduct in the 1990s damaged its business and forced the company to sell WordPerfect and other software programs to Corel Corp. at a loss of more than $1 billion.

Novell’s claim that Microsoft sought or maintained a monopoly in a market for applications generally, or office suite applications more particularly, was dismissed on the ground that the statute of limitations for conduct back in the 1990s had long since run.

Novell sought to keep its antitrust claims alive by alleging that Microsoft had maintained its monopoly in the operating systems market by withdrawing its support for WordPerfect and other Novell applications—which support had made it easy for consumers to use those applications on Microsoft operating systems.  Although this claim was also based on Microsoft’s conduct in the 1990s, it was not barred by the statute of limitations because the statute was tolled on such a claim as a result of the U.S. government’s long-running antitrust case against Microsoft based on allegations of monopolization of the operating systems market.  Although Novell was permitted to bring this claim to trial, the jury deadlocked on the claim, and then the district court dismissed it as a matter of law.

The Tenth Circuit agreed with the district court’s ruling that, as a matter of law, Novell could not show that Microsoft’s withdrawal of Windows 95 support for Novell applications was monopoly behavior in violation of Section 2 Sherman Act.  The Court noted that the Supreme Court and the Tenth Circuit have rejected the idea that an alleged monopolist must give a helping hand to rivals.  The Court stated that “the proper focus of Section 2 isn’t on protecting the competitors but on protecting the process of competition, with the interests of the consumers, not competitors, in mind.”

The Court relied on the general rule that a company is free to decide with whom to assist or deal, rejecting Novell’s claim that it came within the exception set forth in the U.S. Supreme Court’s decision in Aspen Skiing Co. v. Aspen Highlands Skiing Corp.  Under Aspen, a monopolist can be found to have violated the Sherman Act if it ends a voluntary, profitable business relationship with a rival solely to attain an anticompetitive end, which cost the monopolist short term profits.  However, the Tenth Circuit held that Novell failed to prove that Microsoft willingly gave up short-term profits when it withdrew its support for Novell applications.  The Court stated that “to the contrary, all the evidence suggests that Microsoft’s decision came about as a result of a desire to maximize the company’s immediate and overall profits.”