EU: Microsoft Raised IP Rights As Late Defence In European Case

By David Cronin for Intellectual Property Watch
BRUSSELS – The European Commission has accused Microsoft of invoking intellectual property rights “in the eleventh hour” to protect its dominant position in the global computer market.

Per Hellstrom, a senior official in the Commission’s directorate-general for competition, indicated on Monday that the European Union’s antitrust efforts against Microsoft have not ceased, despite a landmark legal ruling last year. Speaking at an 11 February event in Brussels, Hellstrom said that Microsoft had invoked intellectual property rights “only in the eleventh hour” of the probe against it, which also related to its refusal to share information with competitors.

In September, the European Court of First Instance upheld a €497 million euro fine against Microsoft that the Commission imposed in 2004. This penalty, the largest ever handed out in an EU competition case, followed a probe in which the Commission concluded that Microsoft had been ‘bundling’ its flagship Windows – an operating system found in 95 percent of the world’s personal computers – with the company’s MediaPlayer.

Because most personal computers run Windows, they are often unable to be linked up to larger computers – or servers – running alternative operating systems.

Microsoft’s rival Sun Microsystems had complained to the Commission that the US software giant would not grant it data needed to ensure that Windows was interoperable.

“Microsoft’s defence was that the information was covered by intellectual property rights,” Hellstrom said. “This argument was never used when Sun asked for the information. It was only used in the eleventh hour. Microsoft showed one patent a day before we adopted our decision [in 2004].”

He maintained that this refusal was designed to “eliminate competition” and that it had an adverse impact on technological development.

Last month, the Commission announced it was conducting a new investigation into Microsoft. Following a complaint by the European Committee for Interoperable Systems, the Commission decided to study accusations that Microsoft is denying access to information on a range of its products, including Office, a widely-used package that includes word-processing and spreadsheet applications.

Microsoft’s Brussels office declined to comment on Hellstrom’s comments, which were delivered at a seminar hosted by Trans Atlantic Consumer Dialogue. The TACD bands together 65 consumer organisations from Europe and the United States.

The seminar explored what steps are needed to ensure that related technologies developed by different firms can interact with each other.

David Lippeatt, an economic and finance officer with the US mission in Brussels, said that problems with a lack of standardisation have been evident in his country for more than 100 years. In the early nineteenth century a fire occurred in Baltimore, which resulted in $125 million dollars worth of damage. When fire services from other regions were called in, they found that they their hose connections could not fit into the hydrants used in Baltimore.

Still, he argued against governments advocating stringent rules on interoperability. “Mandating interoperability risks depriving intellectual property owners of the right to their property,” he said, arguing that “market forces and not governments” should promote solutions to problems that occur in the technological field.

But André Rebentisch from the European Software Market Association said it is vital that small firms be allowed to use computer products without having to pay royalties to larger firms that hold patents on those goods. Robust action by public authorities is needed to help small and medium-sized firms, he added.

Rishab Aiyer Ghosh, a senior researcher with the United Nations University in Maastricht, Netherlands, noted that royalty-free standards are already being used in the computer industry. For example, the World Wide Web Consortium, a body dedicated to greater advancement of the Internet, promotes interoperable software.

“Standards inherently limit innovation,” he said. “Standards are there to be the common ground on which innovation takes place. But there is also a value to standards. If there is some great new ICT [information and communication technology] and I’m the only one who uses it, it is not very valuable to me.”

David Cronin may be reached at info@ip-watch.ch.