Netscape seeks damages from Microsoft

Jeremy Pelofsky

WASHINGTON: AOL Time Warner Inc. sued Microsoft Corp. on Tuesday for damage

done to its Netscape Internet browser by violations of antitrust law found in a

separate government case against the software giant.

The 20-page lawsuit said the once-dominant Netscape, bought by AOL in 1999,

suffered from Microsoft's unfair promotion of its Internet Explorer browser,

which now tops the market.

A US appeals court in June upheld findings in the US Justice Department's

case against Microsoft that the company illegally used its monopoly in personal

computer operating systems to maintain its dominance.

"Netscape's lawsuit is a logical extension of the findings entered by

the District Court and unanimously affirmed by the Court of Appeals that

Microsoft thwarted competition, violated the antitrust laws and illegally

preserved its monopoly at Netscape's expense," AOL General Counsel Randall

J. Boe said in a statement.

The Justice Department and nine states joining the government case have

reached a proposed settlement. Nine other states are seeking stiffer penalties

against the software giant.

Microsoft spokesman Jim Desler said the company had not reviewed the Netscape

lawsuit and could not comment on specific allegations but added: "AOL

purchased Netscape for $10 billion, now AOL wants to blame Microsoft for

Netscape and AOL's own mismanagement."

Browser war started antitrust case



The Netscape suit filed in US District Court for the District of Columbia said
Microsoft acted illegally beginning in 1995 and that "Microsoft's illegal

actions and the harms to Netscape are ongoing."

Netscape's suit seeks to prevent further anti-competitive behavior and asks

for treble damages, to be determined at trial, to make up for lost browser

licensing revenue and market share, among other things. "I don't see this

case as primarily about money. I see it as primarily about injunctive

relief," said Steve Salop, a Georgetown University law professor.

Microsoft bundled the browser with its Windows operating system, leading to

the government suit. The Justice Department had argued at trial that Microsoft

feared Netscape's popular browser could evolve into a computer platform that

could rival Microsoft's Windows operating system.

The appeals court cleared Microsoft of the specific charge of trying to

monopolize the market for Internet browsers but said Microsoft, through various

business practices, had unfairly competed with Netscape and other companies.

District Judge Colleen Kollar-Kotelly is due to hold hearings in March on

proposals by the nine states arguing for tougher penalties against Microsoft.

Around the same time she will hold separate hearings on whether the settlement

is in the public interest.

AOL is one of several companies due to testify on behalf of the states

seeking tougher penalties. After acquiring Netscape, AOL purchased the cable

television and media empire of Time Warner in 2001 to become AOL Time Warner and

is seen as one of Microsoft's chief competitors.

The holdout states want Microsoft to sell a cheaper, stripped-down version of

its Windows operating system as well as give competitors access to the inner

workings of the Internet Explorer browser and allow them to sell their own

customized version of the Web browser.

Earlier this month, another federal judge scuttled a proposed settlement of

consumer class-action suits against Microsoft. District Judge J. Frederick Motz

said the plan to have Microsoft donate computers and software to poor schools

could give the company an edge in a market where Apple Computer Inc. has

traditionally enjoyed a strong market share.

(with additional reporting by Andy Sullivan)

(C) Reuters Limited.