Microsoft a target for suits

By DAVID SEGAL

The Washington Post

The lawyers who attacked Big Tobacco have discovered a new villain: Microsoft.

Less than a week after a federal judge branded the software giant a brute and monopolist, veterans from the cigarette wars are plotting to sue the company in a wave of private litigation. If the onslaught unfolds as expected, teams of lawyers will turn Microsoft into the next Philip Morris, tangling the company in courts nationwide.

"We're looking at it, we're seriously looking at it," said Stanley Chesley, a prominent class-action tobacco lawyer. "Millions of people bought Windows, and if the company overcharged consumers, it should be held responsible."

Lawyers have been emboldened by a blunt ruling by Thomas Penfield Jackson, the federal judge hearing the government's antitrust suit against Microsoft Corp. Last Friday, Jackson issued findings of fact concluding that Microsoft ruthlessly exploited its market power to strong-arm corporate customers and competitors alike. Jackson also determined that a range of Microsoft tactics stifled innovation, reduced consumer choice and led to higher prices.

Some parts of the legal community see Jackson's words as the combination to a padlocked fortune. Antitrust law grants triple damages to plaintiffs who prevail, so if consumers overpaid for copies of Windows by just $10 apiece, verdicts could easily wind up in the billions of dollars, say specialists.

Typically, private lawyers must spend fortunes marshaling the manpower and research needed to prove a company is a monopolist and bully. With Jackson's ruling in hand, plaintiffs could effectively piggyback off the government's research and its experts' opinions.

"It makes a hell of a road map," said John Coale, a Washington plaintiffs' lawyer who played a leading role in negotiating the $260 billion tobacco settlement in 1998.

One company already has found its way to the courthouse. On Monday, Seastrom Associates, a small advertising firm, filed suit in New York seeking class status for all the state's consumers, alleging Microsoft abused its power by overcharging for Windows.

Microsoft officials say the contemplated suits are baseless and ironic, given Jackson's findings that the company charges less than its rivals, such as IBM, in the operating system market.

"We think it's a sad day for consumers when there's litigation threatened against a company that brought enormous innovation to the marketplace and helped drive down prices," said Microsoft spokesman Mark Murray, adding that the court's findings "do not have any weight or bearing on any other lawsuit until they are entered in a final ruling by Judge Jackson."

But some lawyers don't plan to wait the months it might take for Jackson to issue his conclusions of law. Some contend the findings of fact alone could be deployed in private litigation; judges, they maintain, are granted discretion about what is allowed into evidence, and many might conclude the findings are carefully enough considered to stand on their own.

Regardless, Microsoft won't be an easy target. One lawyer estimated a national class action would cost at least $3 million, a price that might daunt all but firms with the deepest pockets.

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