By Declan McCullagh, 10 June 2004 08:35
NEWS A New York state appeals court has rejected Microsoft's attempt to throw out a class-action suit alleging deceptive and monopolistic business practices.
The state Supreme Court ruled on Tuesday that the lawsuit could continue, overruling part of a lower court's decision that had sided with Microsoft.
The Supreme Court said: "Microsoft's end-user licence agreements with its prime customers, the computer manufacturers and distributors, insulate it only from product defect claims, not consumer injury complaints predicated upon claims of monopolistic and deceptive conduct."
Microsoft successfully fended off much of the Justice Department's antitrust suit with a settlement finalised in 2002. But the outcome of the federal suit encouraged a multitude of trial lawyers to assail the Redmond giant in state courts. The company has managed to settle the bulk of them so far, but at least seven are still in play.
A Microsoft spokeswoman said the company's lawyers are still reviewing Tuesday's ruling and are not ready to disclose whether they will appeal.
"We're disappointed in the ruling, but we will continue to defend ourselves against these meritless claims," she said.
The New York suit is not an antitrust case. Filed by the law firm of Milberg Weiss Bershad & Schulman, it contends Microsoft violated section 349 of the state's general business code. That section prohibits "deceptive acts or practices in the conduct of any business, trade or commerce" and lets private individuals sue for damages and attorney's fees.
At the heart of the New York lawsuit is the claim that Microsoft violated section 349 by entering into secret agreements with computer makers to throttle competition and creating an "applications barriers" in its Windows operating system that harmed competitors such as Linux. The suit alleges that those practices, which Microsoft denies, resulted in higher prices for New York consumers.
Declan McCullagh writes for News.com
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