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The Bridgeport, Conn., jury that refused to find Microsoft a dangerous monopolist 14 months ago was way off — by a factor of a million to one, ruled U.S. District Judge Janet C. Hall in a stunning Aug. 31 decision on punitive damages. The jurors were kind to Microsoft in their June 16, 1999 verdict. They concluded that tiny Danbury, Conn., software firm Bristol Technology, Inc. failed to prove that Microsoft had monopoly power in its alleged bid to expand its Windows domination of desktop PC computers into high-end workstations and office servers. The jurors set a nominal $1 damage award, finding that Microsoft violated Connecticut’s Unfair Trade Practices Act. But Hall pumped it up to $1 million in punitive damages — the largest such award in CUTPA’s 27-year history, according to Robert M. Langer, of Wiggin & Dana’s Hartford, Conn., office, and a co-author of “The Connecticut Unfair Trade Practices Act.” No Connecticut appellate court has ever analyzed the grounds for punitives under CUTPA to the degree Hall has in her 103-page opinion, says Langer, a former assistant attorney general who focused on CUTPA and antitrust law. Bristol CEO Keith Blackwell said Hall’s decision shows his company “proved its case as far as the judge is concerned.” Hall’s ruling on punitive damages may bode well for Bristol’s bid for $6.1 million in attorneys’ fees. “I can’t see how this harms us in any way,” said Blackwell. David B. Tulchin, New York-based Sullivan & Cromwell’s lead trial lawyer on Microsoft’s side, was critical, saying Hall “seems to be substituting her own judgment for that of the jury — the real finders of fact here. Actually, I think the jury got it right.” Tulchin noted that the jury had two CUTPA questions: unfairness and deceptiveness. “There was no unfairness found,” says Tulchin. “On the other CUTPA count, deceptiveness, the jury awarded $1.” SEIZED PUNITIVES In fact, according to Hall’s opinion, Bristol never put the issue of punitives to the jury. Instead, the judge could decide the matter under federal court rule 49(a), Hall concluded. And decide she did. The unfair trade practice that Bristol charges is that Microsoft told software developers it would freely help them create programs to translate across computer operating systems. The so-called WISE program, or Windows Interface Source Environment, benefited Bristol and a handful of companies that created programs to make software “interoperable.” Applications written for Windows could run on UNIX, or vice versa. Bristol’s product, called Wind-U, made it less risky for Unix customers to shift to Windows applications, and opened power computer users to Windows products. By 1997, Microsoft was offering Bristol only parts of its latest Windows NT4 source code. “Here, the court has explicitly found egregiously deceptive behavior by Microsoft,” Hall wrote. “Gates’ Keynote address was an affirmatively false statement and not merely an omission of material fact.” Nevertheless, Microsoft continued to say on its Web site that developers would have access to the latest code, long after Microsoft began to scale back the amount it provided Bristol. Hall found that Microsoft wasn’t offering Bristol some parts of its source code at any price, but that it continued to represent publicly that interoperability was being maintained. For those reasons, the judge concluded that punitive damages were justified. She applied federal due process limits on the size of punitive damage awards, and analyzed the permitted ratios between actual harm, company wealth, and permissible punitives. Bearing in mind that Microsoft had little prior notice that it could be hit with this big an award, Hall ruled that $1 million for Microsoft was “not excessive and will serve the deterrent purposes of CUTPA.” Fourteen months after the jury verdict, Hall has not entered a final judgment on the case. Bristol trial lawyer John L. Altieri Jr. of O’Melveny & Meyers in New York said Hall’s strong differences with the jury’s findings could point towards a new trial.

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