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Thursday, October 17, 2002 - Page updated at 12:00 AM

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Microsoft loses software ruling in California case

Bloomberg News

SAN FRANCISCO — Court findings that Microsoft unlawfully protected its monopoly for personal-computer software can be used in a suit by California computer owners seeking billions of dollars in damages, a judge said.

The ruling is a setback to the Redmond software company, which had sought to keep the findings in the federal government's antitrust lawsuit from being used in the California case. The consumers claim they were forced to pay inflated prices for software because of Microsoft's monopoly.

"You've just taken care of half the case," said Ernest Gellhorn, an antitrust law professor at George Mason University in Arlington, Va. "That's an enormous victory."

San Francisco Superior Court Judge Paul Alvarado said jurors in the lawsuit, scheduled for trial in February, should be given a judge's findings from the federal government's antitrust case that Microsoft illegally protected its Windows monopoly for personal-computer operating software.

As part of their instructions, the jurors will get either a written copy or will be read as many as 350 of the 412 findings by a federal judge in the District of Columbia.

"It drastically reduces the time required to try the case," said Eugene Crew, an attorney representing California consumers.

Robert Rosenfeld, Microsoft's lawyer, sought to minimize the significance of the ruling.

It affects "a small portion of their case and their claims," Rosenfeld said. He had argued that the findings weren't relevant to the California case because they didn't relate to violations of state law claimed in the consumers' suit.

Alvarado told both sides to jointly create a list of findings to be provided to the jury.

The suit filed on behalf of 13 million California consumers says Microsoft is liable for $2 billion in overcharges and seeks as much as $6 billion because damages can be tripled under state law. The suit is one of dozens of antitrust cases filed against Microsoft.

The federal government has proposed a settlement of its 4-year-old antitrust lawsuit against Microsoft under which the company would give computer users an easy way to hide Microsoft programs they don't wish to use.

The California plaintiffs still have to prove that they paid a higher price for Windows because Microsoft has a monopoly, and must show how Microsoft's illegal conduct affected the price independent of any lawful conduct or other marketplace factor, Gellhorn said.

"They've got to show how much they paid" above an economist's estimate of what the price would be in a competitive marketplace, the law professor said.

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