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United States District Court, District of Columbia. STATE of New York, et al., Plaintiffs v. MICROSOFT CORPORATION, Defendant. No. CIV. A. 98-1233 CKK. Nov. 1, 2002.
Executive Summary KOLLAR-KOTELLY, District J. Introduction The Court has prepared this brief summary to assist the public in understanding the Court's ruling in the case State of New York, et al. v. Microsoft Corp., No. 98-1233. . . .Following a very abbreviated discussion of the procedural history, the appellate court's opinion, and the applicable law of antitrust remedies, the Summary describes the remedy that the Court has determined to impose. The Summary does not include the Court's full discussion of the law, nor does it include a description of remedy provisions wholly rejected by the Court. Also omitted from the Summary is a discussion of the specific factual findings entered by the Court in Appendix A of the Memorandum Opinion. Procedural History On May 18, 1998, simultaneous with the filing of a complaint by the United States in a related case, a group of state plaintiffs filed a civil complaint alleging antitrust violations by Microsoft and seeking preliminary and permanent injunctions barring the company's allegedly unlawful conduct. In United States v. Microsoft Corp., No. 98-1232 (D.D.C.), the federal government brought claims pursuant to federal law, while in State of New York, et al. v. Microsoft Corp., No. 98-1233 (D.D.C.), the Plaintiff States [FN1] brought claims pursuant to both federal and state law. These two cases were consolidated, and following a bench trial in the consolidated cases, Judge Thomas Penfield Jackson concluded that Microsoft had violated § § 1 and 2 of the Sherman Act, imposing liability for illegal monopoly maintenance, attempted monopolization, and unlawful tying. Correspondingly, Judge Jackson held that Microsoft had violated the state antitrust laws analogous to § § 1 and 2 of the Sherman Act in each of the nineteen Plaintiff States and the District of Columbia. To remedy these findings of liability, Judge Jackson ordered the division of Microsoft into two separate corporations. Microsoft filed an appeal in both cases. On appeal, the United States Court of Appeals for the District of Columbia Circuit deferred to Judge Jackson's factual findings, altered his findings of liability-affirming in part and reversing in part, and vacated the remedy decree. The appellate court affirmed only limited violations based on § 2 of the Sherman Act for illegal monopoly maintenance; all other grounds were reversed. Soon thereafter, the case was randomly reassigned to this Court for the imposition of a remedy. FN1. This suit was originally brought by twenty states and the District of Columbia. One state withdrew from the action prior to the issuance of liability findings by the District Court. Another state settled its claims in July of 2001. The claims of the States of New York, Ohio, Illinois, Kentucky, Louisiana, Maryland, Michigan, North Carolina, and Wisconsin were litigated through liability and have been conditionally settled as to the issue of remedy. Hence, the "Plaintiff States" refers to the States of California, Connecticut, Florida, Iowa, Kansas, Minnesota, Utah, and West Virginia, the Commonwealth of Massachusetts, and the District of Columbia. Following remand, pursuant to Court Order, the parties in the two consolidated cases entered into intensive settlement negotiations. The settlement negotiations did not resolve both cases in their entirety. However, the United States and Microsoft were able to reach a resolution in United States v. Microsoft Corp. in the form of a proposed consent decree. The settlement negotiations were partially successful with regard to the states' case, State of New York, et al. v. Microsoft Corp.; a portion of the plaintiffs in that case joined the settlement between the United States and Microsoft. Consequently, those states have elected not to proceed to a remedies-specific hearing in State of New York, et al. v. Microsoft Corp. The states which opted not to join the settlement between the United States and Microsoft have proposed a remedy distinct from that presented in the proposed consent decree. Following expedited discovery, the Court held an evidentiary hearing, lasting thirty-two trial days, on the issue of the remedy. The law has long recognized that it is the job of the district court to frame the remedy decree in an antitrust case, and the district court has broad discretion in doing so. I. APPELLATE OPINION & ANTITRUST LAW OF REMEDIES · The appellate court stated unambiguously that "we have drastically altered the scope of Microsoft's liability, and it is for the District Court in the first instance to determine the propriety of a specific remedy for the limited ground of liability we have upheld." · The monopoly in this case was not found to have been illegally acquired, but only to have been illegally maintained. Therefore, rather than termination of the monopoly, the proper objective of the remedy in this case is termination of the exclusionary acts and practices related thereto which served to illegally maintain the monopoly. · Ultimately, the goal of a remedy in an equitable suit is not the "punishment of past transgression, nor is it merely to end specific illegal practices." Rather, the remedy should "effectively pry open to competition a market that has been closed by [a] defendant['s] illegal restraints." Equitable relief in an antitrust case should not "embody harsh measures when less severe ones will do," nor should it adopt overly regulatory requirements which involve the judiciary in the intricacies of business management. In crafting a remedy specific to the violations, the Court "is not limited to prohibition of the proven means by which the evil was accomplished, but may range broadly through practices connected with acts actually found to be illegal." · The "causal connection between Microsoft's exclusionary conduct and its continuing position in the operating systems market" was established "only through inference." In fact, the district court expressly determined as a factual matter that there was "insufficient evidence to find that, absent Microsoft's actions, Navigator and Java already would have ignited genuine competition in the market for Intel-compatible PC operating systems." The appellate court advised that the strength of the causal connection is to be considered "in connection with the appropriate remedy issue, i.e., whether the court should impose a structural remedy or merely enjoin the offensive conduct at issue." As a result, the Court's determination of the appropriate remedy in this case reflects, among other considerations, the strength of the evidence linking Defendant's anticompetitive behavior to its present position in the market. It is noteworthy, however, that Plaintiffs have not persisted in their request for a structural remedy of dissolution ("a break-up of Microsoft") and instead have proposed a remedy which focuses on regulating Microsoft's behavior. II. THEORY OF LIABILITY · The appellate court concluded that the district court properly identified the relevant market as the market for Intel-compatible PC operating systems and properly excluded middleware products from that market. • Operating systems perform many functions, including allocating computer memory and controlling peripherals such as printers and keyboards. Operating systems also function as platforms for software applications. They do this by "exposing"-i.e., making available to software developers-routines or protocols that perform certain widely-used functions. These are known as Application Programming Interfaces, or "APIs." • Because "[e]very operating system has different APIs," applications written for one operating system will not function on another operating system unless the developer undertakes the "time consuming and expensive" process of transferring and adapting, known in the industry as "porting," the application to the alternative operating system. • Both the district and appellate courts noted that Microsoft's lawfully- acquired monopoly is naturally protected by a "structural barrier," known as the "applications barrier to entry ." · Plaintiffs proceeded under the theory that certain kinds of software products, termed "middleware," [FN2] could reduce the "applications barrier to entry" by serving as a platform for applications, taking over some of the platform functions provided by Windows and thereby "weaken[ing] the applications barrier to entry." Eventually, reasoned Plaintiffs, if applications were written to rely on the middleware API set, rather than the Windows API set, the applications could be made to run on alternative operating systems simply by porting the middleware. Ultimately, by writing to the middleware API set, applications developers could write applications which would run on any operating system on which the middleware was preset. FN2. Such software takes the name "middleware" because "it relies on the interfaces provided by the underlying operating system while simultaneously exposing its own APIs to developers" and, therefore, is said to reside in the middle. · Plaintiffs focused their attention primarily upon two such middleware threats to Microsoft's operating system dominance-Netscape Navigator and the Java technologies. The district and appellate courts accepted Plaintiffs' theory of competition despite the fact that "neither Navigator, Java, nor any other middleware product could [at that time], or would soon, expose enough APIs to serve as a platform for popular applications." III. SCOPE OF THE REMEDY A. Middleware · Integral to understanding the two remedies proposed in this case is a preliminary understanding of the manner in which the two remedies treat middleware. In simple terms, the treatment of middleware in the two remedies plays a significant role in defining the scope of products which will receive various protections under the terms of the respective remedies. · The Court ultimately concludes that Plaintiffs' proposed definition of "middleware" is inconsonant with the treatment of the term during the liability phase of this case. Plaintiffs include in their definition of "middleware" almost any software product, without regard to the potential of the product to evolve into a true platform for other applications. • Plaintiffs' definition of "middleware" is irreparably flawed in its attempt to capture within their parameters all software that exposes even a single API. Plaintiffs fail to adduce evidence sufficient to establish that these various pieces of software, which often lack robust platform capabilities but expose at least one API, have the capacity to lower the applications barrier to entry, and thereby promote competition in the monopolized market. As a result, to label such software as "middleware" is not consistent with the manner in which middleware was discussed during the liability phase of this case. • A further flaw in Plaintiffs' treatment of middleware is the inclusion of technologies which fall outside of the relevant market and which do not pose a threat to Microsoft's monopoly similar to the threat posed by nascent middleware. While the Court does not fault Plaintiffs' general approach in looking beyond the relevant market to search for the new nascent threats, the Court is unable to conclude that Plaintiffs have established that all of these technologies have the capacity to increase competition within the relevant market. • The Court observes in addition that Plaintiffs' middleware definition, because of its use throughout their proposed remedy, frequently renders various provisions of Plaintiffs' remedy to be ambiguous and, therefore, unenforceable. · Conversely, the Court finds that the treatment of middleware and the related definitions in Microsoft's proposed remedy more closely reflect the meaning given to the term from the inception of this proceeding. Microsoft's treatment of middleware appropriately expands beyond the specific middleware addressed during the liability phase to address new potential platform threats which possess many of the defining characteristics of the middleware identified by Judge Jackson. The Court's remedial decree reflects this determination, adopting the treatment of middleware advanced by Microsoft in its remedy proposal. • "Non-Microsoft Middleware," as that term is defined in Microsoft's remedy proposal, captures the essence of the middleware threats which were discussed during the liability phase. The definition of "Non-Microsoft Middleware" expands beyond the middleware discussed at the liability phase in that it does not require that the software products already run on multiple PC operating systems, only that they have the potential, if ported to such operating systems, to serve as platforms for applications. In this regard, the term "Non- Microsoft Middleware" is noteworthy for the breadth of its coverage of software products without limitation as to specific types of functionality. • Microsoft's proposed remedy also uses the term "Non-Microsoft Middleware Product," which is defined similarly to "Non-Microsoft Middleware," but adds a requirement that "at least one million copies" of the product "were distributed in the United States within the previous year." The one-million-copies distribution requirement in the definition of "Non-Microsoft Middleware Products" is reflective of the treatment of middleware threats in this case because the district and appellate courts did not merely focus on any software with the potential to serve as a multi-purpose platform, but specifically focused upon middleware which could "gain widespread use based on its value as a complement to Windows." Because a certain portion of Microsoft's proposed remedy requires Microsoft to undertake the redesign of its own product, the one-million-copies threshold relieves Microsoft of the obligation to redesign its product to accommodate a particular piece of software with extremely limited use. • In contrast to the broad definitions of "Non-Microsoft Middleware" and "Non-Microsoft Middleware Products," the term "Microsoft Middleware Product" is defined according to a specific set of existing Microsoft functionalities, as well as future Microsoft functionality. The existing set of functionalities which are included in "Microsoft Middleware Product" are those provided by Internet Explorer, Microsoft's Java Virtual Machine, Windows Media Player, Windows Messenger, Outlook Express, and their successors in Windows. The future technologies captured by the definition of "Microsoft Middleware Product" encompass software included in Windows that provides the functionality of Internet browsers, email client software, networked audio/video client software, and instant messaging software. Other future technologies captured in the definition of "Microsoft Middleware Product" are those functionalities which are both distributed as part of Windows and distributed separately from Windows by Microsoft, trademarked by Microsoft, and which compete with third- party middleware products. • In portions of Microsoft's proposed remedy, there is a need to identify the specific code in Windows. Hence, Microsoft's remedy proposal uses the term "Microsoft Middleware," which is largely reflective of the definition of "Microsoft Middleware Product," but which is further limited to the code separately distributed and trademarked or marketed as a major version of the Microsoft Middleware Product. SRPFJ § VI.J. The term "Microsoft Middleware" is used sparingly in Microsoft's remedy proposal, with its most significant and prominent use arising in conjunction with a provision that requires Microsoft to disclose very specific APIs and related technical information B. New Technologies · Plaintiffs have identified certain technologies which, prior to this remedy proceeding, had not been addressed by the district and appellate courts in detail in conjunction with this case. Plaintiffs identify these technologies as the new frontier in "middleware platform threats" and, therefore, seek to include these technologies in the definition of "middleware" and related definitions. The Court examined four categories of technologies in order to determine if Plaintiffs' proposal to encompass these technologies within the remedy is appropriate: (1) network and server-based applications; (2) interactive television middleware and set-top boxes; (3) handheld devices; and (4) Web services. · The Court concludes that server/network computing has the capacity to function in a role akin to middleware, and therefore, over Microsoft's objection, the Court addresses this technology in a portion of the remedy. · The potential "threat" posed by interactive television software is almost entirely hypothetical. However, the Court notes that, if interactive television software is proven, in the future, to have been ported from TV set- top boxes to run on a Microsoft PC operating system and expose a range of functionality to ISVs through published APIs, such technology would be included automatically in a number of the Court's remedy provisions. · Plaintiffs advance four theories pursuant to which handheld devices pose a "platform threat to the Windows operating system." The Court rejects each of these theories as either logically flawed or unsupported by the evidence. In short, the technology associated with handheld devices has not been shown to have the potential to function in a manner similar to "middleware" consistent with the liability phase. · Plaintiffs argue that Web services, which are entirely distinct from Web browsing, carry the potential to decrease reliance upon personal computers while increasing reliance upon other computing devices, emphasizing that a number of non-PC devices will have the capacity to access Web services. The Court rejects this argument on the grounds that Plaintiffs have not explained how the increase in the use of non-PC devices in conjunction with Web services will reduce Microsoft's monopoly in the market for PC operating systems. • The Court's rejection of Plaintiffs' inclusion in the remedy of handheld devices and Web services is based, in part, upon the conclusion that mere reduction in the popularity of the PC and the ensuing reduction in the absolute demand for Microsoft's Windows operating system does not necessarily "pry open to competition" the market for PC operating systems. IV. ALLEGED "BAD" ACTS BY MICROSOFT · Throughout this phase of the proceeding, Plaintiffs have recited for the Court's benefit countless findings of fact entered by Judge Jackson during the liability phase regarding actions taken by Microsoft. These findings recount various actions taken by Microsoft which can be characterized as improper or unsavory in one respect or another and, at the very least, harmful to its competitors. Significantly however, many of these findings were ultimately not relied upon by the district and appellate courts in conjunction with the imposition of liability for violation of § 2 of the Sherman Act · As the appellate court observed, "[e]ven an act of pure malice by one business competitor against another does not, without more, state a claim under the federal antitrust laws ...." The federal antitrust laws "do not create a federal law of unfair competition or 'purport to afford remedies for all torts committed by or against persons engaged in interstate commerce." ' Harm to "one or more competitors," however severe, is not condemned by the Sherman Act in the absence of harm to the competitive process and thereby harm to consumers. Because no court has yet found that the acts identified in Judge Jackson's Findings of Fact, but not relied upon for the imposition of liability, visited any harm upon competition, let alone a harm which was not outweighed by the simultaneous procompetitive effect, this Court cannot presume that each of the acts identified in the Findings of Fact merits consideration equal with those acts which were found to be anticompetitive, nor that these acts merit any special weight. · The parties have agreed throughout this proceeding that it would be inappropriate now, during the remedy phase of this proceeding, for the Court to consider and evaluate for anticompetitive effect new allegations against Microsoft. · Nevertheless, Plaintiffs identify a number of new and, for lack of a better term, allegedly "bad" acts, relating predominantly to interoperability, taken by Microsoft both prior and subsequent to the imposition of liability. Upon review of Plaintiffs' allegations of "bad" conduct by Microsoft relating to interoperability and the liability findings in this case, the Court concludes that Plaintiffs' allegations in this area bear only a remote relationship to the liability findings. In this regard, the Court has rejected Plaintiffs' suggestion that the imposition of liability, in any way, condemns decisions to depart from industry standards or to utilize a proprietary standard in the absence of deception regarding the departure. In fact, Microsoft's alteration or proprietary extension of industry standards more closely resembles conduct for which Microsoft was absolved of liability; the appellate court absolved Microsoft of liability for its development of a Java implementation incompatible with Sun's Java Implementation · Moreover, despite Plaintiffs' protestations to the contrary, the Court finds that Plaintiffs' allegations with regard to Microsoft's conduct in the area of interoperability are, at their core, new allegations of anticompetitive conduct. As a result, Plaintiffs' reliance upon this series of allegedly new "bad" acts by Microsoft carries little weight, if any, in the Court's determination of the appropriate remedy in this case. V. REMEDY-SPECIFIC CONCLUSIONS A. Original Equipment Manufacturer ("OEM") Configuration Flexibility 1. Windows Licenses · The remedy imposed by the Court will provide substantial freedom to OEMs in their configuration of Microsoft's Windows operating system by lifting Microsoft's illegal license restrictions. · The Court rejects the third-party licensing portion of Plaintiffs' proposal that would permit such third parties to "customize" the appearance of Windows to reflect the third party's input. Plaintiffs have failed to establish that such licensing will actually benefit or promote competition. Additionally, Plaintiffs' proposal for third-party licensing does not reflect the appellate court's recognition that, to the extent that Microsoft's license restrictions prevented drastic alteration of the user interface, they did not violate the Sherman Act. 2. Installation and Display of Icons, Shortcuts, and Menu Entries · Microsoft will be enjoined from restricting by agreement any OEM licensee from installing an icon, menu entry, shortcut, product, or service related to "Non-Microsoft Middleware." · The remedy imposed by the Court will secure for OEMs the general ability to install and display icons, shortcuts, and menu entries for middleware-the type of software disfavored by Microsoft's anticompetitive restrictions-on the Windows desktop or in the Start menu. · However, the Court will not prevent Microsoft from imposing non-discriminatory limitations on the specific areas in which icons may be displayed, provided that such limitations cannot be used to favor Microsoft and, instead, exist as part of the Windows product design. The Court's remedy will also permit Microsoft to protect the design of its product from drastic alteration in a manner which is the substantial equivalent of a launching of a new user interface, such as OEM designation of an icon in such an extreme size or shape that it obscures the crucial elements of the Windows user interface. 3. Insertion of Internet Access Provider ("IAP") Registration Offers · The remedial decree imposed by the Court will enjoin Microsoft from imposing license restrictions on the ability of OEMs to insert offers of service from IAPs during the initial boot sequence. The insertion of these offers was found to provide an opportunity for the promotion of alternative middleware. Microsoft's limitation on the ability of OEMs to insert such offers was found to have an anticompetitive effect in violation of antitrust law. · The Court rejects Microsoft's argument that the insertion of IAP registration sequences should be subject to the imposition of Microsoft's "reasonable technical requirements" on the rationale that such requirements preserve a consistent user experience. 4. Automatic Launching of Applications · It is appropriate for the remedy in this case to permit the automatic launch of non-Microsoft programs upon the completion of the initial boot sequence where the automatically launched program does not substitute the Windows user interface for a different interface or otherwise drastically alter Microsoft's copyrighted work. · The Court has tailored its remedy to permit the automatic launch of such programs because the ability to launch programs automatically will assist in the promotion of non-Microsoft software and middleware, resulting in an increased likelihood that a particular piece of middleware will reach its potential to serve as a multi-purpose platform for applications. · The Court, therefore, specifically rejects the contention by Microsoft that automatic launching of software products should be limited to circumstances in which Microsoft has chosen to launch automatically a competing middleware program. B. End-User Access · The Court's remedial order will require Microsoft to alter its Windows technology to ensure that OEMs and end users may disable end-user access to various types of Windows functionality. In addition, the Court will prohibit Microsoft from designing its operating system product so as to induce reconfiguration of an OEM's or consumer's formatting of icons, shortcuts, and menu entries in an attempt to favor Microsoft's own software. · Plaintiffs have advanced a remedy that requires the removal of Windows software code. Yet, Plaintiffs' remedy proposal does not offer a reasonable way for Microsoft to separate the code in order to comply with the code removal requirements therein. More importantly, the evidence does not indicate that the removal of software code is beneficial from an economic perspective. The Court also finds that the forced removal of software code from the Windows operating system will disrupt the industry, harming both ISVs and consumers. · Nothing in the rationale underlying the commingling liability finding requires removal of software code to remedy the violation. To the contrary, the evidence presented to the Court indicates that the ability to remove end-user access to any commingled functionality would sufficiently address the anticompetitive aspect of the conduct and would prove far less disruptive to consumers and industry participants. In the case of commingling, therefore, the most appropriate remedy must place paramount significance upon addressing the exclusionary effect of the commingling, rather than the mere conduct which gives rise to the effect. C. Additional Protection for OEM Flexibility · Because the OEM channel is such a significant channel of distribution for middleware, the remedy in this case can further unfetter the market from the effects of Microsoft's unlawful anticompetitive behavior by protecting OEMs from retaliation by Microsoft based upon an OEM's support for alternative middleware or operating systems. Nevertheless, restrictions on Microsoft's freedom to retaliate or threaten retaliation must be carefully drawn so as not to unduly restrict legitimate business practices. · Over Microsoft's objection, the Court finds that protection of OEMs against threats of retaliation as well as acts of retaliation will have an effect similar to a ban on actual retaliation and, thus, will further the ultimate goal of promoting competition. · Further protection for OEMs as a middleware channel of distribution is available through the implementation of uniformity in the licenses Microsoft provides in the monopoly market. To tailor the uniform licensing provision so as to provide OEMs with the greatest security, while minimizing the less desirable collateral effects of uniformity, the Court's order of remedy will not prohibit Microsoft's practice of awarding "market development allowances, programs, or other discounts" ("MDPs"), provided that the award of such benefits is based upon reasonable, objective criteria, which are enforced uniformly and without discrimination. · Additional protection for OEMs and their ability to exercise their rights under the remedy imposed in this case can be derived from limited regulation of Microsoft's ability to terminate an OEM's Windows license. Microsoft shall not be permitted to terminate an OEM's license without having first provided the OEM with notice and opportunity to cure. When Microsoft has provided two such notices, Microsoft may terminate the license without any further notice or opportunity to cure. D. Other Participants in the Ecosystem 1. Ban on Retaliation · Microsoft is not permitted to retaliate against ISVs and Independent Hardware Vendors ("IHVs") for their support of platform software that competes with Microsoft's PC operating system software. In addition, the Court will prohibit threats of retaliation, which have the capacity to chill ISV and IHV support for competing products even where the retaliation itself is prohibited. 2. Agreements Limiting Support for Competing Products The Court's remedy will preclude Microsoft from entering into agreements predicated upon an ISV's promise to refrain from developing, promoting, or distributing any software which competes with the platform capabilities of Microsoft software. Such a provision will ensure that Microsoft is unable to chill the development of competing software products which may provide a platform for PC applications. Because a remedy which "dampen[s] ... technological innovation would be at cross-purposes with antitrust law," and because Plaintiffs have not offered any valid justification for prohibiting such agreements, the remedy in this case is carefully tailored so as not to hinder Microsoft's ability to enter into legitimate joint ventures and work-for-hire agreements. 3. Exclusive Agreements The Court's remedial decree will limit Microsoft's ability to enter into agreements in which the other party agrees to support Microsoft's operating system products exclusively or in a fixed percentage. This provision will address those industry participants with whom Microsoft entered into unlawful and anticompetitive exclusive agreements, namely ISVs, IAPs, and OEMs, as well as those industry participants, such as Internet Content Providers ("ICPs") and IHVs, who are ready targets for the imposition of similarly unlawful exclusive agreements. Again, in recognition of the benefit to technology and to competition derived from cooperative agreements between industry participants, the Court's remedy takes pains not to discourage Microsoft from entering into legitimate joint ventures and joint development agreements. In this regard, Microsoft will have some limited ability to prohibit competition with the object of the joint venture or joint agreement, where both parties have contributed significant resources to the venture. 4. Agreements Regarding Placement on the Desktop The Court's remedy will include a provision which addresses the particular means of leverage Microsoft used to induce IAPs to enter into these agreements; namely, special placement on the desktop or elsewhere in Microsoft's PC operating system products of a visible means of end-user access to the third-party product. Therefore, the remedy imposed by the Court shall prohibit Microsoft from granting special placement within the Windows operating system on the condition that the IAP refrain from support of software which competes with not merely Microsoft's Web-browsing technology, but also a number of technologies incorporated into Windows which portray middleware characteristics such that they are properly treated as "Microsoft Middleware." This provision applies to ICPs as well as IAPs, notwithstanding the fact that the appellate court declined to impose liability for Microsoft's exclusive agreements with ICPs. E. Explicitly Forward-Looking Remedies 1. API Disclosures (Interoperation between Windows and Microsoft Middleware) · The remedy imposed by the Court with regard to the disclosure of APIs shall require Microsoft to disclose those APIs, along with related technical information, which "Microsoft Middleware" utilizes to interoperate with the Windows platform. 2. Communications Protocols (Interoperation Between PC Operating Systems and Server Operating Systems) · The remedy imposed by the Court will mandate disclosure and licensing of protocols used by clients running on Microsoft's Windows operating system to interoperate with Microsoft servers. · In all likelihood, the requirement that Microsoft disclose and license the communications protocols utilized by its PC operating systems to communicate with Microsoft's servers is the most forward-looking provision in the Court's remedy. 3. Plaintiffs' Flawed Arguments for Overly Broad Disclosures · Plaintiffs are unable to establish a satisfactory link between the interoperability disclosures they seek and the liability in this case. · Over-broad disclosure, such as that proposed by Plaintiffs, must also be avoided because it will likely enable wholesale copying or cloning [FN3] of Windows without violating Microsoft's intellectual property rights. The cloning of Microsoft's technology carries the potential to hinder some aspects of competition and discourage innovation. As antitrust law does not exist for the protection of competitors, but for the protection of competition, the Court does not regard this end as a legitimate one.
FN3. By cloning, the Court means the creation of a piece of software which replicates the functions of another piece of software, even if the replication is accomplished by some means other than the literal repetition of the same source code. · The Court finds that there is sufficient harm which flows from the mandated disclosure of a vast quantity of internal interfaces which is not countermanded by competitive benefit such that it is best not to require Microsoft to disclose a multitude of internal interfaces. There exist a number of technical justifications for operating system vendors to decline to make such internal interfaces public. For example, internal interfaces are often unstable, meaning that they will not perform effectively when relied upon by third-party applications. 4. Reasonable, Non-Discriminatory Licenses · Although the Court has rejected Plaintiffs' request for the broad disclosure of technical information relating to Microsoft's products, the Court's remedial decree will require Microsoft to make more limited disclosures of APIs, communications protocols, and related technical information in order to facilitate interoperability. · The Court will prohibit Microsoft from imposing unreasonable or discriminatory license terms, but will permit Microsoft to require a reasonable royalty for the licenses necessary to exercise the rights guaranteed by the final judgment. 5. Protection Against Hackers, Viruses and Piracy · The Court's remedy will exempt certain material from disclosure in order to preserve the security of Microsoft products against hackers and viruses. Similarly, Microsoft will not be forced to disclose valuable information to firms with a history of piracy, so long as Microsoft does not use claims of piracy as a means by which to discriminate. F. Compliance and Enforcement Provisions · The scheme envisioned by Plaintiffs for enforcing the injunctive decree entered as the remedy in this case is marked by its reliance upon a special master. In light of the applicable law, the Court harbors serious concerns as to the propriety of Plaintiffs' proposed use of a special master. Even if the Court were confident that Plaintiffs' proposed use of a special master was legally sound, such a conclusion would not allay the Court's remaining concerns with regard to the logistical difficulties in Plaintiffs' special master proposal. Accordingly, the Court declines to appoint a special master at this time. · The remedy in this case will charge Plaintiffs with the obligation of monitoring Microsoft's compliance. While Plaintiffs may rely upon the views of third parties to guide them in this task, the duty of enforcement belongs to Plaintiffs. To ease the burden on the Court and on Microsoft in addressing Plaintiffs' concerns, the Court will require Plaintiffs to form a committee to coordinate enforcement of the remedial decree. Such a committee will serve to minimize duplication of enforcement activities and requests of the Court and Microsoft. · Plaintiffs have been unwaveringly critical of Microsoft's proposal for a technical committee. As the technical committee provision exists largely to assist Plaintiffs in enforcing the provisions of the final judgment in this case, if Plaintiffs do not want to rely upon a technical committee, the Court will not require them to do so. · The Court adopts Plaintiffs' proposal for selecting a compliance officer who serves as a high-level Microsoft employee, but retains a significant amount of autonomy and independence from the corporation. · The Court adopts Microsoft's proposal that the compliance officer distribute the decree and obtain a certification of understanding and compliance only from Microsoft's officers and directors. · The remedy adopted by the Court will provide Plaintiffs, acting only after consultation with their enforcement committee, reasonable access to Microsoft's source code, books, ledgers, accounts, correspondence, memoranda, and other correspondence, access to Microsoft employees for interview, and the right to request and receive written reports from Microsoft on any matter contained in the Court's remedial decree. Plaintiffs will, of course, be bound to limit any use of information obtained through these means for the purpose of ensuring Microsoft's compliance with the remedial decree, or as otherwise required by law. Similarly, should information and documents provided to Plaintiffs be subject to disclosure to a third party, Microsoft will not be deprived of the opportunity to claim protection pursuant to Federal Rule of Civil Procedure 26(c)(7). G. Term of the Decree · The Court's remedial decree shall persist for five years from its effective date. · As an incentive for Microsoft to comply with the terms of the decree, however, the Court specifically reserves the right to extend the term of the decree for up to two years upon a finding that Microsoft has engaged in a pattern of willful and systemic violation of the Court's decree. Conclusion Recognizing, as they must, the confluence of the rapid pace of change in the software industry and the delays inherent in antitrust litigation, Plaintiffs sought to gather all existing complaints regarding Microsoft's business practices and bring them before the Court at this late stage in the case. In doing so, Plaintiffs attempted to circumvent the arduous process which necessarily precedes the imposition of antitrust liability and, instead, proceeded directly to seek a remedy for the readily identifiable aspects of Microsoft's business conduct that other industry participants find objectionable. Though an appropriate remedy may be forward-looking and address conduct beyond the specific acts found to be anticompetitive, Plaintiffs are mistaken in thinking that the imposition of § 2 liability under the Sherman Act for unlawful monopoly maintenance in the market for Intel-compatible PC operating systems permits the Court to impose a remedy in areas unrelated to the monopoly market. This suit, however remarkable, is not the vehicle through which Plaintiffs can resolve all existing allegations of anticompetitive conduct which have not been proven or for which liability has not been ascribed. The appellate court could not have been clearer in its admonition that this Court's decree should be "tailored to fit the wrong creating the occasion for the remedy." Yet despite this admonition, in their request for relief, Plaintiffs have shown little respect for the parameters of liability that were so precisely delineated by the appellate court. In many instances, therefore, this Court has had little choice but to reject Plaintiffs' remedial suggestions on the grounds that they are unjustifiably in conflict with the imposition as well as the rejection of liability in this case. Additionally, the Court observes that a number of the remedial provisions proposed by Plaintiffs would require drastic alterations to Microsoft's products, as well as to aspects of its business model which do not involve illegal conduct. Plaintiffs present little, if any, legitimate justification for these remedies, and in most instances, these proposals are not supported by any economic analysis. Instead, it appears that these types of remedial provisions seek to convert certain legitimate aspects of Microsoft's business model and/or product design into a model which resembles that of other industry participants simply for the sake of changing the status quo. Certain of Microsoft's competitors appear to be those who most desire these provisions and, concomitantly, are the likely beneficiaries of these provisions, while other competitors in the relevant market would not necessarily benefit. In bringing these types of proposals before the Court, Plaintiffs again misunderstand the task presently before the Court-to remedy Microsoft's antitrust violations. General changes to the lawful aspects of Microsoft's business model or product design of the type proposed by Plaintiffs do not themselves provide a remedy, nor have Plaintiffs established that such changes are required, or even appropriate, in conjunction with a remedy. Accordingly, the Court has rejected those aspects of Plaintiffs' remedy proposal which would impose such changes. Instead, the appropriate remedy, which the Court has devised and explained at length in the full Memorandum Opinion, is carefully tailored to fit the wrong creating the occasion for the remedy. The Court's remedy exceeds a mere proscription of the precise conduct found to be anticompetitive and is forward-looking in the parameters of the relief provided. Moreover, the remedy imposed by the Court iscrafted to foster competition in the monopolized market in a manner consistent with the theory of liability in this case. In particular, the Court's remedy addresses, to the extent appropriate, Plaintiffs' desire that Microsoft disclose technical information to foster interoperation between Microsoft's PC operating system software and third-party products, as well as between Microsoft's PC operating system products and server operating systems. The mandatory disclosures between Microsoft's monopoly product and server operating systems acknowledge the competitive significance of server/network computing as the most significant "platform threat" to Microsoft's dominance in the relevant market. The disclosures mandated by the Court will likely prove beneficial to the development of middleware platforms and the functional equivalent of the middleware platform provided by server operating systems. Likewise, the Court's remedy satisfies Plaintiffs' demand for remedial provisions which address OEM flexibility in the configuration of Microsoft's operating system products, but is tempered by the necessary respect for Microsoft's intellectual property rights. In this regard, the Court has largely rejected Microsoft's paternalistic view that it can determine what is best for consumers with regard to the configuration of the Windows operating system. In rejecting this view, the Court's remedy affords OEMs the freedom to configure Microsoft's operating system products in a manner which promotes third-party middleware through the prominent display of icons, shortcuts, and menu entries, and such configuration will be protected against automatic alteration resulting from Microsoft's product design. In addition, OEMs will have the freedom to remove all prominent means of end-user access to portions of middleware functionality integrated into Microsoft's operating system so as to encourage the installation of third-party middleware. The Court's remedial decree also ensures that OEMs may introduce subscription services during the boot sequence without restriction by unjustified Microsoft technical requirements. Further secured by the terms of the Court's decree is the automatic launching of innovative software programs limited only by the requirement that the programs not drastically alter the Windows user interface. In its order of remedy, the Court has heeded Plaintiffs' call for broad protection for OEMs, ISVs, and IHVs against retaliation and threats of retaliation by Microsoft for the support of products that compete with Microsoft's monopoly product. The Court's remedy further curtails Microsoft's ability to enter into agreements that have the effect of excluding competitors from the marketplace. The Court's prohibition on exclusionary contracts is carefully drawn, however, so as to foster, rather than prohibit, procompetitive joint ventures, work-for-hire agreements, and intellectual property licenses. Notwithstanding these affirmative measures, the Court's remedy, of necessity, stops short of any measure which will substantially discourage procompetitive joint ventures, require the substantial redesign of Microsoft's products, or otherwise interfere in Microsoft's lawful use of proprietary technology. Throughout all of its provisions, the Court's remedial order is generous in its treatment of middleware platform threats. The defined terms in the Court's order are appropriately grounded in the theory of liability and the treatment of middleware platform threats during the liability phase, while simultaneously prescient in that they are not confined to technology which exists today. Most notable is the scope of the term "Non-Microsoft Middleware," which captures a wide array of existing platform technology, as well as technology not yet developed. In this regard, even the technologies which Plaintiffs have identified as future potential platform threats, such as interactive television middleware-whose success is but a prediction, will be addressed by the Court's remedial order, provided the aspirations of these technologies become reality. Plaintiffs are correct that Microsoft has a tendency to minimize the effects of its illegal conduct. Yet this minimization, however frustrating, does not require a remedy which prodigiously exceeds even an expansive view of the illegal conduct. The remedy in this case addresses the conduct found by the district and appellate courts to violate the antitrust laws and is imposed without regard to Microsoft's minimalist view of its own illegal conduct. More importantly, the behavioral remedy imposed by this Court neither bends nor softens simply because Microsoft refuses to acknowledge the extent of its own wrongdoing. During this litigation, promises have been made on behalf of Microsoft that the company will change its predatory practices which have been part of its competitive strategy in order to comply with the remedial decree. The Court will hold Microsoft's directors, particularly those who testified before this Court, responsible for implementing each provision of this remedial decree. Let it not be said of Microsoft that "a prince never lacks legitimate reasons to break his promise," [FN4] for this Court will exercise its full panoply of powers to ensure that the letter and spirit of this remedial decree are carried out.
FN4. NICCOLO MACHIAVELLI, THE PRINCE, ch. 18 (1514).
FINAL JUDGMENT The Plaintiff States of California, Connecticut, Florida, Iowa, Kansas, Minnesota, Utah, and West Virginia, the Commonwealth of Massachusetts, and the District of Columbia, having filed their complaints in this action on May 18, 1998; Defendant Microsoft Corporation ("Microsoft") having appeared and filed its answer; The Court having entered Findings of Fact on November 5, 1999 and Conclusions of Law on April 3, 2000; The United States Court of Appeals for the District of Columbia Circuit having affirmed the District Court's finding of liability against Microsoft for violation of § 2 of the Sherman Act and the state law counterparts to § 2 of the Sherman Act in the states of California, Connecticut, Florida, Iowa, Kansas, Minnesota, Utah, and West Virginia, the Commonwealth of Massachusetts, and the District of Columbia, and having remanded to this Court for an order of remedy; and Upon the record of trial and all prior and subsequent proceedings herein, it is this 1st day of November, 2002, hereby
ORDERED, ADJUDGED AND DECREED as follows:
I. Jurisdiction This Court has jurisdiction of the subject matter of this action and of the person of Microsoft.
II. Applicability This Final Judgment applies to Microsoft and to each of its officers, directors, agents, employees, subsidiaries, successors and assigns; and to all other persons in active concert or participation with any of them who shall have received actual notice of this Final Judgment by personal service or otherwise.
III. Prohibited Conduct
A. Microsoft shall not retaliate against or threaten retaliation against an OEM by altering Microsoft's commercial relations with that OEM, or by withholding newly introduced forms of non-monetary Consideration (including but not limited to new versions of existing forms of non-monetary Consideration) from that OEM, because it is known to Microsoft that the OEM is or is contemplating: 1. developing, distributing, promoting, using, selling, or licensing any software that competes with Microsoft Platform Software or any product or service that distributes or promotes any Non-Microsoft Middleware; 2. shipping a Personal Computer that (a) includes both a Windows Operating System Product and anon-Microsoft Operating System, or (b) will boot with more than one Operating System; or 3. exercising any of the options or alternatives provided for under this Final Judgment. Nothing in this provision shall prohibit Microsoft from enforcing any provision of any license with any OEM or any intellectual property right that is not inconsistent with this Final Judgment. Microsoft shall not terminate a Covered OEM's license for a Windows Operating System Product without having first given the Covered OEM written notice of the reasons for the proposed termination and not less than thirty days' opportunity to cure. Notwithstanding the foregoing, Microsoft shall have no obligation to provide such a termination notice and opportunity to cure to any Covered OEM that has received two or more such notices during the term of its Windows Operating System Product license. Nothing in this provision shall prohibit Microsoft from providing Consideration to any OEM with respect to any Microsoft product or service where that Consideration is commensurate with the absolute level or amount of that OEM's development, distribution, promotion, or licensing of that Microsoft product or service.
B. Microsoft's provision of Windows Operating System Products to Covered OEMs shall be pursuant to uniform license agreements with uniform terms and conditions. Without limiting the foregoing, Microsoft shall charge each Covered OEM the applicable royalty for Windows Operating System Products as set forth on a schedule, to be established by Microsoft and published on a web site accessible to the Plaintiffs and all Covered OEMs, that provides for uniform royalties for Windows Operating System Products, except that: 1. the schedule may specify different royalties for different language versions; 2. the schedule may specify reasonable volume discounts based upon the actual volume of licenses of any Windows Operating System Product or any group of such products; and 3. the schedule may include market development allowances, programs, or other discounts in connection with Windows Operating System Products, provided that: a. such discounts are offered and available uniformly to all Covered OEMs, except that Microsoft may establish one uniform discount schedule for the ten largest Covered OEMs and a second uniform discount schedule for the eleventh through twentieth largest Covered OEMs, where the size of the OEM is measured by volume of licenses; b. such discounts are based on objective, verifiable criteria that shall be applied and enforced on a uniform basis for all Covered OEMs; and c. such discounts or their award shall not be based on or impose any criterion or requirement that is otherwise inconsistent with any portion of this Final Judgment. C. Microsoft shall not restrict by agreement any OEM licensee from exercising any of the following options or alternatives: 1. Installing, and displaying icons, shortcuts, or menu entries for, any Non- Microsoft Middleware or any product or service (including but not limited to IAP products or services) that distributes, uses, promotes, or supports any Non-Microsoft Middleware, on the desktop or Start menu, or anywhere else in a Windows Operating System Product where a list of icons, shortcuts, or menu entries for applications are generally displayed, except that Microsoft may restrict an OEM from displaying icons, shortcuts and menu entries for any product in any list of such icons, shortcuts, or menu entries specified in the Windows documentation as being limited to products that provide particular types of functionality, provided that the restrictions are non-discriminatory with respect to non-Microsoft and Microsoft products. 2. Distributing or promoting Non-Microsoft Middleware by installing and displaying on thedesktop shortcuts of any size or shape so long as such shortcuts do not impair the functionality of the user interface. 3. Launching automatically, at the conclusion of the initial boot sequence or subsequent boot sequences, or upon connections to or disconnections from the Internet, any Non-Microsoft Middleware, except that Microsoft may restrict the launching of Non-Microsoft Middleware which replaces or drastically alters the Windows Operating System Product user interface. 4. Offering users the option of launching other Operating Systems from the Basic Input/Output System or a non-Microsoft boot-loader or similar program that launches prior to the start of the Windows Operating System Product. 5. Presenting during the initial boot sequence its own IAP offer. 6. Exercising any of the options provided in Section III.H of this Final Judgment.
D. Starting at the earlier of the release of Service Pack 1 for Windows XP or three months after the entry of this Final Judgment, Microsoft shall disclose to ISVs, IHVs, IAPs, ICPs, and OEMs, for the sole purpose of interoperating with a Windows Operating System Product, via the Microsoft Developer Network ("MSDN") or similar mechanisms, the APIs and related Documentation that are used by Microsoft Middleware to interoperate with a Windows Operating System Product. For purposes of this Section III.D, the term APIs means the interfaces, including any associated callback interfaces, that Microsoft Middleware running on a Windows Operating System Product uses to call upon that Windows Operating System Product in order to obtain any services from that Windows Operating System Product. In the case of a new major version of Microsoft Middleware, the disclosures required by this Section III.D shall occur no later than the last major beta test release of that Microsoft Middleware. In the case of a new version of a Windows Operating System Product, the obligations imposed by this Section III.D shall occur in a Timely Manner.
E. Starting three months after the entry of this Final Judgment to the Court, Microsoft shall make available for use by third parties, for the sole purpose of interoperating or communicating with a Windows Operating System Product, on reasonable and non-discriminatory terms (consistent with Section III.I), any Communications Protocol that is, on or after the date this Final Judgment is submitted to the Court, (i) implemented in a Windows Operating System Product installed on a client computer, and (ii) used to interoperate, or communicate, natively (i.e., without the addition of software code to the client operating system product) with a Microsoft server operating system product.
F. 1. Microsoft shall not retaliate against or threaten retaliation against any ISV or IHV because of that ISV's or IHV's: a. developing, using, distributing, promoting or supporting any software that competes with Microsoft Platform Software or any software that runs on any software that competes with Microsoft Platform Software, or b. exercising any of the options or alternatives provided for under this Final Judgment. 2. Microsoft shall not enter into any agreement relating to a Windows Operating System Product that conditions the grant of any Consideration on an ISV's refraining from developing, using, distributing, or promoting any software that competes with Microsoft Platform Software or any software that runs on any software that competes with Microsoft Platform Software, except that Microsoft may enter into agreements that place limitations on an ISV's development, use, distribution or promotion of any such software if those limitations are reasonably necessary to and of reasonable scope and duration in relation to a bona fide contractual obligation of the ISV to use, distribute or promote any Microsoft software or to develop software for, or in conjunction with, Microsoft. 3. Nothing in this section shall prohibit Microsoft from enforcing any provision of any agreement with any ISV or IHV, or any intellectual property right, that is not inconsistent with this Final Judgment.
G. Microsoft shall not enter into any agreement with:
1. any IAP, ICP, ISV, IHV or OEM that grants Consideration on the condition that such entity distributes, promotes, uses, or supports, exclusively or in a fixed percentage, any Microsoft Platform Software, except that Microsoft may enter into agreements in which such an entity agrees to distribute, promote, use or support Microsoft Platform Software in a fixed percentage whenever Microsoft in good faith obtains a representation that it is commercially practicable for the entity to provide equal or greater distribution, promotion, use or support for software that competes with Microsoft Platform Software, or 2. any IAP or ICP that grants placement on the desktop or elsewhere in any Windows Operating System Product to that IAP or ICP on the condition that the IAP or ICP refrain from distributing, promoting or using any software that competes with Microsoft Middleware. Nothing in this section shall prohibit Microsoft from entering into (a) any bona fide joint venture or (b) any joint development or joint services arrangement with any ISV, IHV, IAP, ICP, or OEM for a new product, technology or service, or any material value-add to an existing product, technology or service, in which both Microsoft and the ISV, IHV, IAP, ICP, or OEM contribute significant developer or other resources, that prohibits such entity from competing with the object of the joint venture or other arrangement for a reasonable period of time. This Section does not apply to any agreements in which Microsoft licenses intellectual property from a third party and such intellectual property license is the principal purpose of the agreement.
H. Starting at the earlier of the release of Service Pack 1 for Windows XP or three months after the entry of this Final Judgment, Microsoft shall:
1. Allow end users (via a mechanism readily accessible from the desktop or Start menu such as an Add/Remove icon) and OEMs (via standard preinstallation kits) to enable or remove access to each Microsoft Middleware Product or Non-Microsoft Middleware Product by (a) displaying or removing icons, shortcuts, or menu entries on the desktop or Start menu, or anywhere else in a Windows Operating System Product where a list of icons, shortcuts, or menu entries for applications are generally displayed, except that Microsoft may restrict the display of icons, shortcuts, or menu entries for any product in any list of such icons, shortcuts, or menu entries specified in the Windows documentation as being limited to products that provide particular types of functionality, provided that the restrictions are non-discriminatory with respect to non- Microsoft and Microsoft products; and (b) enabling or disabling automatic invocations pursuant to Section III.C.3 of this Final Judgment that are used to launch Non-Microsoft Middleware Products or Microsoft Middleware Products. The mechanism shall offer the end user a separate and unbiased choice with respect to enabling or removing access (as described in this subsection III.H.1) and altering default invocations (as described in the following subsection III.H.2) with regard to each such Microsoft Middleware Product or Non-Microsoft Middleware Product and may offer the end-user a separate and unbiased choice of enabling or removing access and altering default configurations as to all Microsoft Middleware Products as a group or all Non-Microsoft Middleware Products as a group. 2. Allow end users (via an unbiased mechanism readily available from the desktop or Start menu), OEMs (via standard OEM preinstallation kits), and Non-Microsoft Middleware Products (via a mechanism which may, at Microsoft's option, require confirmation from the end user in an unbiased manner) to designate a Non-Microsoft Middleware Product to be invoked in place of that Microsoft Middleware Product (or vice versa) in any case where the Windows Operating System Product would otherwise launch the Microsoft Middleware Product in a separate Top-Level Window and display either (i) all of the user interface elements or (ii) the Trademark of the Microsoft Middleware Product. Notwithstanding the foregoing Section III.H.2, the Windows Operating System Product may invoke a Microsoft Middleware Product in any instance in which: (a) that Microsoft Middleware Product would be invoked solely for use in interoperating with a server maintained by Microsoft (outside the context of general Web browsing), or (b) that designated Non-Microsoft Middleware Product fails to implement a reasonable technical requirement (e.g., a requirement to be able to host a particular ActiveX control) that is necessary for valid technical reasons to supply the end user with functionality consistent with a Windows Operating System Product, provided that the technical reasons are described in writing in a reasonably prompt manner to any ISV that requests them. 3. Ensure that a Windows Operating System Product does not (a) automatically alter an OEM's configuration of icons, shortcuts or menu entries installed or displayed by the OEM pursuant to Section III.C of this Final Judgment without first seeking confirmation from the user and (b) seek such confirmation from the end user for an automatic (as opposed to user-initiated) alteration of the OEM's configuration until 14 days after the initial boot up of a new Personal Computer. Any such automatic alteration and confirmation shall be unbiased with respect to Microsoft Middleware Products and Non-Microsoft Middleware. Microsoft shall not alter the manner in which a Windows Operating System Product automatically alters an OEM's configuration of icons, shortcuts or menu entries other than in a new version of a Windows Operating System Product. Microsoft's obligations under this Section III.H as to any new Windows Operating System Product shall be determined based on the Microsoft Middleware Products which exist seven months prior to the last beta test version (i.e., the one immediately preceding the first release candidate) of that Windows Operating System Product. I. Microsoft shall offer to license to ISVs, IHVs, IAPs, ICPs, and OEMs any intellectual property rights owned or licensable by Microsoft that are required to exercise any of the options or alternatives expressly provided to them under this Final Judgment, provided that 1. all terms, including royalties or other payment of monetary consideration, are reasonable and non-discriminatory; 2. the scope of any such license (and the intellectual property rights licensed thereunder) need be no broader than is necessary to ensure that an ISV, IHV, IAP, ICP or OEM is able to exercise the options or alternatives expressly provided under this Final Judgment (e.g., an ISV's, IHV's, IAP's, ICP's and OEM's option to promote Non-Microsoft Middleware shall not confer any rights to any Microsoft intellectual property rights infringed by that Non- Microsoft Middleware); 3. an ISV's, IHV's, IAP's, ICP's, or OEM's rights may be conditioned on its not assigning, transferring or sublicensing its rights under any license granted under this provision; and 4. the terms of any license granted under this section are in all respects consistent with the express terms of this Final Judgment. Beyond the express terms of any license granted by Microsoft pursuant to this section, this Final Judgment does not, directly or by implication, estoppel or otherwise, confer any rights, licenses, covenants or immunities with regard to any Microsoft intellectual property to anyone.
J. No provision of this Final Judgment shall:
1. Require Microsoft to document, disclose or license to third parties: (a) portions of APIs or Documentation or portions or layers of Communications Protocols the disclosure of which would compromise the security of a particular installation or group of installations of anti-piracy, anti-virus, software licensing, digital rights management, encryption or authentication systems, including without limitation, keys, authorization tokens or enforcement criteria; or (b) any API, interface or other information related to any Microsoft product if lawfully directed not to do so by a governmental agency of competent jurisdiction. 2. Prevent Microsoft from conditioning any license of any API, Documentation or Communications Protocol related to anti-piracy systems, anti-virus technologies, license enforcement mechanisms, authentication/authorization security, or third party intellectual property protection mechanisms of any Microsoft product to any person or entity on the requirement that the licensee: (a) has no history of software counterfeiting or piracy or willful violation of intellectual property rights, (b) has a reasonable business need for the API, Documentation or Communications Protocol for a planned or shipping product, (c) meets reasonable, objective standards established by Microsoft for certifying the authenticity and viability of its business, (d) agrees to submit, at its own expense, any computer program using such APIs, Documentation or Communication Protocols to third-party verification, approved by Microsoft, to test for and ensure verification and compliance with Microsoft specifications for use of the API or interface, which specifications shall be related to proper operation and integrity of the systems and mechanisms identified in this paragraph.
IV. Compliance and Enforcement Procedures
A. Enforcement Authority
1. The Plaintiffs shall have exclusive responsibility for enforcing this Final Judgment. Without in any way limiting the sovereign enforcement authority of each of the plaintiff States, the plaintiff States shall form a committee to coordinate their enforcement of this Final Judgment. A plaintiff State shall take no action to enforce this Final Judgment without first consulting the plaintiff States' enforcement committee.
2. To determine and enforce compliance with this Final Judgment, duly authorized representatives of the plaintiff States, on reasonable notice to Microsoft and subject to any lawful privilege, shall be permitted the following: a. Access during normal office hours to inspect any and all source code, books, ledgers, accounts, correspondence, memoranda and other documents and records in the possession, custody, or control of Microsoft, which may have counsel present, regarding any matters contained in this Final Judgment. b. Subject to the reasonable convenience of Microsoft and without restraint or interference from it, to interview, informally or on the record, officers, employees, or agents of Microsoft, who may have counsel present, regarding any matters contained in this Final Judgment. c. Upon written request of a duly designated representative of a plaintiff State, on reasonable notice given to Microsoft, Microsoft shall submit such written reports under oath as requested regarding any matters contained in this Final Judgment.
Individual plaintiff States will consult with the plaintiff States' enforcement committee to minimize the duplication and burden of the exercise of the foregoing powers, where practicable.
3. The Plaintiffs shall not disclose any information or documents obtained from Microsoft under this Final Judgment except for the purpose of securing compliance with thisFinal Judgment, in a legal proceeding to which one or more of the Plaintiffs is a party, or as otherwise required by law; provided that the relevant Plaintiff(s) must provide ten days' advance notice to Microsoft before disclosing in any legal proceeding (other than a grand jury proceeding) to which Microsoft is not a party any information or documents provided by Microsoft pursuant to this Final Judgment which Microsoft has identified in writing as material as to which a claim of protection may be asserted under Rule 26(c)(7) of the Federal Rules of Civil Procedure.
4. The Plaintiffs shall have the authority to seek such orders as are necessary from the Court to enforce this Final Judgment, provided, however, that the Plaintiffs shall afford Microsoft a reasonable opportunity to cure alleged violations of Sections III.C, III.D, III.E and III.H, provided further that any action by Microsoft to cure any such violation shall not be a defense to enforcement with respect to any knowing, willful or systematic violations.
B. 1. Compliance Committee. Within 30 days of entry of this Final Judgment, Microsoft shall establish a compliance committee (the "Compliance Committee") of its Board of Directors, consisting of at least three members of the Board of Directors who are not present or former employees of Microsoft.
2. Compliance Officer. The Compliance Committee shall hire a Compliance Officer, who shall report directly to the Compliance Committee and to the Chief Executive Officer of Microsoft. The Compliance Officer shall be responsible for development and supervision of Microsoft's internal programs to ensure compliance with the antitrust laws and this Final Judgment. Microsoft shall give the Compliance Officer all necessary authority and resources to discharge the responsibilities listed herein.
3. Duties of Compliance Officer. The Compliance Officer shall:
a. within 60 days after entry of this Final Judgment, arrange for delivery to all officers and directors of Microsoft a copy of this Final Judgment together with additional informational materials describing the conduct prohibited and required by this Final Judgment; b. arrange for delivery in a timely manner of a copy of this Final Judgment and such additional informational materials to any person who succeeds to a position described in Section IV.B.3.a above; c. ensure that those persons described in subsection c.i above are annually briefed on the meaning and requirements of this Final Judgment and the United States antitrust laws and advising them that Microsoft's legal advisors are available to confer with them regarding any question concerning compliance with this Final Judgment or under the United States antitrust laws; d. obtain from each person described in Section IV.B.3.a within 60 days of entry of this Final Judgment and annually thereafter, and for each person thereafter succeeding to such a position within 10 days of such succession and annually thereafter, a written certification that he or she: (i) has read, understands, and agrees to abide by the terms of, and has to their knowledge not violated, this Final Judgment; and (ii) has been advised and understands that his or her failure to comply with this Final Judgment may result in a finding of contempt of court; e. maintain a record of persons to whom this Final Judgment has been distributed and from whom, pursuant to Section V.B.3.d above has been obtained; f. on an annual basis, certify to the Plaintiffs that Microsoft is fully compliant with this Final Judgment; g. maintain a record of all complaints received and action taken by Microsoft with respect to each such complaint; and g. report promptly to the Plaintiffs any credible evidence of violation of this Final Judgment. 4. The Compliance Officer may be removed only by the Chief Executive Officer with the concurrence of the Compliance Committee.
V. Termination
A. Unless this Court grants an extension, this Final Judgment will expire on the fifth anniversary of the date on which it takes effect.
B. In any enforcement proceeding in which the Court has found that Microsoft has engaged in a pattern of willful and systematic violations, the Plaintiffs may apply to the Court for a one-time extension of this Final Judgment of up to two years, together with such other relief as the Court may deem appropriate. VI. Definitions
A. "API" means application programming interface, including any interface that Microsoft is obligated to disclose pursuant to III.D.
B. "Communications Protocol" means the set of rules for information exchange to accomplish predefined tasks between a Windows Operating System Product and a server operating system product connected via a network, including, but not limited to, a local area network, a wide area network or the Internet. These rules govern the format, semantics, timing, sequencing, and error control of messages exchanged over a network.
C. "Consideration" means any monetary payment or the provision of preferential licensing terms; technical, marketing, and sales support; enabling programs; product information; information about future plans; developer support; hardware or software certification or approval; or permission to display trademarks, icons or logos.
D. "Covered OEMs" means the 20 OEMs with the highest worldwide volume of licenses of Windows Operating System Products reported to Microsoft in Microsoft's fiscal year preceding the effective date of the Final Judgment. The OEMs that fall within this definition of Covered OEMs shall be recomputed by Microsoft as soon as practicable after the close of each of Microsoft's fiscal years.
E. "Documentation" means all information regarding the identification and means of using APIs that a person of ordinary skill in the art requires to make effective use of those APIs. Such information shall be of the sort and to the level of specificity, precision and detail that Microsoft customarily provides for APIs it documents in the Microsoft Developer Network ("MSDN").
F. "IAP" means an Internet access provider that provides consumers with a connection to the Internet, with or without its own proprietary content.
G. "ICP" means an Internet content provider that provides content to users of the Internet by maintaining Web sites.
H. "IHV" means an independent hardware vendor that develops hardware to be included in or used with a Personal Computer running a Windows Operating System Product. I. "ISV" means an entity other than Microsoft that is engaged in the development or marketing of software products.
J. "Microsoft Middleware" means software code that
Microsoft Middleware shall include at least the software code that controls most or all of the user interface elements of that Microsoft Middleware. Software code described as part of, and distributed separately to update, a Microsoft Middleware Product shall not be deemed Microsoft Middleware unless identified as a new major version of that Microsoft Middleware Product. A major version shall be identified by a whole number or by a number with just a single digit to the right of the decimal point.
K. "Microsoft Middleware Product" means
Functionality that Microsoft describes or markets as being part of a Microsoft Middleware Product (such as a service pack, upgrade, or bug fix for Internet Explorer), or that is a version of a Microsoft Middleware Product (such as Internet Explorer 5.5), shall be considered to be part of that Microsoft Middleware Product.
L. "Microsoft Platform Software" means (i) a Windows Operating System Product and/or (ii) a Microsoft Middleware Product.
M. "Non-Microsoft Middleware" means a non-Microsoft software product running on a Windows Operating System Product that exposes a range of functionality to ISVs through published APIs, and that could, if ported to or made interoperable with, a non-Microsoft Operating System, thereby make it easier for applications that rely in whole or in part on the functionality supplied by that software product to be ported to or run on that non-Microsoft Operating System.
N. "Non-Microsoft Middleware Product" means a non-Microsoft software product running on a Windows Operating System Product (i) that exposes a range of functionality to ISVs through published APIs, and that could, if ported to or made interoperable with, a non-Microsoft Operating System, thereby make it easier for applications that rely in whole or in part on the functionality supplied by that software product to be ported to or run on that non-Microsoft Operating System, and (ii) of which at least one million copies were distributed in the United States within the previous year.
O. "OEM" means an original equipment manufacturer of Personal Computers that is a licensee of a Windows Operating System Product.
P. "Operating System" means the software code that, inter alia, (i) controls the allocation and usage of hardware resources (such as the microprocessor and various peripheral devices) of a Personal Computer, (ii) provides a platform for developing applications by exposing functionality to ISVs through APIs, and (iii) supplies a user interface that enables users to access functionality of the operating system and in which they can run applications.
Q. "Personal Computer" means any computer configured so that its primary purpose is for use by one person at a time, that uses a video display and keyboard (whether or not that video display and keyboard is included) and that contains an Intel x86 compatible (or successor) microprocessor. Servers, television set top boxes, handheld computers, game consoles, telephones, pagers, and personal digital assistants are examples of products that are not Personal Computers within the meaning of this definition.
R. "Timely Manner" means at the time Microsoft first releases a beta test version of a Windows Operating System Product that is made available via an MSDN subscription offering or of which 150,000 ormore beta copies are distributed.
S. "Top-Level Window" means a window displayed by a Windows Operating System Product that (a) has its own window controls, such as move, resize, close, minimize, and maximize, (b) can contain sub-windows, and (c) contains user interface elements under the control of at least one independent process.
T. "Trademarked" means distributed in commerce and identified as distributed by a name other than Microsoft® or Windows® that Microsoft has claimed as a trademark or service mark by (i) marking the name with trademark notices, such as ® or TM, in connection with a product distributed in the United States; (ii) filing an application for trademark protection for the name in the United States Patent and Trademark Office; or (iii) asserting the name as a trademark in the United States in a demand letter or lawsuit. Any product distributed under descriptive or generic terms or a name comprised of the Microsoft® or Windows® trademarks together with descriptive or generic terms shall not be Trademarked as that term is used in this Final Judgment. Microsoft hereby disclaims any trademark rights in such descriptive or generic terms apart from the Microsoft® or Windows® trademarks, and hereby abandons any such rights that it may acquire in the future.
U. "Windows Operating System Product" means the software code (as opposed to source code) distributed commercially by Microsoft for use with Personal Computers as Windows 2000 Professional, Windows XP Home, Windows XP Professional, and successors to the foregoing, including the Personal Computer versions of the products currently code named "Longhorn" and "Blackcomb" and their successors, including upgrades, bug fixes, service packs, etc. The software code that comprises a Windows Operating System Product shall be determined by Microsoft in its sole discretion. VII. Further Elements
Jurisdiction is retained by this Court over this action such that the Court may act sua sponte to issue further orders or directions, including but not limited to orders or directions relating to the construction or carrying out of this Final Judgment, the enforcement of compliance therewith, the modification thereof, and the punishment of any violation thereof. Jurisdiction is retained by this Court over this action and the parties thereto for the purpose of enabling the parties to this action to apply to this Court at any time for further orders and directions as may be necessary or appropriate to carry out or construe this Final Judgment, to modify or terminate any of its provisions, to enforce compliance, and to punish violations of its provisions. Unless otherwise indicated, the provisions of this Final Judgment shall take effect 30 days after the date on which it is entered. In accordance with the imposition and affirmance of liability, the Plaintiff States shall submit a motion for the award of costs and fees, with supporting documents as necessary, not later than 45 days after the entry of this Final Judgment.
VIII. Third Party Rights
Nothing in this Final Judgment is intended to confer upon any other persons any rights or remedies of any nature whatsoever hereunder or by reason of this Final Judgment.
SO ORDERED. |
