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List:       dmca-discuss
Subject:    [DMCA_Discuss]
From:       Seth Johnson <seth.johnson () realmeasures ! dyndns ! org>
Date:       2004-01-19 8:05:22
Message-ID: 400B8FC2.B964DD3E () RealMeasures ! dyndns ! org
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> http://www.groklaw.net/article.php?story=20040118125912991


DOJ Mentions SCO in Report on MS Compliance Efforts 
 
Sunday, January 18 2004 @ 11:35 PM EST  

This is interesting, and it got me thinking. The Department of Justice has
been looking into some aspects of Microsoft's compliance with the final
settlement of the antitrust trial, and SCO's name came up. 
In connection with the Department of Justice's monitoring of Microsoft's
compliance in US v. Microsoft, they provide the court with status reports
every six months on how things are going. Their most recent report has just
been made available. 

At the October 24, 2003 status conference, Judge Kollar-Kotelly directed the
DOJ to file a report on January 16, just before the next court hearing on
January 23rd, updating her on some issues related to Microsoft's licensing,
specifically why so few companies were signing up: 


"A judge has asked the US Department of Justice to investigate why only nine
companies have signed up to license Microsoft's technology for their own
software products, an offering forming part of the federal antitrust
settlement with the software company.

"During an antitrust settlement oversight hearing Friday, Judge Colleen
Kollar-Kotelly questioned why more companies hadn't taken advantage of the
licensing portion of the antitrust settlement, approved by Kollar-Kotelly in
late 2002.

"Kollar-Kotelly has asked the DOJ to interview software companies to see if
changes are needed in the licensing terms in the antitrust settlement. In a
July hearing, Kollar-Kotelly said new licensing terms that Microsoft would
later announce should satisfy concerns over royalty rates Microsoft was
charging for its communications protocols."
That report is now available. When Microsoft appeared at that conference, it
listed three new licensees as examples of the licensing program's success,
one of them SCO, and argued the program was a success. 

If some didn't want to sign up, that was their right, they argued. After
all, MS can't force them to want to interoperate with Microsoft products: 


"Microsoft defended its progress, claiming that it was talking to almost 40
suppliers about licensing its technology. The progress from four to nine
licensees in three months shows a large effort on Microsoft's part, Desler
insisted.

"'We've taken some aggressive steps in terms of promoting this program and
in terms of educating the industry about it,' Desler added. 'We've more than
doubled the number of licensees we have in three months. This does show some
momentum, but this is still a work in progress.'" 
However, in the new status report, the DOJ finds after investigation that
this SCO license was taken in the context of developing a "broader
relationship" with Microsoft, citing MS's earlier paying SCO for a patent
and licensing rights. 

In other words, according to my reading, they are saying it hardly counts as
an example of companies thinking Microsoft's terms for licensing are
acceptable, because there was a deal here, whereby each helped the other,
not an example of a company just signing up because the licensing terms were
on their own merits desirable or at least acceptable to them. 

That explains, no doubt, why IBM has an interest in this license's terms and
asked to see it in connection with the law suit. It also means to me that it
is probably time to focus a bit more on this deal that was struck. What
patent did Microsoft sign up to use? What patent did SCO have at the time?
And what does Microsoft plan to use the patent for? It also frames
Microsoft's licensing program in the appropriate context, for me anyway. How
broad is this "broader relationship"?

The status report's final section is written by Microsoft, so we get to see
their reply to the concern. First, here is what the DOJ says about the SCO
signup: 


"Third, two companies — EMC and SCO — took their licenses in the context of
developing broader relationships with Microsoft. On May 19, 2003, SCO
provided Microsoft with a license covering SCO's UNIX technology, including
patent and source code licenses.(6) 

"(ftnt 6.) Press Release, SCO, SCO Announces UNIX Licensing Deal with
Microsoft (May 19, 2003) at
http://ir.sco.com/ReleaseDetail.cfm?ReleaseID=109360. Also, during the
October 24, 2003 Status Conference, the Court referred to SCO as being
"connected to the open source" Linux community. Transcript of Status
Conference at 6 (Oct. 24, 2003). SCO's relationship with that community has
become largely hostile. The SCO Group is currently seeking to enforce
intellectual property rights against users of Linux client and server
technology. Over the past six months, SCO has informed thousands of Linux
end users that certain Linux products may violate UNIX intellectual property
owned by SCO. Press Release, SCO, SCO Announces New Initiatives to Enforce
Intellectual Property Rights (Dec. 22, 2003) at
http://ir.sco.com/ReleaseDetail.cfm?ReleaseID=125089." 
Microsoft's reply section basically says, So what? Here's 'So what?' in
legalese: 


"Finally, the Plaintiffs have expressed concern that certain licensees, such
as EMC and SCO, have relationships with Microsoft that are broader than
their MCPP licenses. Microsoft has relationships with a wide variety of
firms in the PC ecosystem. Microsoft believes that it should be willing to
explore broader relationships with those prospective MCPP licensees who are
interested in such relationships. Such relationships will typically entail
additional technology sharing or product development arrangements, which
should be seen as beneficial. Microsoft's willingness to explore a broader
relationship does not reduce those firms' ability or incentives to use the
licensed protocols in furtherance of the remedial goals of the Final
Judgments." 
You may find it of interest to see that some complaints the Department of
Justice and the New York Attorney General Elliiot Spitzer have received were
ignored as being "nonsubstantive", meaning that in their view the complaints
were not properly framed as being about Microsoft's compliance with the
settlement. Others were taken seriously and are being investigated right now
or have been acted upon already. For example, there were complaints lodged
about not being able to remove Microsoft Messenger from XP, and Microsoft
eventually acted on the complaints like this: 


"Regarding the complaints concerning the inability for users to uninstall
Windows Messenger from Windows XP, Microsoft has provided instructions on
how to prevent Windows Messenger from running in Windows XP at the following
link: http://support.microsoft.com/?kbid=302089." 
The status report also tells us that one current investigation, based on
complaints received, has to do with non-assertion of patents: 


"With respect to the second issue concerning a non-assertion of patents
provision included in the uniform OEM license, Plaintiffs have received an
additional complaint and continue to gather information and analyze the
issues presented."
Evidently, specific complaints that related directly to the terms of the
final settlement were and are being investigated and acted on. The
settlement terms were the following: 


"Under the settlement, Microsoft:

-May not participate in exclusive deals that could hurt competitors.
-Must offer uniform contract terms for computer manufacturers.
-Must let manufacturers and customers remove icons from desktops for some
Microsoft features.
-Must release some technical information to rival software developers." 
Presumably, anything related to these four points would be substantive. The
Department of Justice's Microsoft page is here. On this page, it says that
communications to them about Microsoft's compliance can be addressed to: 


Renata B. Hesse 
Chief, Networks & Technology Section
Antitrust Division
U.S. Department of Justice
600 E Street, NW
Suite 9500
Washington, DC 20530
Their page for public comments is here. 

There is also a web site established for coordinated state enforcement of
federal court judgments against the Microsoft Corporation and they say: 


"If you believe Microsoft is violating either of the state final judgments,
you can file a complaint by submitting an on-line complaint or by mailing a
written complaint (along with supporting documentation, if available) to:

"Coordinated State Enforcement of Microsoft Antitrust Judgments
c/o California Office of the Attorney General
455 Golden Gate Avenue, Suite 11000
San Francisco, CA 94102"
The Final Judgment in the case, entered by United States District Judge
Colleen Kollar-Kotelly of the District of Columbia in November 2002,
mandated the creation of a three-person Technical Committee to assist in
both monitoring compliance with and enforcing the terms of the settlement.
They say complaints may be submitted via email to Complaints@TheTC.org. 

As you recall, Massachusetts is the sole holdout state refusing to approve
the settlement, and Massachusetts is still taking complaints as well,
although their web site doesn't make it simple to figure out how to file
one. Their interest is broader than the four settlement points, however.
Their attorney general says the licensing program is not working and he is
investigating anticompetitive behavior by Microsoft against rival browsers
and Adobe (see also here) and has been actively asking for input: 


"'If Microsoft is taking steps to hobble the competitive effectiveness of
these rival products and thereby supplant them, such serial killing of
competing technologies is a serious and troubling prospect,' wrote Thomas F.
Reilly, the attorney general in Massachusetts.

"Microsoft and the Justice Department were expected to describe sometime
later the company's efforts to abide by terms of the settlement. The company
declined to comment immediately on Massachusetts' claims.

"Reilly described unspecified reports as the source of these latest
allegations against Microsoft; the attorney general's office has actively
solicited complaints on its Web site about Microsoft's business conduct.

"Massachusetts also criticized a key element of the antitrust settlement as
ineffective. One of the most important provisions of the landmark settlement
compels Microsoft to permit competitors to license parts of its technology
to build products that seamlessly communicate with computers running Windows
software.

"Massachusetts said the program was feckless, arguing that the prices
Microsoft charges rivals were too high and that the company provides only
incomplete information to competitors." 
Here is their timeline of events: 


"November 1, 2002 Judge Kollar-Kotelly issues three separate orders: (1)
Approving DOJ's settlement with Microsoft, formalized in its proposed
Consent Judgment, subject to one amendment giving the court continuing
jurisdiction; (2) Approving the "settling states" consent judgment with
Microsoft, also subject to its continuing jurisdiction; and (3) Ordering a
remedy in the case pursued by the "non-settling states." That remedy,
imposed after the remedies trial, substantially tracks the DOJ settlement,
with some modifications. 

"November 29, 2002 Massachusetts announces it is appealing Judge
Kollar-Kotelly's order on remedies, seeking to have the D.C. Court of
Appeals review the trial court's order and to impose additional remedies
addressing Microsoft's past and future conduct." 
Back in May, in a press release, they listed what they saw as issues in the
settlement: 


"The court-ordered remedy issued last year in the Microsoft antitrust case
fails to restore competition, help consumers, or hold Microsoft accountable
for its unlawful actions, Attorney General Tom Reilly argued today in a
brief filed with the federal appeals court. . . . AG Reilly's appeal brief
addresses a variety of defects in the court-ordered remedy including: 

* Failure to require Microsoft to stop unlawfully commingling its software
code (for instance, inextricably interweaving the Internet Explorer browser
into the operating system so that it cannot be reasonably removed).

* Failure to stop Microsoft's proven illegal practice of deceiving software
developers about its products. The states had proposed a remedy that
required Microsoft to follow a 'truth in advertising' practice by
prohibiting it from misleading software developers about its support for
industry standards. According to the appellate brief filed today, Microsoft
founder Bill Gates admitted during remedy proceedings that Microsoft
routinely makes knowingly inaccurate claims regarding its compliance with
industry standards.

* Failure to address Microsoft's ill-gotten gains and the reality that it
controls the now-dominant browser and has successfully weakened its
competition, Java.

* Failure to properly protect new technologies, such as web services, from
future predatory actions on the part of Microsoft.

* Failure to place any effective disclosure requirements on Microsoft,
regarding how other companies' products can interoperate with Windows. 

"Assistant Attorney General Glenn Kaplan, Assistant Attorney General Sara
Hinchey and Assistant Attorney General Chris Barry-Smith of AG Reilly's
Office are overseeing the Microsoft appeal."
It's probably too late to file a complaint with the DOJ or NY State or
California and have it be considered at the upcoming hearing on January 23,
which is what the current status report was prepared for. But there is
another status report, presumably, in six months. The Massachusetts appeal
is a different issue. 

One other tidbit worth mentioning. The judge refused to allow an email from
a Microsoft exec to Bill Gates and others to be considered when the states
asked her to consider it, back before most of them settled, but only because
in her view it was too late for it to be considered. It's an interesting
email in our context, because in it, the executive complained to Gates et al
about Intel encouraging companies to use Linux and outlined steps he planned
to take to pay Intel back: 


"THE AUGUST 2000 e-mail from then Microsoft Vice President Joachim Kempin to
other top level officials, including Chairman Bill Gates, said that
chipmaker Intel was lobbying other computer makers 'who are not (Microsoft)
friendly in the first place and ... encouraging them to go to Linux.' Linux
is a free operating system that competes with Microsoft Windows. (MSNBC is a
joint venture between Microsoft and NBC.)

"During the initial six-week remedy hearing Judge Colleen Kollar-Kotelly
ruled that lawyers for the nine states pushing the court to impose tougher
sanctions on Microsoft couldn’t admit the Kempin e-mail while
cross-examining Gates. Kollar-Kotelly ruled the e-mail was outside the scope
of the initial antitrust trial for which the company was found to have
violated antitrust laws. . . . 

"In his e-mail to Gates, Kempin lays out a strategy for a unilateral strike
against Intel for having the audacity to suggest to computer makers that
Linux might be a choice for consumers. Kempin said he planned to 'stop any
go-to-market activities with Intel (and) only work with their competitors.' 

"Kempin also notes that he would 'try and restrict source code deliveries
where possible and be less gracious when interpreting agreements — again
without being obvious about it.'” 
It wouldn't be too late to present the email in any new trial, and
considering that the DOJ sees SCO and MS as having a relationship... well,
you get it. I'm wondering if Massachusetts might be interested in looking
into just how broad the "broader relationship" between the two companies is.
An investigation might lead to some solid answers. Is Massachusetts focused
on Microsoft's anti-Linux conduct and do they view Linux as a Microsoft
competitor? Presumably they do, but are they following the SCO story at all?
Does it fit into that context? I don't know, but judging from this email,
evidently it is not altogether irrational to look for deliberately
nonobvious moves by Microsoft against Linux.

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