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Team Battistelli and Team UPC Are Both Very Deep in Denial

Posted in Deception, Europe, Petitions at 7:40 pm by Dr. Roy Schestowitz

They still have a very long way to go

Five Stages of Grief by Elisabeth Kubler Ross & David Kessler
Reference: Five Stages of Grief by Elisabeth Kubler Ross & David Kessler

Summary: The perpetrators of a terrible patent system that permits patents on abstract ideas (which sometimes aren’t novel, either) and litigation as a priority refuse to let go of their dream — a distant, runaway fantasy which may soon cost over a thousand examiners their careers

Team Battistelli and Team UPC have a lot in common and they mutually benefit at the expense of the EPO. We have stressed this repeatedly over the years and there are many aspects to this symbiotic relationship.

Earlier today Team Battistelli said that “[p]atent applications at the EPO from UK companies and inventors continued to climb in 2017 (+2.4%),” but I told them that prices were lowered to ‘cheat’ for this supposed increase, which is still a decrease in revenue. They don’t like talking about that. For a number of months they hoped nobody would notice and point this out. Finances of the EPO are pretty opaque, but one can imagine what’s going on.

“Fourth Industrial Revolution technology patents [i.e. software patents at the EPO] are flourishing…”
      –World Economic Forum
Not only did the EPO lower the cost of applications (after observing decline in the number of applications); it also lowered the bar, welcoming for example software patents which are illegal in Europe. It just introduced some loopholes for that and wasted money promoting such loopholes in the media.

Earlier today the EPO retweeted this nonsense from WEF (World Economic Forum), which is based on something the EPO had paid the media for. “Fourth Industrial Revolution technology patents,” it said. “are flourishing…”

“Replace “patents in ICT” by “software patents”. And guess there are few software developers in the audience…”
      –Benjamin Henrion
This buzzword just means software patents, which are not legal in Europe. How do we know that this buzzword means software patents? IAM and Battistelli jointly said so earlier this year. “Fourth Industrial Revolution” (IR4) should just be read/interpreted as “software patents”; it’s a new (totally made up) term that’s being used in conjunction with older misleading terms like “CII”. Benjamin Henrion has also just taken note of “ICT” — a term that Grant Philpott likes to use alongside “Industry 4.0″ (they all mean the same thing). “Replace “patents in ICT” by “software patents”. And guess there are few software developers in the audience,” Henrion wrote today.

Then there are terms like “artificial intelligence”, which can be used for assessment of patents or for patents on software. We wrote about it many times so far this year (because the “AI” hype has been really strong in the past few months). Earlier today the EPO wrote: “We will discuss artificial intelligence and patent information searching at the East Meets West conference in Vienna…”

Carry on with buzzwords, EPO, but buzzwords won’t save you. The quality of patents is declining along with revenue (apparently). Courts aren’t easily fooled by buzzwords and don’t have 'production' pressures that compel them to decide within just hours.

“The quality of patents is declining along with revenue (apparently).”And on we move to Team UPC, which benefits from low-quality patents because these fuel more lawsuits (which is what they profit the most from). Thomas Adam (“UPCtracker”) wrote about CJEU in relation to UPC (4 days ago), foolishly believing (in spite lots of evidence to the contrary) that the Conservative Party will make exceptions just for UPC (which they never even speak about).

Then there’s “UPC blog” from Louise Amar, who went on about the selective data points from the likes of Bristows, choosing to create/embrace a sort of parallel reality wherein UPC is “almost there” and “inevitable”. In reality, or in this only universe, the UPC is dead. Team UPC (with blogs called “UPC blog” and accounts called “UPCtracker”) will sooner or later reach the “acceptance” phase. Deal with it and move on, Team UPC. Your Twitter accounts and blog names are now obsolete.

Amar wrote this:

Since the Brexit referendum the future of the UPC has been in jeopardy and, despite the optimistic schedules published by the UPC Preparatory Committee, its opening is still uncertain. Recently however, member states have taken encouraging steps. The UPC may thus soon become a reality.

No, it may not and the ‘evidence’ presented is delusional at best. As time goes by there is only growing evidence that the UPC will not happen. Nothing positive has happened since before Brexit. Nothing.

“As usual, especially when it comes to Team Battistelli and Team UPC, there’s an incredible difference between perception and reality. Maybe all of them — not just Battistelli — are perpetually drunk (not only on power).”Amar then proceeds to mumbling some incomprehensible mumbo-jumbo about SPC and Brexit. Brexit’s impact on patents is not profound because the UK remains in the EPO, but it will never participate in the UPC, which won’t materialise anyway.

As usual, especially when it comes to Team Battistelli and Team UPC, there’s an incredible difference between perception and reality. Maybe all of them — not just Battistelli — are perpetually drunk (not only on power).


Hypocrite in Chief: Benoît Battistelli Compares Staff Union to ‘Mafia’

Posted in Europe, Patents, Petitions at 8:46 am by Dr. Roy Schestowitz

"Nazis", "Snipers", “Mafia” and the name-calling strategy of Team Battistelli

Mafia man

Summary: The gloves come off as Battistelli resorts to name-calling and European patent attorneys increasingly defect to the side of protesters (staff of EPO), expressing dissatisfaction if not disgust at the EPO’s management

THERE is no denying that the EPO‘s management is extremely popular right now.

According to this new article, the Tony Soprano-like Battistelli says that SUEPO “is not a trade union [but] a mafia-type entity” (look who’s talking). In a recent poll, 96% of respondents expressed concern and almost half of the staff is brave enough to march against the management. We have heard estimates of over 800 EPO employees protesting in The Hague and over 2,000 in Munich last week. This new summary from Merpel gives similar figures and justifiably wonders what will happen next:

Three members of the EPO Staff Committees have been suspended, as Merpel reported here. In support of their suspended colleagues, further demonstrations have been taking place (Merpel reported the initial one here) – and now she hears that the further protest in the Hague on 1 December numbered around 600 EPO employees, while that in Munich on 4 December attracted over 2000. It is clear that the unrest within the EPO at various things, including the treatment of these officials, is widespread – these numbers are pretty much without precedent.


There seems to Merpel to be an unsustainable escalation in conflict at the EPO. This affects both the general employees, and also the Boards of Appeal, as Merpel reported here. There seems to be a somewhat raised level of political interest in member states now, but how long must Merpel keep writing that something must be done?

See a certain pattern in early comments. Trying to frame this as a general problem (affecting a lot of public bodies) is serving to distract from the EPO’s situation. I know this type of media strategy fairly well because Microsoft uses that too (trying to characterise other companies as ‘equally evil’).

To quote one comment from a British lawyer(from the comments section):

Does anyone have any ideas how we can prevail upon the AC to act – assuming, that is, that they’re not actively complicit in BB’s wrecking of the entire system?

As a GB-based attorney I can write to my national delegates on the AC, but it’s easy for them to ignore correspondence from a single person. If a substantial proportion of GB representatives were to write, individually, they’d hopefully find it harder to ignore. Similarly with attorneys in other countries, there is strength in numbers if we all write to our national delegates.

Are the relevant national professional associations taking any action? Has CIPA made any representations to the GB delegation? Has EPI made representations to any AC delegates? (I know both made submissions on the BoA reform proposals, which were largely ignored, but surely it is time for both CIPA and EPI, and their counterparts in other member states, to make a more general intervention directly to the AC members.)

If the largest EPO-using law firms and companies in each member state made official representations to the AC would these carry any more weight?

The IPKat is performing a great service in Kataloguing all of the perverse developments at the EPO but the time has come for us to speak up directly to those in power. While the complaints are being documented on a handful of blogs, the AC and the management can disregard these as being just some bloggers’ opinion. We can’t just sit on the sidelines and complain amongst ourselves, watching while the EPO management continues to ride roughshod over its employees – we users need to let the EPO know that we are concerned too, and that the opinion of the blogs is shared by many practitioners.

Who will coordinate such action?

As was hinted earlier today, we now consider setting up (or helping to set up) a petition, maybe organise some kind of action which can compel the abuses by EPO management to stop. Hitting them where it hurts, it might help to embargo or discourage further patent applications unless or until some ultimatum is met (e.g. allowing external auditors and an independent investigation to take place at the Office). It may be the only remaining way to resolve this AC-Team Battistelli deadlock.


Sign the New White House Petition Against Software Patents

Posted in Action, Antitrust, Patents, Petitions at 3:19 am by Guest Editorial Team

The Obama administration issued a feeble response to a previous petition against software patents signed by more than 14,000 people. Please sign the new one which requires more than 20,000 signatures to merit a response.

Pursue Software Patent Abolition.
We hold the belief that software patents, in nature and practice, hinder true innovation and grant unjust monopolies.

The Obama Administration’s response to a previous petition shamefully attempted to absolve the President of responsibility and placate us with the toothless America Invents Act. We summarily reject his response and demand immediate action.

Rapid growth in the software industry during economic malaise demonstrates the importance and power of this market. The President must use his full power and influence to fight harmful forces from entrenched incumbents and non-producing entities.

There are no possible reforms to be made to the USPTO that will enable it to keep pace with innovation in the software industry. Those who truly understand software are creating it.


HP Acquires Firm Hostile Towards Free Software, a Microsoft Ally

Posted in Free/Libre Software, FUD, HP, Microsoft, Petitions, Security at 10:17 am by Dr. Roy Schestowitz

Summary: New article about software patents reveals that HP, under new leadership, has quietly bought a group of Microsoft allies (Fortify)

Following Hurd’s departure [1, 2, 3, 4] a former Microsoft ally was made the CEO of HP [1, 2, 3, 4] and this is important because of HP’s leading position in the desktops/servers market, not to mention all of its patents. “Every time a software patent is registered, an angel is bludgeoned to death with a shoe,” wrote “MrAlanCooper” to a former Microsoft employee. Yesterday we noticed this article about software patents in security, in which it’s mentioned that Fortify has just been acquired by HP. It’s important because Fortify too is a Microsoft ally, as we noted in [1, 2, 3, 4, 5]. The article says:

Can you patent the obvious? Apparently when it comes to software security, maybe you can. Gary McGraw explains how another party may get a patent on a technique he had a hand in inventing.

The notion of software patents is extremely controversial. The basic idea is simple and mirrors “regular” patents. An inventor invents something and files a number of claims about the invention. The Patent Office reviews the filing and determines whether to grant a patent for the invention. Holding a patent guarantees the inventor some rights to enjoy the fruits of the invention for a fixed period of time. Not so bad if you invent the next great inside-the-peel Tomato twaddler, but a bit harder to understand in the software space.

Can you patent the obvious? Apparently when it comes to software security, maybe you can.


On to patent land. Apparently the security testing firm Cenzic believes that they deserve a patent for software fault injection. In February 2007 (a decade after our book was published) Cenzic was awarded patent number 7185232 for “fault injection methods and apparatus.” The basic claims in the patent involve injecting some faulty input into a web program (thing one) and watching for error responses (thing two). Very nice. Or maybe not. A grass roots effort to collect prior art and dispute the patent is being spearheaded on the net byEnrique A. Sanchez Montellano.

As an inventor of security technology, I am not completely opposed to the idea of software patents. In fact, we hold eight patents in various aspects of software security at Cigital (some of which are likely to be infringed upon). We like the idea of licensing our ideas and our prototypes to others. In fact, that’s exactly what happened with Fortify which was recently acquired by HP. We licensed our code scanning ideas and prototypes to Kleiner-Perkins who went on to found Fortify, build a real commercial product, and sell the heck out of it. So the notion of protecting our ideas with patents is not foreign to us.

A lot could be said about the article’s attitude w.r.t. software patents, but the news that we missed about Fortify may be important in the future. Fortify attacks Free software quite routinely, so it’s unclear why HP would want this culture to become ‘in-house’. Incidentally, considering that Hurd was fired after Microsoft had pointed out that his work on a homebrew Linux-based operating system was a major threat (c/f SEC filing), one ought to watch carefully what Apotheker does at HP. Microsoft also named Intel’s work on MeeGo as a major threat (alongside HP) and we all know what Microsoft did to Nokia [1, 2, 3, 4], harming MeeGo a great deal using entryism (a manager from BT privately told us by mail that it was probably illegal, he called it “100% corrupt”). Yesterday we wrote about the contractual obligations of Micromoles. Watch out, HP.

Microsoft way


Call for Action: Support the GIMP

Posted in Free/Libre Software, GNOME, GNU/Linux, Petitions, Ubuntu at 6:46 am by Dr. Roy Schestowitz

Direct link

Summary: Please sign the Bring Out The GIMP petition

IN order to avoid further Mono dependencies in Ubuntu, readers are kindly urged to sign this new petition, titled “Bring Out The GIMP”. Please spread the word so as to get as many signatures as possible.

Related posts:


Please Sign Petition to Protest Amazon’s Remote Deletion of 1984 and Animal Farm

Posted in Action, DRM, FSF, Petitions at 1:55 pm by Dr. Roy Schestowitz


SARAH from the Free Software Foundation has called for people to express their dissatisfaction with far-reaching DRM in Amazon’s Kindle. “We have over 1400 signatures already,” she emphasises, “and signers include Lawrence Lessig, Clay Shirky, Cory Doctorow and other notable authors, librarians, and scholars.”

If you know other people who may wish to support the cause, please pass this around as it will be used to persuade Amazon to reverse, not just apologise, and it may also serve as a future lesson to other companies that attempt the same predatory action.

George Orwell

Don’t let Amazon ‘pull an Orwell’ on Orwell

Related post:


Microsoft Tells Antitrust Regulators to Sod Off For Another Couple of Weeks

Posted in Antitrust, Europe, GNU/Linux, Microsoft, Patents, Petitions at 6:40 pm by Dr. Roy Schestowitz

Assassins and mercenaries

Summary: Microsoft delays EU response even further while ECIS lays charges against Microsoft

Yesterday we wrote about ECIS's strike against Microsoft and today it turns out that Microsoft keeps procrastinating while its existing products remain anti-competitive by design.

EU antitrust regulators have granted Microsoft yet another extension to respond to charges that the software giant abused its dominant market position by bundling Internet Explorer with Windows.

A European Commission spokeswoman confirmed to The Register this morning that Microsoft has been given a one-week extension. The company now has until 28 April to respond.

Someone has sent us a new document about Microsoft’s crimes. Yes, found within the PDF in a recent complaint is one link to this other EU document [PDF]. It is reminiscent of the Comes petition, but it’s more recent and a lot shorter. It is titled “Microsoft: A History of Anticompetitive Behavior and Consumer Harm” and it comes from ECIS. It happens to speak very concisely about Microsoft’s version of “reasonable and non-discriminatory” (really meaning “predatory and anti-competitive”).

To use an excerpt that contains references to GNU/Linux in particular, here is a new message from HPT in USENET (quoted text is unifont):

Table of contents of this document is a further indictment against the monopoly regarding its anti-competitive practises against competition.


A History of Anticompetitive Behavior and Consumer Harm

March 31, 2009

I. INTRODUCTION .............................................1
A. Microsoft’s Campaign To Destroy DR-DOS ...................3
B. Microsoft’s Anticompetitive Per Processor License Fees ...5
C. Microsoft’s Retaliation And Price Discrimination Against IBM
D. Microsoft’s Organized Collective Boycott Against Intel ...7
E. Microsoft’s Elimination Of Word Perfect ..................7
F. Microsoft’s Deceptive WISE Software Program ..............9
G. Microsoft’s Elimination Of Netscape .....................10
H. Microsoft’s Attempts To Extinguish Java .................14
I. Microsoft’s Elimination Of Rival Media Players ..........16
J. Microsoft’s Campaign Against Rival Server Operating Systems
A. Microsoft’s Failure To Comply With The Final Judgment ...20
B. Microsoft’s Campaign of Patent FUD against Linux and Open
Source Software.............................................23
C. Microsoft’s Ongoing Misconduct Has Sparked Further European
Commission Investigations ..................................23
A. Microsoft’s Operating System Monopoly Has Harmed Consumers
B. Microsoft’s Office Monopoly Has Harmed Consumers ........26
C. Microsoft’s Web Browser Monopoly Has Harmed Consumers ...28
VI. CONCLUSION .............................................31

Section III.B discusses FUD against Linux:

B. Microsoft’s Campaign of Patent FUD against Linux and Open
Source Software

    “This is not a case of some accidental, unknowing
infringement. There is an overwhelming number of patents being

    — Microsoft General Counsel and Intellectual Property and
Licensing Vice President Horacio Gutierrez [128]

Here is an indicting observation about the anti-competitive practises through unsubstantiated patent violations in Linux:

The open source Linux operating system is the principal rival to
Microsoft Windows. Linux has been taken up by both corporate
customers and, increasingly, by private individuals for home use
(e.g., with netbooks). In a recent interview with CNET, Steve
Ballmer identified Linux as one of the top two competitive
threats to Microsoft in the enterprise segment. [129]

Consistent with its behavior in response to other competitive
threats, Microsoft has used unfair and anti-competitive tactics
to try and slow the uptake of Linux. In particular, Microsoft
has made and continues to make broad, unsubstantiated claims that
software developers distributing Linux or other open source
software, as well as their customers, are infringing
Microsoft’s patents. [130] However, although Microsoft has
claimed that as many as 235 patents may have been infringed
[131], it has consistently failed to identify which patents are
at issue.

It warns of possible future legal action by Microsoft, as a part of its FUD campaign against Linux and Open Source to kill Linux, requirement for additional licensing for “immunity”.  According to this next paragraph, licensing fees have a certain ring of action for protection similar to action by organised crime:

Microsoft’s tactic is to spread fear, uncertainty and doubt
(“FUD”) as to whether developers and users of open source
software may be the target of future patent infringement
suits, and thereby chill consumer enthusiasm and demand for Linux
and open source solutions.

Indeed, Microsoft’s unwarranted threats have brought such
pressure to bear on Linux users that some have felt compelled to
enter into royalty-bearing patent licenses with Microsoft. [132]
Microsoft’s campaign of FUD effectively works to impose a “tax”
on the use of the most viable alternative software to Windows:
faced with an intimidating and powerful potential litigant known
for its hardball tactics, Linux users are driven to pay the
licensing fee despite the speculative nature of the IP claims.
Microsoft’s bullying tactics therefore raise the overall cost
and slow down market penetration by innovative technologies
intended to compete with Microsoft’s monopoly products.

Interesting is the comment about the US Law in regard to software patentability.

Moreover, there is a strong likelihood that Microsoft’s patent
FUD campaign may be unfounded in law. Recent U.S. jurisprudence
clarifies that the scope for patenting business methods, which
lie at the heart of many software patents, is much narrower than
was previously thought to be the case. [133] In addition, one of
the thresholds for patentability – that an invention is not
obvious to a person skilled in the art – has recently become
harder to meet. [134] As such, many of the patents held by
Microsoft are likely to be of questionable validity today.

According to this next paragraph, patents are a methodology to deter competition.

Furthermore, given the myriad of software patents in existence,
consumers may often be unable to determine with certainty whether
their use or distribution of certain software products actually
infringes another company’s IP rights. Therefore, contrary to the
broad and categorical statements of Mr. Gutierrez as to the
intentional nature of any alleged patent infringements, it is
widely recognized in the industry that, regardless of whether
proprietary or open source software is used, there is a high
likelihood that patent infringements will have been committed
inadvertently. Microsoft has sought to exploit the current
absence of clarity in patent law in order to deter consumers from
taking up offerings competing with Microsoft’s own products.

Below mentions Microsoft suing TomTom regarding Microsoft’s questionable patents.

In an apparent escalation of its patent FUD strategy, Microsoft
sued the navigational system vendor, TomTom, for patent
infringement at the end of February 2009. Three patent claims
related to Linux are included in the lawsuit. [135] At least two
of them are related to highly questionable patents on long file
name support in Windows, which have been partially invalidated by
an EC patent court on the grounds that Microsoft’s patent claims
were “not based on inventive activity”. [136] While Microsoft has
publicly claimed that its action is not directed against Linux or
open source, and the case was settled in March 2009 pursuant to a
mostly confidential agreement, this represents an aggressive
development of Microsoft’s use of spurious or highly questionable
patent claims to intimidate and eliminate competition from Linux
in order to maintain or strengthen its dominant position in the
OS market.

The full document is a compelling, fascinating read.


Studying Exclusionary Deals with OEMs

Posted in America, Antitrust, Courtroom, Deals, Dell, GNU/Linux, Microsoft, Novell, Petitions, Red Hat, Windows at 8:04 pm by Dr. Roy Schestowitz

Concrete proof shows how Linux was
excluded, just like today’s ‘non-taxable’ Linux

Yesterday we wondered whether Microsoft’s exclusionary deal with OEMs are similar to exclusionary Linux deals. Particularly, we wondered if these are similar to exclusionary contracts with government departments. What remains clear is that there is a pattern here. In order to understand this pattern better, let’s delve into concrete evidence and explore the past.

Here is Microsoft’s old contract with Compaq [PDF]. It reached the light during the Comes vs Microsoft case in Iowa.




a Washington Corporation


a Delaware Corporation

You can dissect the nature of the deal for yourself (OCRing is not hard, but plenty of editing must follow because of the poor quality of the scan). Mind the following bit in page 22. It’s just one outstanding example among many others.

The following provisions shall apply to all Products listed in this Exhibit C:

(1) Preinstallation

the above royalties require that COMPAQ distribute the Products preinstalled on all customer systems.

See the use of the words “all customer systems”? This is very similar to the issues which were raised and discussed yesterday.

Dell is another nice example. Here is their out-of-date contract with Microsoft [PDF].


#2811-7060 dated march 1, 1997

There is a lot to be found there as well. Web browser discrimination and a Microsoft-centric programs set are some of the recurring patterns in these contracts. There are many more such contracts which were intended to remain secret at the time of signing, just like Microsoft's deal with BECTA and the deal with Novell, among other deals. In Linspire’s case, very little was revealed because it is a privately-held company.

Dell’s affair with Linux and Microsoft brings up a lot of ‘smoking guns’. Examples include this story about Dell’s Linux business in China.

Dell’s love affair with Linux is a clandestine affair these days, conducted in secret, away from disapproving eyes. But now the pair have been spotted in China.

When Michael Dell first saw the web-footed beauty, he fell head over heels. Six years ago Dell pledged a series of strategic investments in Linux companies, including Eazel and Red Hat. The romance attracted the disapproval of Microsoft however, and barely lasted weeks. Very quietly, Dell dumped the bird.

It later emerged that Microsoft’s OEM enforcer Joachim Kempin had promised Steve Ballmer that he’d be putting the screws on PC builders, or “hitting the OEMs harder” in his words.

Here is another disturbing example.

The States’ remedy hearing opened in DC yesterday, and States attorney Steven Kuney produced a devastating memo from Kempin, then in charge of Microsoft’s OEM business, written after Judge Jackson had ordered his break-up of the company. Kempin raises the possibility of threatening Dell and other PC builders which promote Linux.

“I’m thinking of hitting the OEMs harder than in the past with anti-Linux. … they should do a delicate dance,” Kempin wrote to Ballmer, in what is sure to be a memorable addition to the phrases (“knife the baby”, “cut off the air supply”) with which Microsoft enriched the English language in the first trial. Unlike those two, this is not contested.


Earlier memos described that it was “untenable” that a key Microsoft partner was promoting Linux. Kuney revealed that Dell disbanded its Linux business unit in early 2001. Dell quietly pulled Linux from its desktop PCs in the summer of 2001, IDG’s Ashlee Vance discovered subsequently, six months after we heard Michael Dell declare his love of Linux on the desktop the previous winter.

Compaq was also mentioned in other memos, with Microsoft taking the line that OEMs should “meet demand but not help create demand” for Linux.

There are several more I am aware of, some of which involve Dell. To move further, however, let’s take a more ‘holistic’ view on this problem. kuro5hin.org has a good article on this issue as a whole.

They are, in short the secret to Microsoft’s success. And the word secret is to be taken quite literally: No OEM may talk about the contents of his contract, or he will lose his license, and (assumption) likely be sued for breach of contract as well.

You may then also consider the Iowa Petition [PDF]. It shows how Microsoft essentially blocked its competitors (Linux in this case) from reaching the sales channel.

Microsoft’s Predatory Response to GNU/Linux

142. GNU/Linux is an “open source” operating system that runs on Intel-compatible PCs. Microsoft has targeted the competing operating system by pressuring Intel, as well as various major OEMs such as Dell and Compaq, to boycott Linux. In late 2000, for instance, Microsoft executive Joachim Kempin described his plan of retaliation and coercion to shut down competition from Linux: “I am thinking of hitting the OEM harder than in the past with anti- Linux actions” and will “further try to restrict source code deliveries where possible and be less gracious when interpreting agreements – again without being obvious about it,” continuing “this will be a delicate dance.”

143. LindowsOS (now known as Linspire), which is developed and marketed by Lindows.com, Inc., is an Intel-compatible PC operating system based on Linux and which competes directly with Microsoft on the. PC desktop. On information and belief, Microsoft interfered with Lindows.com, Inc.’s ability to distribute its product through the OEM channel. Microsoft also initiated a lawsuit against Lindows.com, Inc. that adversely affected Lindows.com, Inc.’s ability to exist, obtain; funding and conduct business. Microsoft’s Anticompetitive Agreements With OEMs To Foreclose Competition

144. Microsoft Chairman and former CEO, Bill Gates, reportedly summarized the effects of the DOJ’s 1995 consent decree–which banned “per processor” licenses, among other exclusionary licensing terms mas “nothing.” Microsoft was able to devise other restrictive OEM agreements to foreclose competition in th…

145. A “per system” license was the practical equivalent of the “per processor” license. Under the “per system” license, the OEM had to pay royalties to Microsoft for every computer of a particular “model” or “system” that it shipped–again, as with the “per processor” contracts, regardless of whether the PC contained Microsoft’s operating system. Microsoft defined “system” and “model” so broadly in its contracts that virtually all of an OEM’s production was subject to Microsoft’s “double tax” if the OEM wanted to give the consumer a choice of operating systems. Microsoft did not agree to give up its “per system” licenses in the 1995 consent decree, even though the Department of Justice warned the federal district court that “per system licenses, if not properly fencet in, could be used by Microsoft to accomplish anticompetitive ends similar to ‘per processor’ licenses”–and in fact were.

146. Another way that Microsoft found to circumvent the federal court’s 1995 injunction forbidding its use of “minimum commitment/per processor” licenses was what Microsoft calls its “Market Development Agreements” (“MDAs”). Microsoft contrived the MDA as a device to evade the Court’s decree prohibiting Microsoft from requiring OEMs to adhere to “minimum commitments.” As Steve Ballmer (Microsoft’s current CEO) acknowledged: “We have always given better prices to customers who work with us to make the market. Those used to take the form of commits [i.e., minimum commitments] which we do not do anymore as a result of the [federal court's] decree but we still believe in rewarding people who help us create demand. Hence the iMDA.” Under the MDAs, Microsoft granted large discriminatory price concessions to those OEMs that would agree to market and promote Microsoft’s Windows to the exclusion of any rival operating system. These discounts were calibrated so as to force the OEM to sell most of its computers with a Microsoft operating system in order to obtain the lowest price.

147. Because the OEM market is so competitive and profit margins are so thin, every OEM had to get the lowest price it could from Microsoft in order to survive. In March 2002, a Gateway marketing executive (Anthony Fama) testified before Judge Kollar-Kotelly in State of New York et al. v. Microsoft, Case No. 98-1233 (CKK), about how Microsoft used its MDA program in order to force OEMs to market Microsoft’s operating system exclusively: “Given the substantial nature of these discounts, participation in the MDA, as a practical matter, is not optional. In other words, not receiving :these discounts would put Gateway at a substantial competitive disadvantage, and Gateway has communicated that self-evident proposition to Microsoft.” Microsoft also used its MDAs to lock OEMs in and competitors out by offering a discriminatory price to the OEM in a later year provided (a) the OEM reached Microsoft’s imposed goal of Windows sales over competitive sales in the prior year and (b) renewed its exclusionary contract with Microsoft for the later year. This placed the OEM on a perpetual treadmill, eliminating competition indefinitely. Microsoft continued these exclusionary terms at least past April 2002.

148. One method for encouraging competition in the operating systems market would have been the sale by OEMs of “naked machines” (i.e., computers that are sold without a predetermined suite of software forced upon the consumer). “Naked machines” would allow consumers to choose their computer’s software configuration from an array of competitive software products, either for preinstallation by the OEM or installation by the end user.
Microsoft sought and obtained the agreement of the OEMs to refrain from selling “naked machines.” Instead, OEMs universally agree to “bundle” Microsoft applications and operating systems with their computer hardware, effectively depriving consumers of any competitive choices. These restrictive agreements exited before 2000 but, in 2000, Microsoft ratcheted the restriction up so that OEMs are forced to forfeit all discounts otherwise earned if they ship any “naked machines” to consumers. This heightened restriction, which (on information and belief) continues to the present, prohibits PC users and PC retailers from buying and installing lower priced or better quality operating systems of their choice.

Articles were written at the time to cover some of the issues raised by the lawyers in Iowa. Here is one such article. (the page has expired since I grabbed a copy)

A judge on Friday told jurors they must accept as fact that a federal court found in 1999 that Microsoft holds a monopoly over computer operating systems and that it restricted computer manufacturers’ ability to use competing systems.


She said she’ll show that the company used its monopoly power to exclude competition and control prices and that it conspired with other companies to restrain trade, maintaining what she called a chokehold on software competitors and computer manufacturers.

“It isn’t illegal to be successful,” Conlin said in opening remarks. “We applaud that. … But you can’t freeze out competitors and punish and retaliate against people who cooperate with competitors. Microsoft did all that and more.”

Conlin warned jurors that she would say some unflattering things about Microsoft and its billionaire founder Bill Gates, who serves as company chairman.


Conlin’s first 3 1/2 hours of opening arguments delved deeply into computer industry history and how Microsoft fought off competitors attempting to design rival software.

Here is another decent bit of coverage.

Going back now to as early as 1998, Microsoft starts to realize that Linux might pose a possible threat, and Vinod Valloppillil, who is a program manager at Microsoft, is asked by Mr. Allchin, Jim Allchin, to analyze potential strategies for combatting open-source software, and specifically Linux. His memos are leaked to the press in April — I beg your pardon — in October of 1998 and become known as the Halloween documents. And the evidence will be that Microsoft uses its influence in the OEM channel, the computer manufacture channel, to make sure that end users have a difficult time buying PCs with Linux preinstalled.

Some apologists might get off their seats and argue, “it’s all in the past and Microsoft has changed since.” Well, not so fast! The same tricks have not reached and end and they may never cease. Consider Windows Vista.

PC Manufacturer Acer is complaining that Microsoft has jacked up the price of Vista, and that the basic versions are so basic no one will ship them. Since the collapse of the Microsoft Anti-trust Case under the Bush Administration in 2001, manufacturers have no choice but to accede, adding hundreds of dollars to the cost of each PC. With Gates now proclaiming victory over European Regulators, Microsoft once again seems unstoppable. But Microsoft had drawn itself close to the Republican Party. With the Republicans now evicted from the House and Senate, is it time to look at the Microsoft Anti-trust Suit? Could Microsoft be compelled to lower its inflating Vista prices, or to open their tech or even supply funding to Linux-flavored Windows such as Wine?

This bit from Slashdot presented an interesting perspective that shows the effect of having a monopoly. It is still being maintained using an iron fist. Even Novell admitted the problem last year, but it became a Microsoft ‘partner’ shortly afterwards, regardless of the severe consequences.

Microsoft Corp is using scare tactics to exert pressure on PC vendors not to explore the potential of desktop Linux, according to Novell Inc president and COO, Ron Hovsepian

The references provided in this article have hopefully shown that the nature of Microsoft deals, contracts, and negotiations are exclusionary and discriminatory by nature and by design. This is something to bear in mind in the future. This blog post may therefore be worth cross-referencing later on, if only to be considered as compelling evidence of a key contention.

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