Novell sues Microsoft over advertisement

Novell Inc. said Monday that it has filed a lawsuit against Microsoft Corp. for allegedly "making and distributing false and misleading statements" about Novell products in an advertisement that came in the shape of a cereal box.

The Provo, Utah-based software maker argues that Microsoft is in violation of state and federal laws for statements it made about the company's NetWare 6 network operating system, a product that competes against Microsoft's server software. Novell filed its claim in U.S. District Court in Salt Lake City.

A Microsoft legal spokesman declined to comment on the lawsuit late Monday because he had yet to see a copy of the complaint.

Novell is taking aim at a series of statements Microsoft printed on a piece of marketing collateral and sent to technology buyers, including some Novell customers. The advertisement was delivered in a package designed to look like a breakfast cereal box with the name "Microsoft Server Crunch," Novell said.

Included with the marketing material was a copy of a Microsoft product called Microsoft Services for NetWare, according to Novell.

The company argues that Microsoft falsely characterized its NetWare software, specifically in three lines of text: The first read, "What's the expiration date on that NetWare platform?" (Novell counters that there is no expiration date.) The second, "As a result of the recent Cambridge Technology Partners merger, Novell is shifting its focus from software development to consultancy services." (Novell argues that is false.) The third, "You're left with a server platform without the full support of its manufacturer. Which means increasing costs as it rapidly becomes obsolete, forcing you to implement time-consuming retrofits." (The company has countered that claim as well.)

"It's perfectly appropriate for them to compete with us, and obviously they do a very good job of it. But when they make false comments about Novell and its products, we feel we have to take action to stop it," said Joe LaSala, general counsel at Novell.

Novell said it's seeking an injunction to immediately stop Microsoft from distributing the advertisement and recall all those that were sent out, in addition to seeking a correction and unspecified monetary damages. Novell said it first saw the advertisement early last month.

"It will be difficult to calculate the damages at this time because we don't have enough facts yet," LaSala said. "It will be in the course of the litigation that we determine the extent of the damages."

Novell's complaint over the cereal box marketing materials isn't the first case of the company taking issue with Microsoft's public comments about NetWare, LaSala said. In April last year, Novell said Microsoft published an article on its MSN Money Central Web site that was later republished on that falsely stated, "Novell recently announced that it is moving out of the software business and into the network consulting and services business."

After engaging in private correspondence over the published statement, Microsoft eventually modified the statement, LaSala said.

"At that time, we had an exchange of correspondence. They agreed to modify the statements and reposted the story," he said. "What Microsoft has done through this latest marketing campaign has again unfairly disparaged Novell. They tend to make a habit of doing this."

Also in April, Microsoft was ordered by the U.S. Federal Trade Commission to correct a series of advertisements it published with Hewlett-Packard Co. for the Pocket PC handheld computing platform. In the "Can Your Palm Do That?" campaign, the two companies were found to have falsely described the functions of the Pocket PC handheld.

Microsoft was ordered to publish an essay on the limitations of computer handhelds in a quarter-page advertisement in several major daily newspapers, including The New York Times, as a correction.

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