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The summation: Did Microsoft just dodge a bullet in EU court?

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The summation: Did Microsoft just dodge a bullet in EU court?
Judge John D. Cooke, of the European Court of First Instance

Judge Cooke’s questions to counsel for the EC seemed to echo Microsoft’s defense: “The information which forms interoperability is hugely valuable commercial information,” Cooke is quoted as saying by multiple sources.

Late in Wednesday’s session, EC lawyer Anthony Whelan is quoted by The New York Times as having argued that Microsoft was seeking patent-like protection for trade secrets, and that trade secrets were not protected under the law. When Whelan’s comments were echoed on Thursday, Judge Cooke struck back: “The information, which forms interoperability, is hugely valuable commercial information,” he said. “That’s why it’s difficult to understand the attitude of the Commission that these are mere trade secrets…These are not just trivial trade secrets. This is hugely valuable information developed by a major corporation taking hundreds of man-hours to develop.”

A question Judge Cooke asked later on Thursday, whose translation varies depending on the report, concerned whether the law as currently written forces dominating players to turn over commercial information to competitors, implying that the act of doing so might actually give the competitors an unfair commercial advantage.

Samba’s demonstration: Is withholding trade secrets the same as protecting patents?

In one of the EC’s more convincing demonstrations on Thursday, it called Andrew Tridgell, the founder of Samba Team which develops open-source file and print server software, to the stand. In questioning by Anthony Whelan and other EC counsel, Tridgell was asked how company protocols relate to patents. Whelan stated that a protocol could be shared by means of a specification, which could be written specifically so as not to give away company secrets. Microsoft counsel had argued earlier that it declined to provide a license to Samba, knowing that it shares its development code under an open-source agreement, and did not want its protocols being passed out to the public at large. But Tridgell countered that an implementation of Microsoft’s protocols by Samba could be achieved, and the source code that results from that implementation shared, without giving away Microsoft secrets, since the implementation would apply to UNIX and Linux, not Windows.

At one point on Thursday, Tridgell held in his hand what he described as a paperback-sized storage server. With the aid of Microsoft protocols, he said, this little device could be rapidly converted into a workgroup server. Without them, Samba would be “ten years behind” in being able to develop such a tool.

This is where the EC’s case may have inadvertently laid the fuse for a backfire. Earlier in the week, Microsoft counsel had argued that the company had already been sharing specifications with others, but particularly those who would also respect Microsoft’s right to secrecy. Then there was that argument turning around in Judge Cooke’s head: If Samba really was ten years behind in developing a workgroup server, whose fault is that, really? Should a market leader necessarily have an obligation to cut research and development expenses for a competitor?

Perhaps sensing a very wide opening, Microsoft counsel Ian Forrester, in his closing statements this morning, repeated his argument from earlier in the hearings that the company “is being told to give a worldwide license in perpetuity” for information that would enable anyone else to build a workgroup operating system, without having invested as much as Microsoft did in research.

The first clear sign that the EC may not have pulled off a complete victory came mid-day Friday, when Judge Cooke, according to Reuters, asked EC counsel, “There are two distinct findings of abuse but a single fine…How is the court to [adjust the fine] if we should want to annul one abuse and confirm the other abuse?” EC counsel Fernando Castillo de la Torre reportedly responded by saying the Commission hadn’t thought about that, since it had always thought the March 2004 fine would be upheld.

The other issue on the table, debated earlier in the week – whether Microsoft unfairly tied Media Player to Windows – may not have wound up so well for Microsoft. Internal e-mails released during the hearings clearly showed company executives suggesting to then-CEO Bill Gates that Microsoft adopt a Netscape-like strategy to competing with RealNetworks in the media player space. Microsoft had already been found guilty in the US of illegal conduct with regard to its competition with Netscape in the Web browser market, although a settlement with the Dept. of Justice reduced the company’s penalties.

Observers of EU court proceedings have noted that the Court of First Instance could conceivably take months to produce a final verdict, which may either uphold the EC’s fine imposition – and perhaps authorize it to impose further fines – or overturn the ruling. Judge Cooke’s inquiry this morning indicates there may be a third possibility: a King Solomon-like decree that splits the ruling in half. But unlike the outcome of that tale, both sides would probably emerge claiming victory, and historians would later debate whether pursuing the entire affair was really worth the EC’s time and effort.