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Microsoft's long legal saga
By Lisa Bowman
ZDNet News
August 31, 2000, 5:00 PM PT

The Department of Justice antitrust case may be the largest and most daunting lawsuit Microsoft has ever faced, but the company has been contending with legal opponents virtually since the day it was born.

During its 25-year history, the company has been sued by many of its major competitors and has endured countless federal investigations of its business practices.

Many of the suits laid the groundwork for the current federal antitrust case, which centers on how the owner of the dominant operating system uses its market power. Other, earlier suits, were filed by companies hoping to get or keep some control over the software guts of the personal computer -- control that Gates walked away with.

Bill Gates first saw courtroom action way back in 1977, when he found himself in a legal scuffle over the rights to a version of the prgramming language BASIC created by Gates and fellow Microsoft (msft) founder Paul Allen for the world's first PC, the Altair. At the time, Altair creator Ed Roberts was in the process of selling his company, MITS, to another firm called Pertec, and he wanted to give Pertec the rights to BASIC as well.

But Gates defended his rights to the language, and the judge sided with the 21-year-old computer whiz, letting him maintain control over BASIC, and opening the door to Microsoft's domination of the software industry.

Code in hand, Gates was careful in crafting later deals, ensuring that he retained power over the software in later negotiations with companies including IBM (ibm).

In 1986, Microsoft again found itself in a legal imbroglio over the OS, this time with Kent, Wash.-based Seattle Computer Products.

In 1981, SCP had sold Microsoft the rights to its DOS operating system, which later formed the basis for Windows, for just $50,000. However, SCP sued Microsoft in 1986, charging it with unfair competition for, among other things, failing to follow a licensing agreement it claimed allowed SCP continued access to new versions of DOS.

Microsoft eventually settled the suit, but by that time, its own version of the OS, MS-DOS, was becoming widely distributed -- thanks in part to a deal with IBM to use the software in its desktop PCs.

By far the most high-profile of the early suits was brought by Cupertino, Calif.-based Apple Computer Corp. (aapl), a case that came as Microsoft was trying to get its operating system in more people's hands by making it easier to use.

In 1988, Apple contended that Microsoft violated copyrights by stealing the look and feel of its popular Macintosh OS. After a five-year court battle, a federal judge handed Microsoft a victory in 1993, a move that fueled the current proliferation of Windows.

Microsoft (msft) Although Microsoft won the Apple case, the company by this time was starting to earn a reputation for taking products and features created by others and incorporating them into Microsoft software, rather than developing them itself. After all, it had gotten DOS from SCP and the friendly point-and-click capabilities in Windows from Apple. Still, Windows took off on the desktop, trouncing Macintosh and any other technology that got in its way.

While the Apple case was proceeding, the Federal Trade Commission began sniffing around the software giant, prompted by the complaints of such companies as Novell (novl), Lotus Development Corp. and pen computer maker Go. The companies had accused Microsoft of bullying tactics, attempting to steal trade secrets and trying to quash competition.

Although the FTC, on a 2-2 vote, decided not to pursue the case, the DOJ picked it up. In 1995, both sides reached the now famous consent decree, a document that prohibited requiring companies purchasing Windows to also license other Microsoft applications.

But two years later, the government accused Microsoft of violating that decree by bundling its Internet Explorer browser with Windows 95. This time around, a new generation of Microsoft competitors had the feds' ear, including Netscape Communications Corp. and Sun Microsystems Inc. (sunw).

Microsoft eventually won the case on appeal, when the U.S. Appeals Court for the District of Columbia said the courts shouldn't get involved in developing software products and couldn't force Microsoft to ship a version of Windows without the browser.

But in the meantime the DOJ had filed a broader antitrust case against the company. The sweeping suit, filed in May 1998, prompted a protracted trial that recently resulted in a judge ordering the company's break-up.

The Supreme Court is currently deciding whether to hear an appeal of the case or let a lower court decide Microsoft's fate. Microsoft is hoping the case will go to the lower court, which is the same court that ruled in its favor during the consent decree violation case.

 Related Links:
> MS consumers v. MS: The other lawsuits
> Blue Mountain scores win over MS

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