Fourth Circuit Says Novell's Antitrust Action Against Microsoft Can Proceed
The Fourth Circuit Court of Appeals has ruled that Novell has standing to pursue two antitrust claims against Microsoft. Novell, Inc. v. Microsoft Corp., 2007 WL 2984372 (October 15, 2007).
Novell, which manufactured WordPerfect and Quattro Pro until 1996, claimed that Microsoft required original equipment manufacturers to pre-install its office-productivity software, such as Word and Excel, as a condition of getting Windows licenses. Novell alleged that Microsoft’s conduct decreased Novell's market share and its products’ popularity, thus causing it damage. However, because Novell did not directly compete against Microsoft in the operating system market, Microsoft challenged Novell’s standing to bring the claims.
Novell also asserted four claims against Microsoft in which it alleged harm to competition in the software-application market, where Novell did compete directly against Microsoft.
The Court pointed out that as all of Novell’s claims arose before 1996, the claims, which Novell asserted in 20056, were time-barred unless the applicable four year statute of limitations was tolled by an action brought by the Department of Justice in 1998. The Clayton Act provides that government antitrust proceedings toll the statute of limitations for private antitrust proceedings that are “based in whole or in part on any matter complained of” by the government.
The Court concluded that even though Novell was neither a consumer nor a competitor, Microsoft’s allegedly anticompetitive conduct in the operating system market was “directly aimed” at Novell, which gave Novell standing to pursue its two claims. Further, Novell’s claims "echoed” the government’s theory in the 1998 complaint, and therefore were not barred by the statute of limitations.
Novell’s other four claims alleged injury to competition in the office-productivity-applications market. The Court concluded that those claims did not overlap with the DOJ’s complaint, and were also barred by the “different markets” rule, which requires a private plaintiff’s claims to be “in markets identical to, or completely encompassed by, those at issue in the earlier government suit.” Because the office-productivity-applications market was neither identical to nor encompassed by the PC operating system market, Novell’s claims were barred.
