Essay on United States v. Microsoft
The development of technologies and communications increased the attention towards legal regulation of intellectual property. Different forms of protection of intellectual property such as patenting, copyright, licensing and trade secrets are used to protect and encourage innovation and creativity in different spheres of human life (Dunham, 2006)e. The main purpose of legal regulations relating to intellectual property is to support innovators and grant a certain rate of monopoly to them in order to reward them. On the other hand, antitrust policies are meant to secure economic efficiency at the market, and are directed against monopolies. Therefore, these two branches of law have inherently conflicting methods, and there are many situations when the requirements of one group of laws contradict to the other. The purpose of this paper is to analyze the case of a well-known case of United States v. Microsoft, express own opinion on the charged levied against Microsoft and consider the interaction of antitrust and intellectual property laws.
- Overview of United States v. Microsoft case
The case of United States v. Microsoft was filed in 1998 by 20 states and the Department of Justice (Dunham, 2006). According to the prosecutors, Microsoft violated 1890 Sherman Antitrust Act (ss. 1-2) by misapplying its monopolistic power with regard to the sales of Windows operating system and web browser Internet Explorer (Dunham, 2006). This case is in fact the combination of two separate antitrust issues, issues at web browser market and at the market of operating systems. Regarding the sales of operating systems, the claim was the following: Microsoft established unlawful agreements with Original Equipment Manufacturers (OEMs) for selling computers with preinstalled Windows operating system on these computers. Furthermore, Microsoft required OEMs to distribute and license other commercial software, and web browser (Internet Explorer) in particular. Since Microsoft had a dominant position on the market of operating systems, and OEMs considered it highly important to sell computers with a pre-installed operating system, these agreements created a specific competitive advantage for other Microsoft products bundled with OS Windows, and for the browser in particular. Moreover, Microsoft was accused of providing advantage to Windows and IE developers with their API, compared to competitive groups of developers (Casenotes, 2003).
DOJ defined Internet Explorer as a separate product, and gave proofs that aggressive market policy of Microsoft created monopoly which did not allow the manufacturers of other browsers act in the conditions of a competitive market (Casenotes, 2003). At the same time, Microsoft described browser as a feature (Casenotes, 2003), and argued that it was a free additional function of OS Windows rather than a separate product.
As a result of the case consideration with several proceedings and appeals, DOJ made the following decision (Dunham, 2006): charges were applied against Microsoft due to violating Sherman Antitrust Act; Microsoft was obliged to provide uniform Windows licenses to all parties and eliminate specific agreements with OEMS; moreover, a committee of three experts in programming and design was created to ensure the compliance of Microsoft API and policy with the requirements of DOJ (United States v. Microsoft, 2006).
- Personal opinion
In my opinion, the charges levied against Microsoft were valid, since most of the arguments provided by Microsoft had some internal fallacies. First of all, in the situation with Internet Explorer Microsoft stated that the users received the product for free. However, the costs of Internet Explorer were already added to the price of the copies of Windows, and users could not have a choice whether to get Windows with IE at the usual price, or to get Windows without IE at slightly reduced price (and use browser provided by a different company). Secondly, OEM agreements used by Microsoft increased the costs of computers without Windows (as vendors had to pay additional fees for them too), and also reduced user choices – the users were not able to choose between similar configurations with or without Windows; rather, they were forced to choose among a variety of computers with Microsoft software, and among the remaining rare models without this software. These situations limit the user’s free choice and therefore affect competition.
Conclusion
The balance between intellectual property laws and antitrust laws is highly important for the very development of the modern society, because the combination of two instruments allows to encourage scientific and intellectual progress, and ensure that the market of intellectual property still retains the freedom of competition. In the case of United States v. Microsoft, the decision to levy charges on Microsoft was made, due to unlawful actions and use of tying of separate products took place. In my opinion, the decision to apply charges was justified, because the actions of Microsoft placed additional financial burden on users and limited their consumer choices. In-depth analysis of Microsoft actions and balanced use of antitrust law in the sphere of intellectual property led to further development of the market of operating systems and browsers, and contributed to the progress in information technology in general.
