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CORRECTION: Microsoft Attorney Gives Opening Statements in Class Action Suit

Posted on: Tuesday, 16 March 2004, 06:00 CST

Mar. 17--The Saint Paul Pioneer Press has moved a new version of the story slugged SP-MICROSOFT, which was filed for Mar. 17 by Knight Ridder/Tribune Business News. The new version subs to delete the quote in the fourth paragraph and recast it.

Please delete the earlier version and use this version.

Microsoft's Lead Attorney Gives Opening Statements in Class Action Suit

By Leslie Brooks Suzukamo

Saint Paul Pioneer Press, Minn.

Mar. 17--You may not see a connection between Harry Potter books and copies of Microsoft Windows software, but the lead attorney defending Microsoft in a consumer class action lawsuit in Hennepin County does.

Both the books and the software have sold millions and millions of copies, and it is their popularity with consumers that propelled each to dominate their respective fields, not violations of antitrust laws, Microsoft attorney David Tulchin said in court Tuesday.

Tulchin was talking to the eight-woman, four-man jury as he opened the company's defense against a lawsuit that claims Microsoft overcharged about 1 million Minnesotans for its software from 1994 to 2001.

Earlier Tuesday, one of the plaintiffs' attorneys, Richard Hagstrom, wrapped up a two-day, two-man opening statement by claiming that Microsoft broke the law to gain the upper hand over competitors and to deprive consumers of real choices that could have resulted in significantly lower prices.

Seven plaintiffs are claiming on behalf of all Minnesota Microsoft users that the Redmond, Wash.-based software giant broke antitrust laws to establish a monopoly that overcharged Minnesotans who bought Microsoft's Windows, Word, Excel and Office software suite.

The plaintiffs claim the company overcharged between $283 million and $425 million during that time, which would be worth between $340 million and $505 million adjusted for inflation today.

Microsoft lost a federal antitrust lawsuit five years ago that found it had established an illegal monopoly with its Windows operating system. But the federal trial never determined if Microsoft overcharged customers.

The 1999 decision also never considered whether Microsoft illegally gained a monopoly for its Word software in the word processing market, or its Excel software for spreadsheets. Both applications control 90 percent of their worldwide markets today, just as the Windows operating system does for the software that acts as the brains for nine out of 10 of the world's personal computers.

"The evidence in this case will show this critical fact -- that Microsoft has charged low prices for high-quality products," Tulchin, an attorney from the New York firm of Sullivan & Cromwell, told the jurors.

Microsoft's high market share in operating systems, word processing and spreadsheet software "reflects choices by millions and millions of people," he said.

At one point, Tulchin showed the jurors the latest copy of Forbes magazine, which features Harry Potter author and billionaire J. K. Rowling on the cover for a story about the world's richest people.

Microsoft will call expert witnesses who will tell jurors how Microsoft made its billions by selling millions of copies of its software, just as Rowling wrote books that sold millions of copies, Tulchin promised.

There was plenty of competition at the time when Microsoft established its dominance for several of its products, he said.

The attorney used giant projector screens to display a litany of names of competing companies like IBM, Novell, Sun Microsystems, Corel, Lotus and Red Hat that had various programs that competed with Microsoft products during the late 1980s or early to mid 1990s when Microsoft supposedly broke anti-trust laws.

The price of the Windows operating system has remained relatively flat -- around $50 -- since 1992 while improving and offering more features, Tulchin said.

Tulchin said he expects to finish his opening statement today by refuting plaintiffs' arguments that Microsoft tricked software developers into wasting time writing software for word processing or spreadsheets for an operating system that Microsoft never intended to finish. The time supposedly gave Microsoft a head start writing its own word processing and spreadsheet applications but Tulchin said there was no deception.

The Minnesota case has attracted attention because it is the first of nearly three-dozen state class action cases to make it to trial. Microsoft has settled similar class actions in nine states and Washington, D.C., for roughly $1.5 billion, had cases thrown out in 16 other states and is watching the balance still moving forward.

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(c) 2004, Saint Paul Pioneer Press, Minn. Distributed by Knight Ridder/Tribune Business News.

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