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Innovation, IP rights key in Microsoft's EU case

Company to appeal EU antitrust ruling at April 24 hearing

By Sabina Zawadzki
April 11, 2006 12:00 PM ET

Reuters - BRUSSELS -- Microsoft Corp. and the European Commission will clash in court over innovation and intellectual property rights when the software giant appeals a 2004 antitrust decision, according to court papers.

Microsoft wants to turn around the commission's decision that it abused the dominance of its Windows system to muscle out rivals that did not have enough detail of the operating system to create software that could run with it.

Europe's top antitrust authority ordered the company to share information -- so-called protocols -- so that other software makers could compete.

In a one-week hearing scheduled to start April 24 at the European Union's second-highest court, Microsoft will argue that rivals were always able to make interoperable software and that the commission's demands threaten Microsoft's intellectual property rights.

Microsoft will essentially argue that it should not have to give away its intellectual property, after having spent effort and money inventing it, only because it became successful.

"Microsoft relies on the fact that its communication protocols are technologically innovative and are covered by intellectual property rights," the document said.

"Microsoft had designed its Windows server operating systems from the outset to interoperate with non-Microsoft server operating systems," the papers said.

But the commission said the behavior of companies must change if their products dominate the market and that, in any case, not all of Microsoft's protocols are innovative.

More than 90% of the world's PCs use Microsoft's Windows operating system.

"Nothing in the file shows that the communication protocols in relation to which Microsoft will have to disclose specifications contain innovations," the document said, laying out the commission's arguments.

While Microsoft argues that the protocols are "valuable trade secrets," the commission says the company is blurring the line between trade secrets and intellectual property rights.

"[The commission] observes that the fact that trade secrets can be assigned or transferred does not mean that they constitute intellectual property," the document said.

According to the documents, the commission will reiterate its original decision that rivals are not able to make interoperable software.

It will reject five alternative ways set forward by Microsoft to achieve that goal, saying that those methods had already been dismissed in the original decision.

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