By Declan McCullagh and Stephen
June 26, 2003
A federal appeals court dealt a legal setback to Sun Microsystems on Thursday, tossing out most of a preliminary injunction requiring Microsoft to carry its rival's version of an interpreter for the Java programming language.
But the 4th Circuit Court of Appeals in Richmond, Va., upheld a requirement that Microsoft cease distributing certain copies of its own Java Virtual Machine (JVM), saying that the company "exceeded the scope" of a January 2001 license agreement with Sun. The three-judge panel said the agreement only gives the company the right to include its own Java VM in Windows--not to offer it separately through computer makers or through Windows Update, which Microsoft stopped doing in February.
The panel devoted the bulk of its 28-page opinion to assailing other portions of the broad and far-reaching injunction imposed on Microsoft by a district court earlier this year. In explaining the need for the injunction, U.S. District Judge J. Frederick Motz concluded there was a "serious risk" that the market could tip away from Java and toward Microsoft's .Net.
"We conclude that the district court's findings are insufficient to support its conclusion that immediate irreparable harm will be sustained if the mandatory preliminary injunction is not entered, and accordingly that injunction must be vacated," the panel said Thursday. The case now returns to Motz for further proceedings and, unless a settlement takes place, an eventual trial.
Both companies said they welcomed Thursday's decision.
"We're pleased with today's ruling," Microsoft spokesman Jim Desler said. "It's a positive step."
Sun won its first request--that Microsoft stop distributing its own Java VM as a standalone version--but, so far, has been rebuffed on the second--that Microsoft be compelled to carry Sun's Java software.
"We are extremely pleased with the appellate court's ruling today affirming the copyright infringement injunction," Lee Patch, Sun's vice president for legal affairs, said in a statement. "This decision confirms that Microsoft violated our prior settlement agreement and that it did so in a way that continued to fragment the Java platform on PCs."
Under that settlement, Microsoft was permitted to distribute its version of Java in Windows 2000, a version that was based on the source code in version 1.1.4 of Sun's Java Developer Kit. Sun argued that the settlement's license agreement terms, which covered use of Sun's copyrighted software, permitted Microsoft to distribute Java only with the operating system; not as an update downloaded over the Web. Motz agreed with Sun's position, and the appellate court upheld the view.
Keeping up with the times
Version 1.1.4 of Java, which dates back to 1997, was already out-of-date in 2001. Sun believed at the time of the settlement that it was better for Microsoft to ship an aging version than none at all.
Under the terms of the agreement, Sun granted Microsoft a right to distribute Java in existing products through Jan. 2, 2008, and a right to modify Microsoft's Java software to fix critical bugs or security holes through Jan. 2, 2004.
But in its lawsuit filed last year, Sun claimed that Microsoft was distributing "an obsolete implementation, ensuring that important advances" in Java technology were unavailable to users. It asked the courts to order Microsoft to ship Sun's "current, compatible implementation."
Patch said he was "disappointed" that the appeals court rejected the must-carry requirement.
Legal experts had been skeptical that the 4th Circuit would uphold the "must-carry" portion of the injunction, and the three-judge panel on Thursday said that any such injunction would have required a court to guess about the future direction of the software industry. It noted that even Sun's own expert witness could not be sure whether the market would tip from Java to .Net. It also said Sun had not successfully argued that Microsoft had attempted to monopolize the "emerging market for middleware" in violation of the Sherman Act.
"The mandatory preliminary injunction aimed at preventing 'distortion' in the new emerging market for middleware has not been linked, in fact or by any established legal theory, to the final relief that Sun seeks in its claim that Microsoft has illegally maintained its monopoly in the market for worldwide licensing of Intel-compatible PC operating systems," the panel concluded. "And for this reason also, the mandatory preliminary injunction must be vacated."
Sun claimed that Microsoft's .Net platform could turn the PC market away from Java--in violation of antitrust laws--because the company could use its monopoly power to "secure a unique advantage for itself" through its distribution channels. Microsoft responded in court documents by saying .Net is not part of the default version of Windows XP and would not become one until the next version of its operating system, scheduled for release in late 2004.
Also, Microsoft argued, Sun could choose to pay a modest fee to convince PC makers to distribute Java without bundling it in Windows. Microsoft pointed to other methods that companies have used to distribute software, noting that Apple Computer has delivered more than 125 million copies of its QuickTime software and that RealNetworks has reached 285 million PC users with its media player.
In recent months, Sun finally began to succeed in its yearslong effort to bypass Microsoft as a distributor of Java by getting PC makers to include Java with their products. Earlier in June, the top two PC makers--Dell Computer and Hewlett-Packard--signed deals to bundle Java on their desktop and laptop computers.
Dell and HP both said they made the move because they needed to ensure that customers wouldn't have any difficulties browsing Web sites that use Java.
Sun Chief Executive Scott McNealy said the HP and Dell deals have started "a very interesting domino effect," leading other PC manufacturers to consider a similar inclusion of Java.
In December, Motz concluded that Sun stood a good chance of winning its antitrust lawsuit against Microsoft and told both sides to craft a preliminary injunction, which he approved on Jan. 21.
In his 11-page order, Motz gave Sun what it requested when it filed the lawsuit: an injunction ordering Microsoft immediately to stop distributing incompatible versions of Sun's Java interpreter and to begin shipping authorized versions with Windows and Internet Explorer in four months.
Microsoft immediately appealed Motz's decision to the 4th Circuit, calling it "extreme and unprecedented" and accusing Sun of violating a California law that prohibits unfair competition. On Feb. 4, a three-judge panel of the appeals court put Motz's injunction on hold until the panel could hear oral arguments--which took place on April 3--and reach its own decision.
Sun's case builds on a previous legal assault on its rival, which began in October 1997 and alleged that Microsoft violated its license agreement by distributing incompatible versions of Java and deceptively promoting those versions as compatible. The two companies settled in January 2001, with Microsoft agreeing to pay Sun $20 million and inking a contract that governed how Microsoft could distribute Java.
The Java language lets programs run without alterations on a variety of computers. Because a Java program can run, for instance, on a mainframe from IBM, a Unix server from Sun or a Windows PC from Dell Computer, it represents a possible threat to Microsoft's dominant Windows operating system.
In an internal e-mail dated September 1996, Microsoft Chairman Bill Gates wrote that the Java platform "scares the hell out of me," because it's "still very unclear to me what our OS will offer to Java client applications code that will make them unique enough to preserve our market position."
In the current lawsuit, Sun argues that Microsoft is now trying to supplement--or even replace--its Windows monopoly by encouraging developers to write code for the .Net platform instead of for Java. In addition, Sun says, "Microsoft has refused to port (its popular) Office (software) to competing platforms in order to illegally maintain its monopoly" and force consumers to purchase products such as Microsoft's Exchange Server, Internet Information Server and SQL Server.
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