Hardware & Infrastructure
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3/10/2006
05:15 PM
Rob Preston
Rob Preston
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Down To Business: When Fighting The Good Fight Isn't Worth It

When you're hauled into court, you don't always get justice. RIM learned that lesson the hard way. Will Microsoft?

It's better to be smart than right ... assuming you can't be both. Research In Motion swallowed that bitter pill this month when it agreed to pay $612.5 million--more than a quarter's worth of revenue--to privately held NTP to license mobile E-mail patents still under review by the U.S. Patent and Trademark Office.

RIM cried uncle as the cranky federal judge overseeing the case threatened to shut down its BlackBerry service. The settlement wraps up a nasty five-year court battle during which RIM racked up millions of dollars in legal fees, leaked tens of millions of dollars in revenue, and otherwise got sidetracked from its core business. RIM should have realized sooner that the good fight isn't always one worth fighting.

Even if the Patent Office now rules that NTP's patents aren't any good, the settlement will stand. "It's a lot of money for patents that will not survive," lamented RIM co-CEO Jim Balsillie in what could be the understatement of the year, "but that [reasoning] doesn't do us any good if there's a court that doesn't wait."

Microsoft is at a similar crossroads in Europe. It can either make nice with Europe's trustbusters, which in 2004 found the company guilty of anti-competitive business practices, or it can antagonize them while claiming the moral high ground. Not surprisingly, Microsoft is doing the latter, charging this month in a 16-page complaint that European Commission officials schemed with the software giant's rivals to discredit its compliance with the antitrust decision.

Recall that years ago Microsoft took the same in-your-face tack with the U.S. Justice Department and the judge who oversaw its U.S. antitrust trial. Bill Gates, for one, was so evasive on the stand that he came off as mocking the system. The result was an initial ruling that would have dismantled Microsoft. Only after company executives stopped grandstanding and started showing some respect for the process were they able to mitigate the U.S. decision to one that has allowed Microsoft to operate pretty much undaunted.

Now Europe is taking its best shot. Whether Microsoft has a legitimate beef with how the European case is being handled really doesn't matter (unfortunately). Microsoft owes it to its shareholders and customers to broker a peace before this no-win confrontation gets even more expensive and distracting.

For the record, Microsoft says the EC has carelessly used information provided by three unnamed rivals to undermine its defense, and it calls into question the impartiality of the EC's technical adviser. Microsoft also maintains that the EC hasn't been forthcoming with evidence it has compiled in cahoots with the company's rivals.

But as RIM learned the hard way, when you're hauled into court, you don't always get justice. The legal process, especially when powerful governments are the protagonists, is sometimes stacked against you. (Microsoft's first round of appearances before the European Court of First Instance is scheduled for April.)

In the United States, class-action lawyers regularly shop their frivolous suits to the judges and counties they know will be the most sympathetic. High-tech litigators (Novell, NTP, SCO, Sun, etc.) that can't punish their competitors in the marketplace can always seek out these courts. For Microsoft's rivals, the judicial woodshed of last resort is now Brussels, which is all too happy to paddle the single biggest threat to Europe's software industry, even as the spread of Linux and Web alternatives makes Microsoft's quasi-monopoly yesterday's news.

Critics of the sue-and-disrupt system rightly demand tort, patent, and other reforms. Meantime, though, understand who holds the power. Despite what you might have heard at the most recent World Trade Organization protests, it isn't the biggest multinational companies that set the rules; it's those that regulate and judge them.

Rob Preston,
VP/Editor in Chief
rpreston@cmp.com

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