How to maintain a monopoly

Last month saw developments in a couple of important legal cases for the IT industry.

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By  Mark Sutton Published  January 4, 2003

Last month saw developments in a couple of important legal cases for the IT industry.

Both involve industry leaders in their relevant fields trying to control their technology and copyright, as they would have it, or trying to use the law dominate their market, as their opponents would have it.

The first case concerns Microsoft, and its attempts to prevent a Linux software vendor using the name ‘Lindows’ for its company and its product—as Lindows.com and LindowsOS respectively (‘Linux’ plus ‘Windows’ equals ‘Lindows’, in case you hadn’t guessed).

Microsoft believes that it can trademark ‘Windows’ despite, as Lindows points out, the term having been used extensively for multi-task, graphical interfaces well before Microsoft released Windows 1.0.

A ruling is due from the United States District Court in Seattle sometime this month as to whether Microsoft has a case. Hopefully the Judge will see sense, and throw this action straight out of court, but given the depth of the Microsoft coffers and the tenacity with which Redmond has pursued legal action in the past, not to mention some of the more idiotic decisions made by the US courtst, then who knows.

The other action concerns chip manufacturers Via and Intel. Intel has tried to sue Via for infringement of patent for several of its chipsets, Via maintains that Intel can’t restrict these patents, because to do so would be monopolistic. The UK courts originally ruled that Via could not use the anti-competition defence, but on appeal, and in a rare display not only of common sense but of technological comprehension, the judge ruled that there was a danger of anti-competitive behaviour.

In the Judge’s ruling he spelled his reasoning out: “If what Via alleges is made out then the dominance of Intel in the world-wide market in the important and developing technology for PCs is buttressed by its enormous portfolio of patents and restrictive licensing policy. This may be true of others but in the case of this technology the commercial and technical requirement for compatibility of hardware and software confers on the industry leader an even more impregnable position.”

Despite the fact that both of these cases involve the market leaders throwing their weight around, the outcomes have different consequences. It doesn’t really matter to the market if Microsoft’s lawyers beat Lindows into submission. These kind of trademark cases are two-a-penny—in the UK a cheap flights company is even trying to convince the courts that it somehow has the sole rights to the word ‘easy’.

Of course, Lindows could face a bankrupting damages bill if Microsoft wins, but LindowsOS is already being installed and run on budget PCs available through retail in the US. The concept that there is an alternative to Microsoft Windows—which seems to be what Redmond is really worried about—has already gained acceptance with consumers. All this action really does in the long term is show how worried Bill really is by open source software.

The situation with Intel is potentially further reaching. While Intel should have every right to enjoy the results of its R&D expenditure—more than most of its rival’s total revenues—should this be at the cost of the rest of the market?

The judge rightly identifies a fundamental concern—that Intel controls the architecture of the PC so completely that by preventing anyone else from having access to the technologies involved, it effectively creates a monopoly. And monopolies, as we all know, are bad for business and bad for consumers.

A commentator for Information Week, talking about the passing of Windows 95, pointed out that in the eighties if you wanted a windows GUI you had to buy an Apple Mac. And while the GUI format became the industry standard, Apple effectively crippled the Mac by not letting anyone else use its technology, while IBM allowed clones of its PC format. The history lessons are there for Intel of the dangers of monopolies, but will it take a court decision to make it take notice?

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