January 17, 2007
Following the antitrust case brought by the Department of Justice and some state governments, Microsoft has faced a number of private class-action lawsuits.
Unlike the government case, however, which alleged that Microsoft used its market position to harm competition by incorporating new features into the operating systems at no additional cost, these private class-action lawsuits claim that Microsoft overcharged consumers.
Microsoft has successfully obtained dismissals of a substantial number of these cases and has made a concerted effort to resolve these private class-action lawsuits through settlement where reasonably possible. While the company continues to face legal challenges, it has made considerable progress in resolving these conflicts.
The Government Antitrust Case
The U.S. Department of Justice and attorneys general for 19 states plus the District of Columbia filed suit against Microsoft in 1998 claiming violation of the antitrust laws.
After discussions ordered by the U.S. District Court for the District of Columbia, Microsoft reached a settlement – often referred to as the consent decree – with the DOJ in 2001. Nine states joined with that agreement, while seven others continued to pursue their claims separately before accepting the District Court’s final judgment in 2002. One state appealed that ruling; however, it was upheld in 2004 by the U.S. Court of Appeals.
Additionally, Microsoft reached separate settlements with three state governments – two prior to the consent decree and one after the final judgment.
Private Class-Action Lawsuits
More than half of these private class-action lawsuits were moved to federal court and consolidated in a case known as the Multi-District Litigation (MDL).
The federal court narrowed these claims significantly, throwing out the claims of indirect purchasers, foreign purchasers and refusing to certify a class of volume license customers. The dismissal of these claims was affirmed on appeal. (Separately, Microsoft reached settlement with a small class of direct purchasers in 2003.)
The remaining class-action cases, including the case filed in Iowa, proceeded in state courts. Although these private lawsuits are often referred to by the state where they were filed, they are separate and distinct from the claims filed by state attorneys general in the government case.
In these private class-action cases, Microsoft has:
Won dismissals in 16 states.
Won denials of class certification in 2 states.
Reached final settlements in 17 states.
Reached preliminary settlement in 2 states.
Just two of these lawsuits remain in Iowa and Mississippi. A motion to dismiss the Mississippi action is pending. Trial in the Iowa case began in November 2006.