COOLEY GODWARD LLP
LLOYD R. DAY, JR. (90875)
JANET L. CULLUM (104336)
JAMES R. BATCHELDER (136347)
JAMES DONATO (146140)
DAVID J. ESTRADA (168105)
Five Palo Alto Square
3000 El Camino Real
Palo Alto, CA 94306-2155
Telephone: (650) 843-5000
Attorneys for Plaintiff
SUN MICROSYSTEMS, INC.
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
SAN JOSE DIVISION
SUN MICROSYSTEMS, INC., No. C 97-20884 RMW (PVT) ENE
a Delaware corporation,
SUN MICROSYSTEMS, INC.'S CORRECTED
Plaintiff, MEMORANDUM IN SUPPORT OF ITS
MOTION FOR PRELIMINARY INJUNCTION
v. FOR UNFAIR COMPETITION UNDER CAL.
BUS. & PROF.CODE sect. 17200 et seq.
MICROSOFT CORPORATION,
a Washington corporation, Date: July 31, 1998
Time: 9:00 a.m.
Defendant. Judge: Hon. Ronald M. Whyte
Crtrm: 6
Refiled Pursuant to
10/21/98 Order of the Court
TABLE OF CONTENTS
Page
I. INTRODUCTION 1
II. THE MARKET IN WHICH SUN AND MICROSOFT COMPETE 3
III. SUN'S JAVA TECHNOLOGY 4
IV. MICROSOFT'S RESPONSE TO SUN'S JAVA TECHNOLOGY 6
V. MICROSOFT'S UNLAWFUL CAMPAIGN TO FRAGMENT AND HIJACK THE JAVA 8
ENVIRONMENT
A. Microsoft's Three-Part Scheme. 10
B. Step 1: Fragment the JAVA Environment. 12
1. Microsoft's Original Effort To Fragment and Appropriate 13
Sun's JAVA Technology
2. Microsoft's Latest Efforts to Fragment and Appropriate 14
the JAVA Technology.
C. Step 2: Induce Developers To Create Microsoft-Dependent 18
Applications.
D. Step 3: Exploit Windows Monopoly To Grab Market Share. 20
VI. THE IRREPARABLE HARM TO SUN AND OTHERS 21
VII. ARGUMENT 23
A. A Few Well-Established Principles Of Unfair Competition Law 23
Mandate An Injunction Against Microsoft
B. Microsoft Seeks To Destroy The Value Of Sun's JAVA 25
Technology
TABLE OF AUTHORITIES
CASES Page
Allied Grape Growers v. Bronco Wine Co., 24
203 Cal. App. 3d 432, 452 (1988)
Barquis v. Merchants Collection Ass'n, 23
7 Cal. 3d 94, 112 (1972)
Committee on Children`s Television, Inc. v. General Foods Corp., 23
35 Cal. 3d 197, 209-10 (1983)
Hewlett v. Squaw Valley Ski Corp., 24
54 Cal. App. 4th 499, 540 (1997)
Locke v. Warner Bros., Inc., 25
57 Cal. App. 4th 354, 363 (1997)
People v. Cappuccio, Inc., 24
204 Cal. App. 3d 750, 760 (1988)
Podolsky v. First Healthcare Corp., 24
50 Cal. App. 4th 632, 648 (1996)
Saunders v. Superior Court, 24
27 Cal. App. 4th 832, 839 (1994)
State Farm Fire & Casualty Co. v. Superior Court, 23
45 Cal. App. 4th 1093, 1103 (1996)
Sunbelt Television, Inc. v. Jones Intercable, Inc., 24
795 F.Supp. 333, 338 (C.D. Cal. 1992)
Sutherland v. Barclays American/Mortgage Corp., 25
53 Cal. App. 4th 299, 314 (1997)
Tippet v. Terich, 23
37 Cal. App. 4th 1517, 1536 (1995)
United States Surgical Corp. v. Origin Medsystems, Inc., 23
27 U.S.P.Q.2d 1526 (N.D. Cal. 1993), 1993 WL 379579 at *1.
"Strategic Objective
"Kill cross-platform Java by grow[ing] the polluted Java market"
--Microsoft Pricing Proposal for VJ++ 6.01
I. INTRODUCTION
Microsoft is exploiting its unrivalled monopoly power in desktop
operating systems in an effort to wrest control of Sun's JAVA(TM) technology
from Sun by flooding the market with products that effectively transform
Sun's standard JAVA environment into an incompatible Microsoft-dependent
environment.
This Court has already determined that Sun is likely to prevail in
showing that Microsoft's Internet Explorer ("IE") 4.0 browser and Software
Development Kit for JAVA ("SDKJ 2.0") fail to pass Sun's relevant test
suite, and therefore fall outside the scope of Microsoft's license to
distribute products that incorporate Sun's JAVA technology. The Court's
earlier ruling notwithstanding, Microsoft persists in distributing its
unlicensed, incompatible products, and is poised to launch yet additional
products that will greatly exacerbate the irreparable injury already caused
to Sun, its other distributors, and to developers and consumers in general.
Microsoft's campaign to fragment and hijack Sun's JAVA technology has
taken on fresh urgency in the wake of its new product announcements since
Sun's earlier motion. Microsoft is currently in the process of releasing
two new JAVA development tools, VJ++6.0 and SDKJ 3.0, and has announced
plans to release in late June 1998 its next generation operating system,
Windows98, containing incompatible, Microsoft-dependent implementations of
Sun's JAVA technology. Microsoft's distribution of these new products,
which Microsoft describes as taking "Windows-specific Java . . . fully
public" (Armstrong Decl., Ex. 26), threatens to complete the fragmentation
of Sun's JAVA programming environment begun in SDKJ 2.0 and Internet
Explorer 4.0, and wrest control of Sun's JAVA technology away from Sun.
Significantly, Microsoft plans to bundle its non-conforming JAVA
implementations with Windows98, thereby flooding the market with more than
1 million new PCs per month pre-installed with "Windows-specific Java."
Baratz Decl., para. 2.
In deliberate violation of its contractual undertakings and Sun's
property rights, Microsoft is drawing on its vastly superior distribution
channels for desktop operating systems and browsers to inundate the market
for desktop computers with an unlicensed, incompatible version of Sun's
JAVA environment in a blatant effort to devalue Sun's technology and
establish its own, corrupted version as a de facto industry standard.
Unwilling to rely on its distribution channels alone, Microsoft also has
unlawfully secured the agreement of its various licensees and distributors
to refrain from incorporating conforming implementations of Sun's JAVA
technology in the products they distribute, and instead agree to
re-distribute Microsoft's incompatible, Windows-dependent version of Sun's
technology. Abusing its monopoly in desktop operating systems, Microsoft
has also extracted the agreement of original equipment manufacturers,
Internet service providers and Internet content providers not to distribute
the JAVA-based browsers of Sun's other licensees, including Netscape,
thereby effectively closing another important channel of distribution for
Sun's technology.
Flagrantly abusing its monopoly control over the distribution of
operating systems software, Microsoft seeks to appropriate for itself alone
the benefits of Sun's pathbreaking JAVA technology, while simultaneously
neutralizing its commercial appeal as a competitive alternative to
Microsoft's operating systems monopoly. By flooding the market with desktop
systems and browsers that support only Microsoft's corrupted version of
Sun's JAVA environment, and not the standard JAVA environment, Microsoft is
acting to destroy the promise of an industry-wide, uniform programming
environment, as well as the economic incentive of consumers and developers
alike to adopt and use the standard JAVA environment. By simultaneously
distributing unlicensed toolkits designed to induce developers to create
and distribute applications using Microsoft's corrupted JAVA environment,
Microsoft similarly seeks to flood the market with applications that are
tied to and dependent on the use of Microsoft's corrupted JAVA environment
and the products that support it.
If Microsoft is permitted to proceed with its unfair and monopolistic
scheme, no relief this Court can subsequently grant will undo or fully
remedy the harm that will befall Sun, its many other licensees, and
particularly the consumers and software developers who have relied on
Microsoft's obligation to comply with its license.
The issue presented by this motion is straightforward: Will Microsoft
be permitted to distribute incompatible implementations of Sun's JAVA
technology in its operating systems, browsers and related toolkits, where
the necessary -- and intended -- effect of its wrongful conduct will be the
destruction of the competitive market Sun's technology and license
agreements create?
II. THE MARKET IN WHICH SUN AND MICROSOFT COMPETE
Microsoft and Sun compete with one another in the distribution of
programming environments for personal computers, browsers and other systems
platforms. Microsoft's Windows brand of operating systems dominates the
market for PC operating systems, and its Internet Explorer browser program
is poised to dominate the PC market for browsers. Microsoft's Windows
operating systems and its Internet Explorer browser create
platform-dependent programming environments. Application programs developed
for Microsoft's platform-dependent environments specifically require and
function only with Microsoft's Windows operating system, browser or virtual
machine, and will not function on any other vendor's operating system,
browser or virtual machine. Baratz Decl., para. 4.
The platform-dependent nature of Microsoft's programming environments,
coupled with its overwhelmingly dominant share of PC systems, enables
Microsoft to maintain its dominance of the market for PC operating systems
by raising substantial barriers to competition. These barriers result from
a dynamic interplay between the increasing returns to scale achieved in the
production of application programs and network effects among consumers.
Arrow Decl., para. 7-15. Since most of the costs incurred in developing
application programs occur in the development of the program, the marginal
cost of producing an additional copy of an already-written program is
virtually zero. Because the fixed costs of program development are high,
and the marginal costs are low, there is a strong incentive to develop
applications for environments with a large installed base of users in
preference to a smaller base. Consequently, the number and variety of
programs will be greatest for the operating system with the largest market
share. At the same time, consumer demand will be greatest for operating
systems with the largest number and greatest variety of application
programs. These factors create a feedback effect in which more programs
lead to more consumer demand, which leads to more programs. That
phenomenon, coupled with the obvious desire to achieve compatibility with
the largest installed base of other systems, serves to perpetuate and even
expand Microsoft's dominance of the market. Arrow Decl. para. 10-15.
III. SUN'S JAVA TECHNOLOGY
In contrast to Microsoft's platform-dependent programming
environments, Sun's JAVA technology creates a platform-independent
environment that can be compatibly implemented by many different competing
vendors. Deutsch Decl., para. 27-28. Since applications developed for the JAVA
programming environment can run on any system or browser that implements
the JAVA technology in conformance with Sun's requirements and test suites,
a vendor who compatibly implements the JAVA technology can immediately
obtain the benefit and use of every application developed for the JAVA
programming environment, not just those that are specifically developed for
its particular operating system or browser. The availability of
applications that are capable of running on competing operating systems as
well as Microsoft's operating systems significantly reduces the competitive
advantage Microsoft enjoys. Sun's JAVA technology thus reduces the barriers
to competition that confront the operating system and browser manufacturers
who wish to compete with Microsoft's operating systems and browsers. Arrow
Decl., para. 21.
By licensing other systems vendors and distributors, including
Microsoft, to produce and distribute products that implement its JAVA
programming environment, Sun has created a rapidly expanding market for
applications and systems that implement and use the JAVA programming
environment. Baratz Decl., para. 8. So long as Microsoft's implementation of
the JAVA programming environment is compatible with those of Sun's other
licensed distributors, the fact that Microsoft's operating systems have an
overwhelmingly dominant share of the market is not alone sufficient to
induce developers to develop platform-dependent applications for
Microsoft's systems, particularly since the JAVA(TM) programming environment
would allow them to reach an even larger installed base of systems, and
thus a larger potential return on their investment in program development.
The same is true for consumers, who will no longer be constrained to buy
Microsoft systems if they wish to run programs that can operate on
Microsoft and other systems. Arrow Decl., para. 16-22.
Because the JAVA programming environment is implemented on many
different systems, including Microsoft's systems, the potential market it
offers software developers for applications development is even larger than
the potential market for Windows applications. By offering an alternative
environment for applications development, one that has a market potential
that is even larger than the Windows market, Sun's JAVA technology has the
potential to render the Windows operating system and the programming
environment it supports significantly less important to developers and
consumers alike. Arrow Decl., para. 22. Sun's JAVA technology thus acts to
counter if not eliminate the feedback effect that sustains Microsoft's
monopoly, and threatens its foundation. Arrow Decl., para. 22-24.
For that and other reasons, Microsoft has a strong incentive to
neutralize the cross-platform compatibility of the JAVA environment. Arrow
Decl., para. 24. Insofar as Microsoft is licensed to distribute products that
implement the JAVA environment, and toolkits for development of
applications for that environment, it is particularly important that it do
so in a manner that is compatible with the standard JAVA environment if the
cross-platform potential of the JAVA environment is to be achieved. The
fact that Microsoft commands such a large share of the market for products
that implement the environment, such as personal operating systems and
browsers, creates an opportunity for it to abuse its market share to seize
control of the standard JAVA environment and transform it to a
Microsoft-dependent environment. Because Microsoft accounts for the great
majority of the products shipped that implement the JAVA environment, it
can effectively seize control of that environment simply by differentiating
its implementation of the environment from all others in the market. Arrow
Decl., para. 23.
IV. MICROSOFT'S RESPONSE TO SUN'S JAVA TECHNOLOGY
Microsoft's senior management immediately appreciated the threat posed
by Sun's JAVA technology to the foundations of Microsoft's monopoly. As one
Microsoft analyst observed in a November 1995 white paper entitled "What
Should We Do About Java?":
"[A]ny Java application or applet can be run on any Java enabled
platform without machine specific or OS specific knowledge or
restrictions. In effect, the machine and OS specifics have been
made irrelevant. A new and complete interface has developed that
completely hides the machine franchise and indeed, goes a long
way toward hiding the OS franchise. The Java language is the only
net interface the program sees. This hiding of the Microsoft
franchise is certainly not good for Microsoft."
Armstrong Decl., Ex. 2 at 4. Indeed, so pronounced is the threat to
Microsoft's monopoly that it prompted Bill Gates to warn his staff in
September 1996:
"This scares the hell out of me.
"Its 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.
"Understanding this is so important that it deserves top
priority."
Armstrong Decl., Ex. 3.
At the same time, Microsoft also coveted the commercial and technical
benefits that Sun's JAVA technology provides. As a March 1996 Microsoft
white paper states:
"The growth of the Internet has made the cross-platform nature of
technologies a significant deciding factor for customers. . . .
The increasing importance of the Intranet [networks] also
increases the importance of cross-platform technologies. MIS
managers want applications to be available to all their users
independent of platform. Java is popular on the Internet and
Intranet because of its simplicity and cross-platform nature."
Armstrong Decl., Ex. 4.
Confronted with this dilemma, Microsoft had three legitimate choices:
It could ignore Sun's technology and hope that it failed in the
market;
It could independently develop and distribute products that
incorporated its own technology to compete against the JAVA
technology without license from Sun; or
It could license the JAVA technology from Sun and become a
distributor of products that incorporate Sun's technology.
Ostensibly, Microsoft chose the third alternative, and took on the
rights -- and the obligations -- of a licensed distributor of products that
implement Sun's JAVA environment. It did so by promising Sun that the
products Microsoft distributed would implement Sun's technology in
conformance with Sun's requirements, and that promise is embodied in
Microsoft's agreement that it would only distribute such products as have
passed Sun's compatibility test suites. Section 2.6(a) of the agreement
expressly requires that before Microsoft distributes any product that
incorporates the JAVA technology, that product must first pass Sun's
compatibility test suite. Batchelder Decl., Ex. F. As this Court previously
held, the course of dealing between Microsoft and Sun "establishes that
Microsoft's products must pass all the tests in the JCK test suite, unless
Sun indicates otherwise." 3/24/98 Court Order at 15. "Pursuant to section
2.6(a)(iv), each new version of any Microsoft product that incorporates
Sun's JAVA technology must pass the test suites of the JCK" before
Microsoft can distribute it. Id. at 4.
There can be no doubt that Microsoft understood and agreed that the
products it was licensed to distribute were required to incorporate Sun's
JAVA programming environment, not an incompatible version tied to and
dependent on Microsoft's Windows operating system. As Alan Baratz,
JavaSoft's president and a lead negotiator of the distribution agreement,
testified:
"I believe that we communicated to and Microsoft was well aware
of the fact that compatibility was the core value proposition
behind the Java technology, behind the Java platform . . . and it
was the most important aspect of this agreement in that . . . we
would ensure that Microsoft product that integrates the
technology would remain compatible with every other licensee
products that integrate the technology . . . So write it once.
Run it anywhere . . . That is the value that Java brings to
developers, and the value Java brings to consumers, and the value
that Java brings to hardware and software OEMs. And we entered
into this agreement for Microsoft to be a channel for delivering
that technology compatibility [sic], i.e., preserving that value
proposition within their products. And yes, I believe they fully
understood that."
Armstrong Decl., Ex. 5. As the recitals make plain, and as one of
Microsoft's lead negotiators, Robert Muglia, acknowledged, the reason
Microsoft was licensed to distribute products that incorporated Sun's
technology was to secure the widespread compatible distribution of Sun's
JAVA programming environment:
"Sun wanted Microsoft to license the technology to help validate
the JAVA technology, given our important market presence, as well
as to provide a distribution vehicle for the technology inside
Microsoft's products."
"Alan [Baratz] did indicate that he wanted the JAVA technology to
be widely available to developers on Microsoft platforms. And
given the fact that Microsoft ships a large number of copies of
Windows, this was a good distribution vehicle for him."
Armstrong Decl., Ex. 6. Sun did not grant Microsoft the right to distribute
products incorporating Sun's technology so that Microsoft could fight with
Sun for control of Sun's technology. And it certainly did not agree that
Microsoft would be allowed to use its vastly superior distribution channels
to wrest control of Sun's technology from Sun by flooding the market with
products that create a non-conforming, Microsoft-dependent version of the
JAVA environment. As the Court previously concluded, the notion that Sun
agreed to let Microsoft use Sun's technology to distribute products that
are incompatible with the JAVA programming environment is implausible on
its face:
"Microsoft's manipulation of the ambiguities surrounding section
2 of the TLDA . . . cannot be reconciled with the purpose behind
the TLDA and the JAVA technology itself. Microsoft's reading of
the TLDA would essentially allow Microsoft to destroy the
cross-platform compatibility of the JAVA programming
environment."
3/24/98 Court Order at 15 (emphasis added). "Microsoft's interpretation of
the TLDA is inconsistent with JAVA's objective of cross-platform
compatibility." Id. at 14 n.3.
V. MICROSOFT'S UNLAWFUL CAMPAIGN TO FRAGMENT AND HIJACK THE JAVA
ENVIRONMENT
Even as Microsoft was promising Sun that the products it would
distribute would conform to Sun's requirements, it was secretly preparing
to undermine the value and appeal of Sun's JAVA technology by distributing
something very different. In February 1996, even before signing the
distribution agreement, Microsoft's Executive Vice President, Paul Maritz,
outlined Microsoft's strategy to win the browser war with Netscape and
simultaneously "neutralize Java" by "tying" the "user interface" and "APIs"
"back to Windows," by "get[ting] control of JAVA with JAVA support/tools",
and by "get[ting] control of then leverag[ing] the programming model."
Armstrong Decl., Ex. 7 at 10-12.
That scheme, clearly documented in Microsoft's senior-most management
briefings weeks before the contract was signed, and further elaborated in
the years following the execution of the agreement (Armstrong Decl., Ex.
8), seeks to maintain and expand Microsoft's monopoly in desktop operating
systems by unfairly abusing Microsoft's status as a licensed distributor of
Sun's JAVA technology to wrest control of the standard platform-independent
JAVA environment from Sun and transform it into a Microsoft-dependent
environment, one that is uniquely tied to and operable only with the
virtual machine and Windows operating system that Microsoft alone
distributes.
As reported to Bill Gates in April 1997 by the manager responsible for
execution of Microsoft's strategy:
"When I met with you last, you had a lot of pretty pointed
questions about Java, so I want to make sure I understand your
issues/concerns. . . .
1. What is our business model for Java?
2. How do we wrest control of Java away from Sun?
3. How do we turn Java into just the latest, best way to write Windows
applications?
4. What are we doing to leverage/expose Windows to Java developers?
5. Implications of our Sun contract to our evolution of Java?"
Armstrong Decl., Ex. 9. Microsoft's recent product announcements provide
the answers.
To "turn Java into just the latest, best way to write Windows
applications," Microsoft is distributing tools deliberately designed to
destroy the cross-platform capability of the JAVA applications they create.
As poignantly described in Microsoft's pricing strategies for its upcoming
VJ++ 6.0 JAVA development suite, the "strategic objective" of its new
toolkit is to "Eliminate/contain cross-platform Java by growing the
polluted Java market," "migrate and lock Java developers to Win32 Java,"
and ultimately to "kill cross-platform Java by grow[ing] the polluted Java
market." Armstrong Decl., Exs. 10-11, 1. Recognizing that "cross-platform
capability is by far the number one reason for choosing/using Java," and
that Microsoft's Windows-dependent products do "not cater to the current
market demand," Microsoft deliberately plans to set a low price point for
its tools. Why? Because Microsoft "need[s] high distribution of a product
that is not demanded by the market." Armstrong Decl., Ex. 10.
To "wrest control of JAVA away from Sun," Microsoft is leveraging its
monopoly in PC operating systems to make its polluted JAVA environment
dominant as well. As recounted in a March 1997 e-mail outlining Mr. Gates's
strategy to the head of Microsoft's JAVA development program:
"What I think Bill says:
. . .
"We give away the Java VM to ISVs (to ship without royalty), but
only on Windows. (I think he confirmed that we could charge OEMs
a royalty for our VM, once it became ubiquitous) . . . This is
interesting. It leverages our desktop dominance to help our Java
VM become dominant, and avoids giving away value in the form of a
capable VM on other OSs. Our VM can be capable on other OSs, but
we get paid for that value and thus reduce the value of those
OSs. For Windows our VM can have value, but the link to Windows
means we get paid for it there via Windows royalties. This seems
really smart to me."
Armstrong Decl., Ex. 38.
In short, Microsoft is deliberately working to destroy the very market
it agreed to help Sun and all other JAVA distributors to create. Now, two
years after the agreement was signed, Microsoft has finally dropped all
pretense of any intent to fulfill its express contractual obligation.
Instead, it is deliberately abusing its status as Sun's distributor,
exploiting its monopoly power in the market for personal computer operating
systems to maintain and expand that monopoly, and unfairly using its
dominance of the distribution channels for operating systems, browser
programs and related software development tools to wrest from Sun control
of Sun's JAVA programming environment. Arrow Decl. para. 31-32.
A. Microsoft's Three-Part Scheme.
Microsoft's unlawful scheme to destroy the cross-platform promise of
the JAVA technology, while simultaneously hijacking it for Microsoft's
benefit alone, entails three essential steps.
First, having obtained the right to distribute products incorporating
Sun's technology on the pretext that its products would conform to Sun's
standards, Microsoft immediately set out to fragment Sun's JAVA technology,
that is, to alter the technology implemented in the products Microsoft
distributes in ways contrived by Microsoft to render the programming and
runtime environments supported by its products incompatible with the
standard JAVA environment supported by the products of all other JAVA
distributors. As one senior Microsoft vice president succinctly stated, "I
would explicitly be different -- just to be different.... [W]ithout
something to pollute Java more to Windows (show new cool features that are
only in Windows) we expose ourselves to more portable code on other
platforms." Armstrong Decl., Ex. 12. By fragmenting the JAVA environment
into two, incompatible environments, Microsoft forces developers and
consumers to choose which environment they will support. Forced to choose,
Microsoft can safely rely on its dominant market share, together with the
economic incentive of developers to develop applications for the
environment having the largest share of installed systems, to cause
developers and consumers alike to adopt whatever environment Microsoft
products support. Arrow Decl., para. 26.
Second, to render its polluted JAVA environment commercially
attractive to consumers, Microsoft must induce independent software
developers to create applications for that environment. Armstrong Decl.,
Exs. 14, 15, 18. To that end, Microsoft must also develop and distribute
the tools needed to do so. The distribution of tools designed to create
applications that will run only on Microsoft's products and no others is an
essential component of Microsoft's strategy to fragment the JAVA market and
lock-in consumers. As succinctly stated in an October 1996 "Java Strategy,"
Microsoft must "Get developers to write very rich Windows applications,
controls, etc. in Java." Armstrong Decl., Ex. 15. Doing so proved
difficult, however, particularly since it was the cross-platform appeal of
Sun's technology that so attracted developers. For that reason, Microsoft
publicly downplayed its true intentions in an effort to seduce independent
software vendors and others into using Microsoft-specific APIs before ever
realizing they had bought-in to the Microsoft platform.
"As i [sic] told charlesf [Fitzgerald] on the phone, at this
point its [sic] not good to create MORE noise around our win32
java classes. Instead we should just quietly grow j++ share and
assume that people will take advantage of our classes without
ever realizing they are building win32-only java apps."
Armstrong Decl., Ex. 23.
Third, Microsoft set out to obtain a dominant market share for its
Microsoft-dependent environment. As detailed in Microsoft's October 1996
"Java Strategy," the "key" objective is to "[d]rive MS Java VM and
classlibs (w/ Win32 extensions!) to broad installed base." Armstrong Decl.,
Ex. 15. Unless a sufficiently large share of systems in the market support
the Microsoft-dependent environment, developers will have little or no
incentive to create applications for it. As the market share of products
implementing the Microsoft-dependent environment grows, so too will the
economic incentive of developers to create applications for it, and the
economic incentive of consumers to use it. Indeed, if the share of products
that implement the Microsoft-dependent environment becomes dominant,
Microsoft can effectively wrest control of the JAVA technology away from
Sun, since its non-conforming, Microsoft-dependent environment would then
provide the largest potential market for development of "JAVA"
applications. Arrow Decl., para. 23, 26.
As Microsoft well appreciates, its principal "lever" to achieve a
dominant market share for its polluted JAVA environment is "Distribution
(w/ Windows)." Armstrong Decl., Ex. 16. Indeed, it is precisely to obtain
that market share dominance that Microsoft now seeks to exploit its Windows
monopoly to distribute its non-conforming implementation as part of
Windows98. By bundling its Microsoft-dependent environment with Windows98,
Microsoft hopes to grab a ubiquitous market share for its non-conforming
version of Sun's JAVA environment and thereby wrest control of Sun's JAVA
technology away from Sun. Arrow Decl. para. 31.
B. Step 1: Fragment the JAVA Environment.
As cogently explained by Dr. Kenneth Arrow, a Nobel laureate Stanford
economist whose life's work includes the study of innovation and industrial
organization, Microsoft has a pronounced economic incentive to fragment the
JAVA environment. By fragmenting the JAVA environment, Microsoft can
effectively force developers and consumers to choose which of two different
and incompatible environments they will support. Confronted with such a
choice, the relative market share enjoyed by the systems that support each
environment is likely to be a determinative consideration in the minds of
consumers and developers alike. To the extent that Microsoft commands the
dominant share of installed systems that implement a JAVA environment, and
to the extent that Microsoft is able to differentiate the environment its
systems support from the standard JAVA environment supported on all other
systems, it can exploit its market share advantage to drive the adoption of
its non-standard environment. Arrow Decl. para. 26.
To achieve Microsoft's objectives, differentiation alone is not
enough. To neutralize JAVA, while simultaneously preserving its monopoly
position, Microsoft must also ensure that the applications developed for
its fragmented environment are Microsoft-dependent, that is, tied to and
dependent on the products Microsoft alone supplies. Arrow Decl. para. 25, 29,
31; Armstrong Decl., Ex. 18. By fragmenting JAVA into two, incompatible
programming environments, Microsoft effectively defeats the promise of
cross-platform compatibility created by Sun's JAVA technology and the open
licensing program that accompanies it. Arrow Decl., para. 25. By rendering the
applications developed for its incompatible environment dependent on the
use of products it alone distributes, Microsoft's scheme locks consumers
and developers alike into dependency on its platforms and thereby
re-establishes the feedback effect that Sun's JAVA technology is designed
and licensed to eliminate. Arrow Decl., para. 25, 29. Simply by being
different, that is, by forcing developers and consumers to choose between
two incompatible programming and runtime environments, the standard JAVA
environment licensed by Sun and the corrupted environment distributed by
Microsoft, Microsoft can exploit its overwhelming share of installed and
newly shipping systems to cause developers and consumers to adopt the
environment that is present on the largest share of desktop platforms:
Microsoft's corrupted, platform-dependent environment. Arrow Decl., para. 23,
26, 29, 31.
1. Microsoft's Original Effort To Fragment and
Appropriate Sun's JAVA Technology
As soon as Microsoft obtained the right to distribute products that
incorporate Sun's JAVA technology, it deliberately set out to modify Sun's
technology to render it dependent on and tied to the products that
Microsoft alone distributes.2 Armstrong Decl., Ex. 20. As early as October
1996, Microsoft's "Java Strategy" laid out the scheme to "pollute" Sun's
core JAVA classes "with Win-specific class libs," "[l]et Java class library
space fragment, so that `write once, run anywhere' does not happen," then
"[d]rive MS Java VM and classlibs (w/Win 32 extensions!) to broad installed
base," to provide Microsoft ownership of "the de facto Java class library
platform" tied to the Windows OS. Armstrong Decl., Ex. 15.
Significantly, Microsoft could have complied with its distribution
license by implementing any new functionality it wished to add to Sun's
standard set of java.* classes simply by packaging all such non-standard
additions outside Sun's public classes and labeling them as
Microsoft-specific "COM.MS" classes. TLDA sect. 2.8(d). Batchelder Decl., Ex.
F. It chose covert action instead, and deliberately attempted to hide its
changes to Sun's APIs by deceptively planting them within the existing
java.* class hierarchy in direct violation of the express restrictions of
the agreement. TLDA sect. 2.8(d).
"If we can get away with it, I would no[t] comment on our Java
class extensions . . . I don't think we should push or publicize
our java class work or the fragmentation that is occurring with
Java in the industry."
Armstrong Decl., Ex. 23.
2. Microsoft's Latest Efforts to Fragment and
Appropriate the JAVA Technology.
Since this Court's March 24, 1998 Order, Microsoft's efforts to
fragment and misappropriate the JAVA technology have, if anything,
intensified. Indeed, Microsoft has developed and pre-released for worldwide
distribution new toolkit products (VJ++ 6.0 and SDKJ 3.0) that not only
replicate many of the impermissible alterations embedded in IE 4.0 and SDKJ
2.0, but also contain a new set of alterations to the JAVA technology
further calculated to tie programs developed using such alterations to
Microsoft's operating system, browser, and virtual machine.
VJ++ 6.0 and SDKJ 3.0 exacerbate Microsoft's earlier efforts to
"neutralize Java" by tying it "back to Windows." Armstrong Decl., Ex. 21.
Paul Gross, Microsoft's vice president in charge of tools development
clearly spelled out the purpose behind Microsoft's VJ++ 6.0, for Steve
Ballmer and Paul Maritz in January 1998:
"When people see the next version of VJ++, they will finally get
what we mean by `making Java a great language for building
Windows apps.' What they will see is Ironwood -- a framework that
replaces our AFC and Sun's AWT and JFC. Ironwood is built on
Jdirect so it basically provides an encapsulation of the Windows
api easily accessible from Java. You build forms that are either
ironwood or HTML or both. You don't build forms from Java Beans
(the industry `standard' Java component model).
Basically, the #1 thing that draws people to Java is cross
platform. VJ 1.1 held its own for a while as being a good tool
for Sun's Java. VJ 6.0 will be a good tool for Microsoft's Java
and not Sun's and hence not cross platform. Developers will
scream. (But some will love it and recognize its inherent
`elegance').
Is this all inevitable? Yes, with the course we chose. We decided
rather than trying to outrun sun at their game to change the
rules. Share will be the penalty. I do believe though that the
write once run anywhere myth is slowly being debunked. And this
will just be another nail. I believe we will prevail with this
strategy in the long run."
Armstrong Decl. Ex. 34
a. Microsoft's Improper "Extensions" Of The
JAVA Language.
Microsoft has pre-released VJ++ 6.0, SDKJ 3.0 and Windows98 to effect
further unauthorized incompatibilities with the standard JAVA environment
by "extending" Sun's specification of the JAVA language. Cast in the form
of new, unauthorized "keywords" and "compiler directives," these extensions
further erode cross-platform compatibility by creating, in effect, a new
programming language that is operable only on Microsoft's Windows platform
using Microsoft's corrupted implementations of the JAVA technology. 5/11/98
Deutsch Decl., para. 4, 32, 52, 67-70, 73.
These new language features, which violate Sun's JAVA Language
Specification and Sun's Virtual Machine Specification, will cause a
compiler that conforms to the JAVA standards specified by Sun to reject or
misinterpret any programs written using these new features. Deutsch Decl.,
para. 4, 32, 52, 57-58, 64-76, 73. These added features also will prevent the
default configuration of Microsoft's compiler (which has been altered to
accommodate these new language features) from compiling some valid programs
written in the JAVA programming language specified by Sun.
Microsoft's most recent corruptions of the JAVA technology are
deliberate attempt to undermine the cross-platform compatibility created by
the JAVA technology and Sun's licensing program. Microsoft's non-conforming
extensions gratuitously introduce both source and binary code
incompatibility. Deutsch Decl., para. 4, 21-27, 32, 52, 64-70, 73. As a
result, any developer wishing to create applications using Microsoft's
non-standard features must do so using Microsoft's non-standard toolkit
products (rather than the JAVA Compatible implementations and toolkits of
Microsoft's competitors), and any applications using these new features
will function only on Microsoft's corrupted compiler and virtual machine,
and only in the context of the Windows operating system. Id. These newest
alterations, the functionality of which could have been accomplished
without destroying cross-platform compatibility (Deutsch Decl., para. 71, 90),
manifest Microsoft's anticompetitive purpose, namely, to fragment rather
than unify the JAVA programming environment. Even Microsoft's own senior
developers see no merit to such gratuitous changes. Indeed, as the project
manager of Microsoft's virtual machine development program candidly
observed:
"I don't see why we need keywords for eventing. I've just
finished a reasonable amount of work mapping the Beans model to
ActiveX, and it seems perfectly sufficient for the eventing
scenarios we've got. Is there some reason we'd want to do
something different than support a simple model which works on
all platforms, works with ActiveX, and doesn't require VM or
compiler changes?"
Armstrong Decl., Ex. 40. Unless Microsoft's purpose is to fragment the JAVA
programming environment, the answer is clearly no.
b. Microsoft's Continuing Exclusion of JNI.
This Court found on March 24 that Microsoft's IE 4.0 and SDKJ 2.0
products failed Sun's compatibility tests for JNI, the standard JAVA
interface by which native code may call services provided by a virtual
machine. 3/24/98 Order at 7. Notwithstanding this Court's Order,
Microsoft's pre-release versions of VJ++ 6.0, SDKJ 3.0, and Windows98
exclude JNI, just as IE 4.0 and SDKJ 2.0 did. Schroer Decl., para. 15, 19, 23.
The JNI interface enables developers to create native methods that can
call JAVA code and access JAVA objects in a manner that will compatibly
operate on any other JAVA Compatible virtual machine that runs on a given
host system. Deutsch Decl., para. 5. Rather than include JNI, Microsoft's VJ++
6.0, SDKJ 3.0 and Windows98 each contain non-standard native method
interfaces, called RNI, J/Direct and Java/COM, that are tied to Microsoft's
corrupted implementations of the JAVA technology. Using the Microsoft
native method interfaces, the resulting native method programs will operate
correctly only on the Microsoft virtual machine, and will fail to operate
correctly on any other JAVA Compatible virtual machine developed for
Microsoft's Win32 programming environment, such as those of Sun, Borland,
Oracle and IBM. Deutsch Decl., para. 5.
Like Microsoft's addition of unauthorized language features (Deutsch
Decl, para. 71, 90), Microsoft's refusal to implement JNI, and its exclusion
from VJ++ 6.0, SDKJ 3.0, and Windows98, is totally unnecessary, and can
only be calculated to defeat the cross-VM compatibility created by JNI.
Microsoft could, for example, have implemented JNI in each of its products
along with the Microsoft native method interfaces without degradation in
performance. Deutsch Decl., para. 6.
Microsoft's exclusion of JNI from its product and toolkit
implementations of the JAVA technology forces application developers, tool
developers and end users to choose between Microsoft's non-conforming
virtual machine implementation and the conforming virtual machine
implementations of Sun's other licensees. Deutsch Dec., para. 7. Microsoft's
exclusion of JNI from its implementations of the JAVA technology also
forces application developers who wish to develop native code for use with
JAVA applications on Microsoft's virtual machine to use Microsoft's toolkit
products to do so, since only Microsoft's toolkits provide the means to
develop native code compatible with the native code interfaces supported by
Microsoft's virtual machine implementation. Id.
Microsoft's decisions to exclude JNI from VJ++ 6.0, SDKJ 3.0, and
Windows98, and to further alter these products with incompatible language
features, undermines the fundamental promise of the JAVA technology: that a
program written to function on any implementation of the JAVA programming
environment will correctly function across other implementations of the
JAVA programming environment. Deutsch Decl., para. 8, 91-96.
C. Step 2: Induce Developers To Create Microsoft-Dependent
Applications.
Once Microsoft developed a non-conforming JAVA environment uniquely
tied to its product implementations, it needed to induce independent
software developers to create applications for it. To accomplish this,
Microsoft had to persuade the developers and consumers who were rapidly
turning to Sun's JAVA technology for its cross-platform capability that
Microsoft's products would satisfy their needs, even while Microsoft
secretly altered the standard JAVA environment to make it
Microsoft-dependent. Armstrong Decl., Exs. 18, 20.
Microsoft's market research consistently shows that cross-platform
compatibility is the single most important reason developers choose to use
the JAVA environment for applications development. Armstrong Decl., Exs. 1,
10, 11; Armstrong Decl., Exs. 23. Knowing full well that the ability to
create cross-platform applications was the single most important capability
developers sought in JAVA tools, Microsoft purposefully concealed its
platform-dependent ambitions from them. Armstrong Decl., Exs. 1, 10, 11,
16, 23. For this reason, it was important to Microsoft to alter its
implementation in ways that would be imperceptible to developers, while
still rendering the applications they create using Microsoft's tools
dependent on Microsoft's other products, such as Microsoft's IE 4.0 or its
Windows operating system. That is why John Ludwig, the Microsoft vice
president in charge of JAVA development, advised his senior colleagues
that, in competing with the JAVA technology, "subversion has always been
our best tactic. . . . subversion is almost invariably a better tactic than
a frontal assault . . . it leaves the competition confused, they don't know
what to shoot at anymore . . ." Armstrong Decl., Ex. 16. That is also why
Microsoft has deceptively modified the "java." methods and "java." fields
in the standard "java." packages and "java." classes contained in each of
the product implementations it distributes (IE 4.0, Windows98 beta, SDKJ
2.0 and 3.0, and VJ++ 6.0). Schroer Decl. para. 20-24, Exs. I, J, Schroer
Supp'l Decl. 1/29/98, Ex. A, B. And that is why Microsoft continues to
display Sun's JAVA Compatible logo on its non-conforming products,
including its pre-release versions of VJ++ 6.0 and SDKJ 3.0,
notwithstanding the Court's injunction. Armstrong Decl., Exs. 29, 30.
Remarkably, even after this Court's March 24, 1998 Order (3/24/98
Order at 17), and despite Sun's demand that Microsoft not do so (Batchelder
Decl., Exs. B, C), Microsoft continues to use the "JAVA Compatible" logo to
promote its SDKJ 3.0 and VJ++ 6.0 tool kit products (Armstrong Decl., para.
32-33 and Exs. 29, 30), notwithstanding the fact that these products
contain the same non-conforming implementation as SDKJ 2.0.1, and fail the
same JCK 1.1a test suite, in the same ways, for the same reasons as does
SDKJ 2.0.1. See generally, Schroer Decl., para. 23, Ex. H filed in Support of
Sun's Motion for Preliminary Injunction. Microsoft's continuing
infringement of Sun's "JAVA Compatible" logo in connection with these
non-conforming tool kit products can only be designed to deceive developers
into believing that its latest toolkit products -- unlike the enjoined SDKJ
2.0 -- are authorized by Sun, pass Sun's JCK 1.1a test suite, and can be
relied upon for generating programs that will operate on compatible
implementations of the JAVA Technology.
To further induce independent developers to create programs for
Microsoft's incompatible implementations of the JAVA technology, Microsoft
has engaged in a systematic and long-running campaign of misrepresentations
and false advertising. For example:
(a)Microsoft misleadingly advertises that the TLD
Agreement designates Microsoft's implementation of the
JAVA Technology as "the official reference
implementation" for Win32-based systems platforms and
browsers (Armstrong Decl., Ex. 31);
(b)Microsoft falsely advertises that "[t]he JAVA
applications created with the SDKJ will run on any
platform." (Armstrong Decl., Ex. 32 at 3); and
(c)Microsoft has falsely advertised and -- even after this
Court's March 24, 1998 Order to the contrary --
continues to advertise its incompatible SDKJ and VJ++
6.0 products as "JAVA Compatible." (Armstrong Decl.,
Exs. 29, 30.)
These public misrepresentations by Microsoft are improper, and can only
have been calculated to induce developers to write programs for Microsoft's
incompatible and non-conforming JAVA programming environment.
As yet another means to cause developers to use its incompatible
toolkits for JAVA development, Microsoft unlawfully distributes its
incompatible implementation of Sun's JAVA runtime interpreter, called the
Microsoft Virtual Machine for JAVA, on a standalone basis, and requires
developers who wish to display or use its "Designed for Windows95/NT" logo
to promote the application programs they distribute to use Microsoft's
Virtual Machine for JAVA in the products they distribute. Schroer Decl., para.
27, Exs. M, N. Because Microsoft dominates the market for desktop operating
systems, many developers consider it essential to be able to use
Microsoft's "Designed for Windows95/NT" logo to promote their products.
Baratz Decl., para. 17-19. Microsoft's requirement effectively constrains
developers to use Microsoft's Virtual Machine for JAVA in the programs they
develop regardless of whether they would otherwise choose to do so, Baratz
Decl., para. 19, and have no economic justification, save to constrain
developers to use Microsoft's incompatible tools and implementations as the
price they must pay to earn Microsoft's seal of approval. Arrow Decl. para. 31.
D. Step 3: Exploit Windows Monopoly To Grab Market Share.
Above all else, Microsoft understands that the single most effective
inducement it can create for software developers to write applications for
its incompatible environment is to rapidly obtain a large market share of
systems on which its incompatible environment is installed. Indeed, if the
share of systems implementing the Microsoft-dependent environment becomes
sufficiently dominant, Microsoft can exploit the incentive of developers to
create applications for the environment having the largest installed base
to establish its environment as the de facto standard in the market. At
that point, simply by virtue of its dominant share of installations in the
market, Microsoft can effectively wrest control of the JAVA technology away
from Sun. Arrow Decl., para. 26.
Consequently, the third essential step in Microsoft's scheme to "kill
cross-platform JAVA" (Armstrong Decl., Ex. 1) is the manipulation of the
distribution channels for JAVA technology to expand the installed base of
systems that support Microsoft's incompatible implementations. To secure a
dominant share of the market for its implementations and tools, Microsoft
is unlawfully exploiting its market power as a monopolist of desktop
operating systems to bundle its incompatible "JAVA" environment with
Windows(R)98. If Microsoft is allowed to distribute its non-conforming
version of Sun's JAVA technology in Windows98, virtually every new PC will
come pre-installed with Microsoft's incompatible version of Sun's JAVA
technology.
Never one to leave things to chance, Microsoft is simultaneously
acting to constrict or close the channels of distribution for JAVA
compatible implementations distributed by others. Armstrong Decl., Ex. 15.
For example, Microsoft's Windows distribution agreements with original
equipment manufacturers ("OEMs") effectively require OEMs to distribute its
Microsoft-dependent "Java" environment, in the form of Internet Explorer
4.0, in preference to any other browser. Armstrong Decl., Ex. 41. Microsoft
has also entered into contracts with third parties that require such third
parties exclusively to use and distribute the incompatible,
Microsoft-dependent environment in the products they distribute, and to
refrain from using or distributing products that implement the standard
JAVA environment. As provided in one such contract, Microsoft has required
its licensee to:
"(a)redistribute the Microsoft virtual machine for Java
included in the Licensed Software (the "MS Java VM")
as part of Company Product and not any other virtual
machine;
(b) use only the Microsoft native code interfaces
(J/Direct, RNI, Java/COM) that are part of the MS Java
VM for any native code calling"
Armstrong Decl., Ex. 35. Such agreements effectively prevent or restrict
the distribution of products other than Microsoft's that implement the JAVA
technology and have no legitimate economic justification. Arrow Decl., para.
31.
VI. THE IRREPARABLE HARM TO SUN AND OTHERS
Microsoft is abusing its monopoly power in operating systems software
to defeat the cross-platform compatibility of Sun' JAVA technology, to
destroy the value of that technology to Sun and its licensees, and to reap
for itself the technical advantages and good will associated with that
technology. Largely because of Microsoft's monopoly power in the desktop OS
market, its predatory tactics threaten success. If Microsoft is permitted
to bundle its incompatible implementation of Sun's JAVA technology with the
Windows98 operating system, the installed base of that incompatible
implementation will quickly mushroom into a de facto standard. Arrow Decl.,
para. 26-29.
These circumstances, coupled with Microsoft's imminent distribution of
its VJ++ 6.0 and SDKJ 3.0 tool kit products, cry out for injunctive relief
to preserve the integrity of the JAVA technology and the competitive market
forces it creates. If Microsoft's new products, and Microsoft's other
non-conforming implementations of the Java technology, are not barred from
distribution, the damage to Sun's JAVA technology, to the nascent market it
supports, and to each participant in that market, will quickly become
irreversible. Id.; Deutsch Decl., para. 8, 91-96; see also generally LeFaivre,
Sueltz, Entenmann Decls., filed in Support of Sun's Reply Motion for
Preliminary Injunction, dated 2/13/98.
The irreparable harm caused by Microsoft's misconduct is far-reaching.
Third party independent application developers are denied the assurance
that a program written to function on one implementation of the JAVA
technology will function across all implementations. Id. Third party tool
developers are forced to choose between conforming to Sun's standard
cross-platform technology, and conforming to Microsoft's incompatible
implementations of that technology. Id. End users are denied the full range
of lower-cost cross-platform compatible programs, compilers and virtual
machines capable of operating compatibly in the Windows environment that
would have existed but for Microsoft's incompatibilities. They are also
denied the benefits of increased innovation in new technologies challenging
Microsoft's existing monopoly power. Id. Perhaps most poignantly, Sun and
its licensees are irreparably harmed as a result of the decrease in value
of the JAVA technology to developers, tool vendors and customers, and as a
result of the lost opportunity they each directly suffer.
The longer Microsoft is permitted to distribute its non-conforming
products, the greater the incentive for Sun's existing and potential
licensees of the JAVA technology to abandon their conformance with Sun's
standard version of the technology in favor of pursuing compatibility with
Microsoft's rapidly expanding base of non-conforming products.
VII. ARGUMENT
A. A Few Well-Established Principles Of Unfair Competition Law
Mandate An Injunction Against Microsoft
California Business and Profession Code section 17200 et seq. sets out
a comprehensive statutory remedy for Microsoft's subversion of Sun's JAVA
technology. As an initial matter, familiar federal standards govern Sun's
entitlement to a preliminary injunction on this California law claim.
United States Surgical Corp. v. Origin Medsystems, Inc., 27 U.S.P.Q.2d 1526
(N.D. Cal. 1993), 1993 WL 379579 at *1.3 Specifically, Sun is entitled to
an injunction "if it can show either: (1) a likelihood of success on the
merits and the possibility of irreparable injury; or (2) serious questions
going to the merits and a balance of hardships tipping it its favor." Id.
(citations omitted).
California's unfair competition law mandates injunctive relief against
"[a]ny person performing or proposing to perform an act of unfair
competition within this state." Cal. Bus. & Prof. Code sect. 17203. The statute
broadly defines "unfair competition [to] mean and include any unlawful,
unfair or fraudulent business act or practice." Id. at sect. 17200. The statute
protects business competitors and consumers alike. Tippet v. Terich, 37
Cal. App. 4th 1517, 1536 (1995).
California courts have consistently emphasized the remedial purpose of
the California statute. "The section was intentionally framed in its broad,
sweeping language precisely to enable judicial tribunals to deal with the
innumerable `new schemes which the fertility of man's invention would
contrive.'" Barquis v. Merchants Collection Ass'n, 7 Cal. 3d 94, 112
(1972); see also Committee on Children's Television, Inc. v. General Foods
Corp., 35 Cal. 3d 197, 209-10 (1983) (noting statute's intent to "enjoin
wrongful business conduct in whatever context such activity might occur").
Business conduct need not be illegal to support an injunction under Section
17200. State Farm Fire & Casualty Co. v. Superior Court, 45 Cal. App. 4th
1093, 1103 (1996). Rather, the "test under section 17200 is that a practice
merely be unfair." Allied Grape Growers v. Bronco Wine Co., 203 Cal. App.
3d 432, 452 (1988).
The statute's test for "unfairness" is straightforward and based on
common sense. Actions or practices "`that violate[] fundamental rules of
honesty and fair dealing'" also violate Section 17200. Barquis, 7 Cal.3d at
112 (citation omitted); see also Sunbelt Television, Inc. v. Jones
Intercable, Inc., 795 F.Supp. 333, 338 (C.D. Cal. 1992) (same) (citing
People v. Casa Blanca Convalescent Home, Inc., 159 Cal.App. 3d 509, 530;
State Farm, 45 Cal. App. 4th at 1104 ("An `unfair' business practice occurs
when that practice `offends an established public policy or when the
practice is immoral, unethical, oppressive, unscrupulous or substantially
injurious to consumers.'").
Business conduct that is "fraudulent" constitutes a separate and
independent ground for a Section 17200 injunction. See State Farm, 45 Cal.
App. 4th at 1102 (noting that, because Section 17200 "is disjunctive, a
`business act or practice' is prohibited if it is `unfair,' or `unlawful,'
or `fraudulent.'") In the Section 17200 context, "'fraudulent . . .does not
refer to the common law tort of fraud.'" Saunders v. Superior Court, 27
Cal. App. 4th 832, 839 (1994). Rather, it requires only that "members of
the public are likely to be deceived." Podolsky v. First Healthcare Corp.,
50 Cal. App. 4th 632, 648 (1996). "A violation can be shown even if no one
was actually deceived, relied upon the fraudulent practice, or sustained
any damage." Id at 647-48; see also Allied Grape, 203 Cal. App. 3d at 452
(same).
To redress unfair practices, Section 17200 authorizes sweeping
injunctive relief. "The remedial power granted under this section is
`extraordinarily broad.'" Hewlett v. Squaw Valley Ski Corp., 54 Cal. App.
4th 499, 540 (1997) (citation omitted). "Injunctive relief `may be as wide
and diversified as the means employed in perpetration of the wrongdoing.'"
Id. Consequently, Section 17200 gives this Court wide discretion "to make
orders to prevent such activities from occurring in the future," id., and
to enjoin "past activity and out-of-state activity," Stop Youth Addiction,
17 Cal. 4th 553 at 570 (citing Bus. & Prof. Code sect. 17203) (injunction
reaches any "person who engages, has engaged, or proposes to engage in
unfair competition"). The statute's remedies are cumulative to and
independent of the remedies or penalties available under any other law.
Hewlett, 54 Cal. App. 4th at 520; State Farm, 45 Cal. App. 4th at 1093.4
B. Microsoft Seeks To Destroy The Value Of Sun's JAVA
Technology
At its core, Microsoft has denied Sun the fundamental benefit of its
distribution rights under the TLDA. As discussed above, Sun expressly
entered into the TLDA to obtain the benefits of Microsoft's unrivalled
capacity for ubiquitous distribution of Sun's JAVA technology. As a matter
of basic contract law, Microsoft was obligated not only to discharge all of
its express obligations in the TLDA, but also to satisfy its obligations of
good faith and fair dealing not to destroy or injure Sun's rights to the
fruits of the TLDA. See Sutherland v. Barclays American/Mortgage Corp., 53
Cal. App. 4th 299, 314 (1997) ("Every contract imposes upon each party a
duty of good faith and fair dealing in its performance and its
enforcement'"); Locke v. Warner Bros., Inc., 57 Cal. App. 4th 354, 363
(1997) ("neither party shall do anything which will have the effect of
destroying or injuring the right of the other party to receive the fruits
of the contract.'"). Instead, Microsoft breached the express letter of the
TLDA and its fundamental purpose by distributing its own non-conforming
implementation of the JAVA technology. On this basis alone, Microsoft
should be enjoined under Section 17200 from making any further
distributions. See State Farm, 45 Cal. App. 4th 1093 at 1105 (breach of
duty of good faith and fair dealing supports injunction based on unfair
competition finding).
Dated: May 14, COOLEY GODWARD LLP
1998
By:__________________________________
Lloyd R. Day, Jr.
Attorneys for Plaintiff SUN MICROSYSTEMS, INC.
-------------------
FOOTNOTES
1Armstrong Decl., Exh. 1. back to text
2See generally 11/16/97 Hankinson Decl., filed in Support of Sun's Motion
for Preliminary Injunction dated 11/17/97. In particular, Microsoft altered
Sun's java.* core classes by adding a number of Microsoft APIs, deleting
certain Sun APIs, and excluding Sun's standard Java Native Interface
("JNI") from its product implementations in favor of its
Microsoft-dependent interfaces tied to its Windows OS. back to text
3 For the Court`s convenience, a copy of this opinion is attached as
Exhibit D to the Declaration of James Batchelder (Batchelder Decl.) filed
herewith. back to text
4 Section 17200 also authorizes restitution of `lost moneys or properties
resulting from the unfair competition.` Allied Grape, 203 Cal. App. 3d at
453. back to text
COOLEY GODWARD LLP
LLOYD R. DAY, JR. (90875)
JANET L. CULLUM (104336)
JAMES R. BATCHELDER (136347)
JAMES DONATO (146140)
ROBERT M. GALVIN (171508)
MICHAEL D. MOREHEAD (172672)
Five Palo Alto Square
3000 El Camino Real
Palo Alto, CA 94306-2155
Telephone: (650) 843-5000
Attorneys for Plaintiff
SUN MICROSYSTEMS, INC.
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
SAN JOSE DIVISION
| SUN MICROSYSTEMS, INC., a Delaware
corporation, Plaintiff, v. MICROSOFT CORPORATION, a Washington corporation, Defendant.
|
) ) ) ) ) ) ) ) ) ) ) ) |
No. C 97-20884 RMW (PVT) ENE
Sun Microsystems, Inc.'s Motion for Preliminary Injunction Under 17 U.S.C § 502 Date: July 31, 1998 Time: 9:00 a.m. Judge:Judge: Hon. Ronald M. Whyte Crtrm: 6 |
NOTICE OF MOTION AND STATEMENT OF RELIEF REQUESTED
On July 31, 1998 at 9:00 a.m., or as soon thereafter as the matter can be heard by Judge Ronald M. Whyte in Courtroom 6 of the United States District Court located at 280 South First Street, San Jose, California 95113, plaintiff, Sun Microsystems, Inc. ("Sun") will move for a preliminary injunction against defendant Microsoft Corporation ("Microsoft") pursuant to 17 U.S.C. § 502 for copyright infringement.
Sun will ask the Court to enjoin Microsoft from reproducing, distributing or selling the following Microsoft products which infringe Sun's copyrights for its JAVATM Development Kit ("JDK") computer program: Internet Explorer 4.0 ("IE 4.0"), Software Development Kit for JAVATM ("SDKJ") 2.0 and 3.0, Visual J++ 6.0 and Windows 98, unless and until Microsoft has demonstrated that these products successfully pass Sun's compatibility test suite and comply with all other compatibility and certification requirements provided for in the Technology License and Development Agreement ("TLDA") between Sun and Microsoft.
MEMORANDUM OF POINTS AND AUTHORITIES
Will Microsoft be permitted to infringe Sun's copyrights for its JDK computer program by distributing products that fail to pass Sun's compatibility test suite?
The parties have previously briefed in detail many of the background facts surrounding Sun's JAVATM Technology and the limited rights granted to Microsoft in the TLDA to distribute products incorporating the JAVATM Technology. See Sun's Motion for Preliminary Injunction dated November 17, 1997 at 2-6; Microsoft's Opposition dated February 6, 1998 at 2-6. Upon consideration of the parties' prior submissions and arguments, the Court made the following preliminary findings in granting Sun's earlier motion for injunctive relief:
Microsoft's opposition indicates that the determination of whether IE 4.0 and SDKJ 2.0 "pass" Sun's relevant test suite is solely an issue of contractual interpretation. Microsoft appears to admit that its IE 4.0 and SDKJ 2.0 products generate Signature Test failures. Microsoft argues, however, that when the Signature Test's reported failures are construed in light of the TLDA, Microsoft's products fully comply with the compatibility requirements of section 2. Microsoft argues that the TLDA allows Microsoft "to extend and enhance the java.* classes as long as it does not modify or extend the java.* class names." Opposition at 16. See TLDA § 2.8(d). Accordingly, Microsoft argues that the reported Signature Test errors are merely the results of changes to the JAVA classes permitted by the TLDA.
Microsoft's manipulation of the ambiguities surrounding section 2 of the TLDA, however, cannot be reconciled with the purpose behind the TLDA and the JAVATM Technology itself. Microsoft's reading of the TLDA would essentially allow Microsoft to destroy the cross-platform compatibility of the JAVA programming environment. See Hankinson Supp. Decl. ¶¶ 8, 11, 12. Moreover, the TLDA appears to limit any functionality added by Microsoft (VAOPs) to classes outside the public java.* class APIs. The TLDA also appears to require Microsoft to adhere to specific naming conventions for this added functionality. See TLDA §§ 1.28, 2.8.
* * *
. . . [T]he course of dealing between Microsoft and Sun merely establishes that Microsoft's products must pass all the tests in the JCK test suite, unless Sun indicates otherwise. In the present case, Microsoft did not provide Sun with the opportunity to review the test suite results of IE 4.0 and SDKJ 2.0. Sun has also demonstrated a sufficient likelihood of establishing that 100% compliance with the Relevant Test Suite is required of Microsoft. See Hankinson Sup. Decl. ¶¶ 15, 16.
* * *
In summary, it appears that JCK 1.1a is the Relevant Test Suite under the TLDA. Furthermore, it appears that Microsoft's IE 4.0 and SDKJ 2.0 products both fail Sun's JCK 1.1a test suite in several material respects. . . .
Order Re Sun's Motion for Preliminary Injunction dated March 24, 1998 ("3/24/98 Order") at 14-15, 17. Since the Court's ruling, Microsoft's test manager, Kory Srock, has confirmed that -- contrary to Microsoft's earlier contentions -- Microsoft knew and understood that Sun's JCK 1.1a was the relevant test suite and that IE 4.0 and SDKJ 2.0 both fail that test suite. Srock Tr. at 32-35, 124-26, 151, 165-69.
The Court's initial injunction has not deterred Microsoft from its continued efforts to undermine Sun's JAVATM Technology. Most recently, Microsoft has introduced pre-release versions of three new products: SDKJ 3.0, Visual J++ 6.0 and Windows 98.
• SDKJ 3.0 is simply a newer version of SDKJ 2.0 -- the developer's kit product that the Court previously found to fail Sun's JCK 1.1a test suite for compatibility. In essence, SDKJ 3.0 is the JAVATM Technology adapted for the Windows platform. Schroer Decl. Exh. C.
• Visual J++ 6.0 is a software development environment product that utilizes the JAVATM Technology which Microsoft received from Sun, and includes additional functionalities. Id. Exh. E.
• Windows 98 is Microsoft's latest operating system which includes IE 4.01 -- a minor modification to IE 4.0. Id. Exh. G.; Srock Tr. at 144-47.
Sun has obtained pre-release versions of these three products from Microsoft and tested them with Sun's JCK 1.1a test suite for compatibility. Schroer Decl. ¶¶ 13-23. Like IE 4.0 and SDKJ 2.0, each of Microsoft's new products fails to pass the JCK 1.1a test suite. Id. ¶¶ 15,19,23. SDKJ 3.0, Visual J++ 6.0 and Windows 98 contain the same modifications that caused SDKJ 2.0 and IE 4.0 to fail Sun's tests. Id. ¶ 23(a). In addition, these new products embody still further, dramatic departures from Sun's specifications for the JAVATM Technology that can render programs written in the programming environment supported in these Microsoft products operable only with Microsoft's products.
Notwithstanding the fact that these Microsoft products fail to pass Sun's test suite and are instead designed to undermine -- not support -- cross-platform compatibility, Microsoft is currently distributing all three products via its Website, and has announced plans for the commercial launch of each product in the immediate future.
Sun's JAVATM Technology is a collection of programming components that create a standard, platform-independent programming and runtime environment. Sun's JAVATM Technology has two basic elements: the JAVATM programming environment and the JAVATM runtime environment.
The JAVATM programming environment allows software developers to create a single version of program code that is capable of running on any platform that conforms to Sun's specifications for the JAVATM runtime environment. The JAVATM programming environment is comprised of three components: Sun's specification for the JAVATM language, Sun's specification for the JAVATM class libraries, and the JAVATM compiler.
The JAVATM runtime environment is comprised of the JAVATM class libraries and the JAVATM runtime interpreter. A systems platform or browser program that implements the JAVATM runtime environment can execute application programs developed for the JAVATM programming environment.
Sun makes the JAVATM programming and runtime environments available to developers via a computer program which embodies the language, the classes and the compiler. This computer program is called the JAVATM Developer's Kit ("JDK"), which can be downloaded in binary form from Sun's website, pursuant to a license. Sun also licenses the source code for its JDK computer program to systems and browser manufacturers (e.g., Apple, IBM, Microsoft, Netscape, etc.) to enable them to incorporate and distribute the JAVATM programming and runtime environments in their own operating systems, browsers and development tool kits.
In January 1996, Sun first released a version of its JDK computer program, called JDK 1.0. Schroer Decl. ¶ 3. At the same time, Sun released a set of compatibility tests called the 1.0 test suite, to enable licensees who incorporated the JDK 1.0 technology to test their products for conformance with Sun's requirements. Id.
In February 1997, Sun released the JDK 1.1 computer program, a significant upgrade of the JDK 1.0 Id. ¶ 4. The JDK 1.1 release was accompanied by the JAVATM Compatibility Kit ("JCK") 1.1a test suite. Id. Subsequently, Sun released a series of revised "bug-fix" versions of JDK 1.1 that corrected minor problems as they were subsequently discovered, including JDK 1.1.3. Id. ¶ 7.
Sun has registered its copyrights in the JDK computer program by filing applications with the Copyright Office and depositing portions of the source code for the computer program. After determining that the JDK computer program constituted copyrightable subject matter pursuant to 17 U.S.C. § 410(a), the Copyright Office has issued certificates of registration for the JDK computer program to Sun. Crean Decl. Exhs. A-C.
In February 1997, Sun notified Microsoft that the source code for JDK 1.1 was available for download via the Javasoft Partners Website. Schroer Decl. ¶ 5. Each time a new version of JDK was available, Sun placed the new source code on its Javasoft Partners Website and announced that it was available for download. Id.
Microsoft regularly downloaded Sun's JDK source code from the Javasoft Partners Website. Id. ¶ 6. In February and March 1997, Microsoft copied the entire source code for JDK 1.1 by downloading the information from the Javasoft Partners Website, and in July and August 1997, Microsoft copied the entire source code for JDK 1.1.3 by again downloading the information from the Javasoft Partners Website. Id. ¶¶ 6-7.
On January 30, 1998, pursuant to Magistrate Judge Trumbull's order, Microsoft produced to Sun portions of the source code for IE 4.0 and SDKJ 2.0 which implement portions of the JAVATM Technology. Batchelder Decl., Exh. B. Examination of that source code reveals that IE 4.0 and SDKJ 2.0 contain hundreds of files literally copied from Sun's source code for the JDK 1.1 and 1.1.3 computer programs and many additional files where Sun's source code is reproduced with only minor modifications.
Specifically, 993 files of Sun's JDK 1.1.3 source code were found to have corresponding files in Microsoft's source code for IE 4.0 and SDKJ 2.0. Deutsch Decl. ¶ 35. Of the 993 corresponding files, 596 files (60%) were identical to Sun's JDK 1.1.3, 46 files (5%) contained trivial differences and 230 files (23%) contained differences in less than 10% of the lines of source code comprising the file. Id. The direct copying of Sun's copyrighted source code is further confirmed by the fact that hundreds of files of the IE 4.0 and SDKJ 2.0 source code contain Sun's notice of copyright. Id. ¶ 37.
An analysis of the copyrighted JDK source code copied by Microsoft reveals that there are a wide range of expressive choices for achieving the desired functionality. Id. ¶ 44. The source code could have been written a number of different ways to achieve the same functions. Id. The massive, literal identity between Sun's copyrighted source code and Microsoft's source code for IE 4.0 and SDKJ 2.0 confirm beyond any reasonable doubt that Microsoft copied Sun's code. Id.
Microsoft recently began distributing several new products which implement and incorporate Sun's JAVATM Technology, namely SDKJ 3.0, Visual J++ 6.0 and Windows 98. On March 11, 1998, Microsoft began distributing pre-release versions of SDKJ 3.0 and Visual J++ 6.0 via the Microsoft Website. Schroer Decl. ¶¶ 8-9 . In April 1998, Microsoft began distributing Windows 98 Release Candidate 0. Id. ¶ 10. Microsoft has announced it will commercially distribute SDKJ 3.0 and Visual J++ 6.0 before the end of 1998 and Windows 98 on June 25, 1998. Id. ¶¶ 8-10.
Although Sun does not have access to the source code for SDKJ 3.0, Visual J++ 6.0 and Windows 98, the source code for SDKJ 3.0, Visual J++ 6.0 and Windows 98 will likely contain a significant amount of Sun's copyrighted JDK source code. According to Microsoft, Windows 98 will include IE 4.01 -- a "bug fix" version of IE 4.0. Srock Tr. at 146-48. IE 4.0 was found to contain hundreds of files of Sun's copyrighted source code. Deutsch Decl. ¶¶ 25-37. SDKJ 3.0 is simply a new version of SDKJ 2.0, which similarly contains hundreds of files directly copied from Sun's copyrighted source code for the JDK computer program. Id. As for Visual J++ 6.0, Microsoft claims on its website that the Visual J++ 6.0 compiler "supports all language features in Java, including Sun's additions to the language specified in the Java Developers Kit (JDK) 1.1." Schroer Decl. ¶ 9, Exh. E (emphasis added).
In granting Sun's motion for a preliminary injunction, this Court previously held that Sun "demonstrated a sufficient likelihood of establishing that 100% compliance with the Relevant Test Suite is required of Microsoft." 3/24/98 Order at 15. The Court concluded:
In summary, it appears that JCK 1.1a is the Relevant Test Suite under the TLDA. Furthermore, it appears that Microsoft's IE 4.0 and SDKJ 2.0 products both fail Sun's JCK 1.1a test suite in several material respects.
3/24/98 Order at 17.
Microsoft's test manager, Kory Srock, who was deposed after the Court issued its preliminary injunction, has confirmed Microsoft knew that JCK 1.1 was the relevant test suite and that both IE 4.0 and SDKJ 2.0 fail that test suite, contrary to the positions Microsoft took while opposing Sun's preliminary injunction motion. Srock Tr. at 32-35, 124-26, 151, 165-69. According to Mr. Srock, it "seemed pretty straightforward to me" that Microsoft was required "to use the test suite that accompanied the version of the JDK implemented in the product." Id. at 35. Thus, "once IE4 incorporated the JDK 1.1 technology, Microsoft used the JCK 1.1 test suite to test it." Id. at 124. Nevertheless, before IE 4.0 was shipped, Microsoft knew IE 4.0 failed "about 50" tests on the Sun JAVATM compatibility test suite. Id. at 126. When asked about an e-mail concerning public relations information which asserted that "the Java virtual machine* in Internet Explorer 4.0 passes every one of those tests," Mr. Srock testified that "it is not a true statement." Id. at 168-69.
Consequently, not only has the Court already adjudicated that Sun is likely to establish Microsoft's IE 4.0 and SDKJ 2.0 products fail to pass the JCK 1.1a test suite as required by the TLDA, subsequent discovery has confirmed the correctness of the Court's decision.
Sun recently performed compatibility testing of Microsoft's SDKJ 3.0 Pre-Release 1, Visual J++ 6.0 Technology Preview 1 and Windows 98 Release Candidate 0. Schroer Decl. ¶¶ 13-25. After downloading binary copies of SDKJ 3.0 and Visual J++ 6.0 and receiving a binary copy of Windows 98, Sun performed each of the JCK 1.1a compatibility tests, and found that SDKJ 3.0, Visual J++ 6.0 and Windows 98 fail to pass the JCK 1.1a test suite. Id.
Like IE 4.0 and SDKJ 2.0, SDKJ 3.0 fails to pass the JCK 1.1a "SignatureTest." Id. ¶ 15(a). The "SignatureTest" detected the same 107 changes, additions and deletions in SDKJ 3.0 as in SDKJ 2.01 and IE 4.01. Id. ¶¶ 15(a) and 23(a); see also Schroer Supp. Decl. dated January 29, 1998, ¶ 25. Microsoft has modified the set of public APIs for the "java" class libraries by adding and deleting various methods and fields in the "java" classes. Schroer Decl. ¶ 15(a). These non-conforming modifications were not previously disclosed to Sun by Microsoft and result in the failure of SDKJ 3.0 to pass the JCK 1.1a "SignatureTest." Id.
In addition, SDKJ 3.0 fails to pass any of the 214 required tests for the JAVATM Native Interface ("JNI"), and two tests for the JAVATM compiler. Id. ¶ 15(b) and (c).
Visual J++ 6.0 and Windows 98 also fail to pass the JCK 1.1a test suite, revealing the same changes, additions and deletions present in SDKJ 3.0, IE 4.01 and SDKJ 2.0.1. Id. ¶¶ 19, 23.
Injunctive relief is specifically authorized by the Copyright Act. 17 U.S.C. § 502(a). A plaintiff seeking a preliminary injunction must demonstrate either (1) "a likelihood of success on the merits and the possibility of irreparable injury" or (2) "serious questions going to the merits were raised and the balance of hardships tips sharply in its favor." Cadence Design Sys., Inc. v. Avant! Corp., 125 F.3d 824, 826 (9th Cir. 1997), petition for cert. filed (Feb. 19, 1998). In a copyright infringement action, a presumption of irreparable harm arises if the plaintiff is able to show a reasonable likelihood of success on the merits. Id.; Triad Sys. Corp. v. Southeastern Express Co. 64 F.3d 1330, 1335 (9th Cir. 1995).
In the present case, a preliminary injunction is warranted because Sun can demonstrate a likelihood of success on the merits on its copyright infringement claim. The Court previously found that, because Microsoft's IE 4.0 and SDKJ 2.0 failed the JCK 1.1a test suite, Microsoft's use of the "JAVA Compatible" trademark was unauthorized. 3/24/98 Order at 17. Like the "JAVA Compatible" trademark, Microsoft's license to copy and distribute products that use Sun's copyrighted source code is similarly conditioned upon the requirement that all such products first pass Sun's applicable test suite for the technology they incorporate. Since Microsoft's IE 4.0 and SDKJ 2.0 fail to pass the JCK 1.1a test suite, distribution of those products by Microsoft infringes Sun's copyrights. Because Microsoft is distributing additional products -- SDKJ 3.0, Visual J++ 6.0 and Windows 98 -- which implement the same version of Microsoft's virtual machine and class libraries as IE 4.0 and SDKJ 2.0 and also fail the JCK 1.1a test suites, Microsoft is poised yet again to infringe Sun's copyrights.
The irreparable harm that will befall Sun if Microsoft is permitted to continue and expand its infringement of Sun's copyrights is more than presumptive. Using its dominant position in the marketplace for desktop operating systems, Microsoft is preparing to inundate the market with an unlicensed and incompatible version of Sun's JAVATM Technology by incorporating nonconforming versions of Sun's technology in its upcoming release of Windows 98. If this occurs, Microsoft will quickly establish its unlicensed and incompatible version as a de facto industry standard, and no relief this Court can subsequently grant will undo the harm that will befall Sun, its licensees and their customers.
In order to establish copyright infringement, Sun must prove (1) ownership of a valid copyright and (2) copying of an expression protected by copyright. Triad Sys., 64 F.3d at 1335.
After an examination by the Copyright Office, Sun has received certificates of registration for various versions of its JDK computer program, including JDK 1.1. See, e.g., Crean Decl., Exh. C. These certificates of copyright registration, made within five years of the first publication of the JDK computer program, constitute prima facie evidence of Sun's ownership and raise a presumption of validity for Sun's copyrights. 17 U.S.C. § 410(c); Entertainment Res. Group, Inc. v. Genesis Creative Group, Inc., 122 F.3d 1211, 1217 (9th Cir. 1997), cert. denied, 118 S. Ct. 1302 (1998); Triad Sys., 64 F.3d at 1335. Sun therefore will have no difficulty establishing this element of its copyright claim.
"`[C]opying' is shorthand for the infringing of any of the copyright owner's five exclusive rights." S.O.S., Inc. v. Payday, Inc., 886 F.2d 1081, 1085 n.3 (9th Cir. 1989). Sun, as the owner of copyrights to the JDK computer program, owns the following relevant, exclusive rights: (1) to reproduce the copyrighted work; (2) to prepare derivative works based on the copyrighted work; and (3) to distribute copies of the copyrighted work to the public. 17 U.S.C. § 106; Dr. Seuss Enters., L.P. v. Penguin Books USA, Inc., 109 F.3d 1394, 1397 (9th Cir.), cert. dismissed, 118 S. Ct. 27 (1997).
Here, there can be no doubt that Microsoft has copied Sun's JDK computer program, prepared derivative works based on the program, and distributed copies of the copyrighted work to the public. Sun doubts that Microsoft will contest these facts.
Sun's website records reveal that persons at Microsoft downloaded (i.e., copied) the source code for Sun's JDK 1.1 and 1.1.3 in February and July of 1997, respectively. Schroer Decl. ¶¶ 6-7. An examination of the source code produced by Microsoft for IE 4.0 and SDKJ 2.0 reveal the presence of Sun's copyright notice in hundreds of files of Microsoft's source code. Deutsch Decl. ¶ 37. IE 4.0 and SDKJ 2.0 are plainly "derivative works" because they are based upon Sun's copyrighted JDK computer program. See 17 U.S.C. § 101 (defining "derivative work"). The object code for IE 4.0 and SDKJ 2.0 is simply compiled ("translated") from Sun's copyrighted source code. Since Sun's JDK computer program is literally copied into Microsoft's IE 4.0 and SDKJ 2.0 products, Microsoft is also distributing copies of Sun's copyrighted work to the public.
Based on Microsoft's announcements regarding SDKJ 3.0, Visual J++ 6.0 and Windows 98, Sun will likely succeed in establishing that Microsoft's activities regarding those products also infringe Sun's copyrights.
Even if Sun's direct evidence were insufficient, Sun has presented compelling circumstantial evidence of copying as well. "Because direct evidence of copying is rarely available, copying may be established by proof of access and substantial similarity." Broderbund Software, Inc. v. Unison World, Inc., 648 F. Supp. 1127, 1135 (N.D. Cal. 1986); see also Smith v. Jackson, 84 F.3d 1213, 1218 (9th Cir. 1996).
Microsoft indisputably had access to Sun's JDK program in both source code and object code form. Sun has demonstrated that Microsoft regularly was informed of new versions of the JDK program, and that Microsoft had access to a special Javasoft Partners website where licensees could download the source code for new versions of the JDK program. Schroer Decl. ¶ 5. In fact, Sun's records demonstrate persons at Microsoft did in fact download the source code for the JDK computer program, including versions 1.1 and 1.1.3. Id. ¶¶ 6-7. Given this high degree of access, the standard of proof required to show substantial similarity is lowered. Smith, 84 F.3d at 1218 (discussing the "Inverse Ratio Rule" requiring a "lower standard of proof on substantial similarity when a high degree of access is shown").
Sun's evidence of substantial similarity is so striking, however, that Sun satisfies this requirement regardless of the standard of proof. "Substantial similarity may be found whenever the works share significant similarity in protected expression both on an objective, analytical level and a subjective, audience-response level." Dr. Seuss, 109 F.3d at 1398 (internal quotations omitted). Expert analysis of Microsoft's source code for IE 4.0 and SDKJ 2.0 reveals a very high degree of similarity between Microsoft's files and Sun's JDK files. Deutsch Decl. ¶ 34. At least 434 files in the source code for IE 4.0 and SDKJ 2.0 were identical to the source code in Sun's JDK 1.1, and at least 596 files were identical to the source code in Sun's JDK 1.1.3. Deutsch Decl. ¶¶ 34-35. Approximately 86% of the IE 4.0/SDKJ 2.0 files for which corresponding JDK 1.1 files were identified were either identical or contained less than 10% lines of different source code. Id. ¶ 34. Approximately 88% of the IE 4.0/SDKJ 2.0 files for which corresponding JDK 1.1.3 files were identified were either identical or contained less than 10% lines of different source code. Id. ¶ 35. Microsoft's IE 4.0 and SDKJ 2.0 contain, at the very least, over 100,000 lines of source code which are literally identical to the source code of Sun's copyrighted JDK program. Id. ¶ 36.
Given the extensive, literal identity between the source code, Microsoft must have copied Sun's source code. Source code for a particular function can be expressed in a variety of different ways. Id.. ¶ 44. Many choices are simply a reflection of a particular programmer's style or preferences. Id. As Dr. Deutsch has shown, source code that is identical between Microsoft and Sun's files could have been expressed in a variety of ways, yet still carry out the same task with comparable conciseness and efficiency. Id. ¶¶ 45-48. The extensive, literal identity in the source code is not a fortuitous coincidence. Microsoft chose to copy Sun's particular form of expression.
"A licensee infringes the owner's copyright if its use exceeds the scope of the license." S.O.S., Inc., 886 F.2d at 1087; see also Rano v. Sipa Press, Inc., 987 F.2d 580, 586 (9th Cir. 1993); Microsoft Corp. v. Very Competitive Computer Prods. Corp., 671 F. Supp. 1250, 1257 n.4 (N.D. Cal. 1987). "The critical question is not the existence but the scope of the license." S.O.S., Inc., 886 F.2d at 1087-88.
Here, Microsoft will be unable to rely on any license under the TLDA as a defense to Sun's copyright infringement claim because Microsoft's IE 4.0, SDKJ 2.0 and 3.0, Visual J++ 6.0 and Windows 98 fail to pass Sun's compatibility test suite, and therefore fall outside the scope of any license granted to Microsoft in the TLDA.
Section 2.0, "LICENSE GRANTS," of the TLDA, defines the scope of the copyright license granted to Microsoft. Pursuant to sections 2.1(a) and 2.2(a)(iii), Sun granted to Microsoft, among other things, a nonexclusive license under Sun's Intellectual Property Rights, including copyrights, to (1) "make, access, copy, view, display, modify, adapt and create Derivative Works of the Technology in Source Code form for the purposes of developing, compiling to binary form and supporting Products" and (2) "make, use, import, reproduce, license . . . sell or otherwise distribute to end users as part of a Product or an upgrade to a Product, the Technology and Derivative Works thereof in binary form." Batchelder Decl. Exh. C. Under section 2.6(a)(iv) and (vi), that license, however, was conditioned upon the requirement that each new version of any Microsoft product that incorporates Sun's JAVATM Technology first pass Sun's compatibility test suit prior to its commercial distribution by Microsoft. Id. Microsoft's license from Sun was further limited by section 2.8(d) which prohibited Microsoft from making any modification to any "public class or interface declarations whose names begin with `java.'" Id.
Microsoft's products, IE 4.0, SDKJ 2.0 and 3.0, Visual J++ 6.0 and Windows 98, incorporate Sun's JAVATM Technology by copying source code from the copyrighted JDK computer program, but fail to pass Sun's JCK 1.1a test suite. In its March 24, 1998 opinion, this Court concluded Sun had demonstrated a sufficient likelihood of establishing that (1) the JCK 1.1a test suite was the Relevant Test Suite under the TLDA, (2) 100% compliance with the Relevant Test Suite is required and (3) Microsoft's IE 4.0 and SDKJ 2.0 failed to pass the JCK 1.1a test suite in "several material requests." 3/24/98 Order at 12-17. The subsequent testimony of Microsoft's Kory Srock confirms those findings. With the present motion, Sun presents additional evidence demonstrating that SDKJ 3.0, Visual J+ 6.0 and Windows 98 similarly fail to pass the JCK 1.1a test suite as required under the TLDA.
By distributing products which fail to pass the compatibility requirements of the TLDA, Microsoft is exceeding the scope of its copyright license. As the recital to the TLDA makes clear, Sun "wishes to license its JAVA technology, while maintaining compatibility among JAVA language based products." Batchelder Decl. Exh. C (emphasis added); cf. 3/24/98 Order at 14 n.3 ("Microsoft's interpretation of the TLDA is inconsistent with JAVA's objective of cross-platform compatibility."). Microsoft is not authorized to copy Sun's JDK source code for use in a product that fails to pass the compatibility requirements of the TLDA. Nor is Microsoft licensed to prepare derivative works of the JDK computer program that fail to pass the compatibility provisions of the TLDA. By commercially distributing or preparing to commercially distribute incompatible products that copy Sun's JDK 1.1 and 1.1.3 computer programs, but fail to pass Sun's JDK 1.1a test suite, Microsoft is exceeding the scope of its license, and therefore, is infringing Sun's copyrights.
The decision in S.O.S., Inc. v. Payday, Inc. is directly on point. In that case, the Ninth Circuit reversed the district court's grant of summary judgment for the defendant on plaintiff's claim of copyright infringement, holding that the district court "erred in assuming that a license to use a copyrighted work necessarily precludes infringement." S.O.S., 886 F.2d at 1085. S.O.S. had granted Payday a license only to use S.O.S.'s payroll software. By copying and preparing a modified version of S.O.S.'s software without permission, Payday exceeded the scope of the license. Id. 1088-89. The Ninth Circuit remanded the case to the district court to determine whether Payroll's acts, "unshielded by any license, infringed S.O.S.'s copyrights." Id. at 1089; see also Gilliam v. American Broadcasting Cos., 538 F.2d 14, 20 (2d Cir. 1976) ("One who obtains permission to use a copyrighted work in the production of a derivative work, however, may not exceed the specific purpose for which permission was granted.").
As demonstrated above, Microsoft's IE 4.0, SDKJ 2.0 and 3.0, Visual J++ 6.0 and Windows 98, fall outside the scope of the copyright license contained in the TLDA because those products do not comply with the TLDA's compatibility requirements. Like the defendant in S.O.S., Microsoft has made unauthorized copies and modifications to the licensed computer program. Sun granted Microsoft a limited license to copy certain works, subject to and conditioned upon Microsoft's obligation to distribute only products which first passed Sun's relevant test suite and otherwise satisfied the compatibility requirements of the TLDA. Having willfully exceeded the scope of the license granted, Microsoft's copying of the JDK computer program is unshielded by any license and, therefore, infringes Sun's copyrights.
Because Sun has shown that it is likely to succeed on the merits of its claim that Microsoft is infringing Sun's copyrights, Sun is entitled to a presumption of irreparable harm. Cadence Design, 125 F.3d at 826. Microsoft cannot rebut the presumption of irreparable harm by asserting the adequacy of money damages. Id. at 827. Moreover, "the balance of hardships issue cannot be accorded significant -- if any -- weight in determining whether a court should enter a preliminary injunction to prevent the use of infringing material where . . . the plaintiff has made a strong showing of likely success on the merits." Id. at 830.
Even without reliance upon that presumption, however, it is clear that Sun faces irreparable harm if Microsoft is not enjoined from shipping incompatible (and therefore infringing) products, especially through its planned massive distribution of Windows 98. Sun's entire licensing program, premised on maintaining cross-platform compatibility among licensees of the JAVATM Technology, will be irreparably damaged if Microsoft is permitted to distribute products which do not pass Sun's test suites. Microsoft's shipment of these products will "destroy the cross-platform compatibility of the JAVATM programming environment," 3/24/98 Order at 15, robbing Sun and its licensees of the substantial time and capital invested in the JAVATM Technology. Such losses undoubtedly constitute irreparable harm. See Apple Computer, Inc. v. Formula Int'l, Inc., 725 F.2d 521, 525-26 (9th Cir. 1984) (jeopardy to plaintiff's "investment and competitive position" caused by defendant's infringement "satisfies the requirement of irreparable harm needed to support a preliminary injunction") (internal quotations omitted).
At the very least, Sun has raised "serious questions" as to whether Microsoft is infringing Sun's copyrights by distributing products which copy Sun's JDK computer programs, but fall outside the scope of the license granted in the TLDA because they fail to satisfy the compatibility requirements of the TLDA.
Sun also has shown the balance of hardships tips sharply in its favor. Sun will suffer immediate and grave harm if Microsoft is not restrained from releasing products which copy Sun's JDK computer program, yet fail to pass the compatibility requirements of the TLDA in contravention of the TLDA's overarching purpose and the Technology's overriding "objective of cross-platform capability."
Microsoft, on the other hand, "cannot complain of the harm that will befall it when properly forced to desist from its infringing activities." Triad, 64 F.3d at 1338; see also Cadence Design, 125 F.2d at 830 (holding district court erred in denying preliminary injunction based on "devastating" effect injunction would have on infringer's business). Moreover, the hardship to Microsoft is minimized given the nature of the limited injunction Sun now seeks. Sun only seeks an injunction prohibiting Microsoft from distributing incompatible versions of Microsoft's products which copy Sun's JDK computer program. Microsoft would remain free to distribute IE 4.0, SDKJ 2.0 and 3.0, Visual J++ 6.0 and Windows 98 by either (1) modifying the products so they pass the JCK 1.1a test suite for compatibility or (2) removing all JAVATM Technology from the products.
Microsoft cannot avail itself of the benefits of the TLDA while shirking its obligations. It cannot copy Sun's JDK computer program, and then distribute incompatible products which do not pass Sun's JCK 1.1a test suite. Having willfully exceeded the scope of its license from Sun, Microsoft is now infringing Sun's copyrights. Sun is entitled to stop that infringement now, before the harm becomes irreparable. The Court should grant Sun's motion, and promptly enjoin Microsoft from any further infringement of Sun's copyrights, unless and until Microsoft's products pass Sun's compatibility test suite and comply with all other compatibility and certification requirements provided for in the TLDA.
Dated: May 12, 1998
COOLEY GODWARD LLP
By:
Lloyd R. Day, Jr.
Attorneys for Plaintiff
SUN MICROSYSTEMS, INC.
*As used on this web site, the terms "Java virtual machine" or "JVM" mean a virtual machine for the Java platform.