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Microsoft Corp. said in government hearings Monday that it is determined to fight Japan’s anti-monopoly watchdog over a clause in licensing contracts with Japanese manufacturers. The software giant was defending itself before the Fair Trade Commission a clause Microsoft has in licensing agreements with manufacturers that prevents companies from suing it for patent and copyright infringement if they suspect their own software technology has ended up in the Windows operating system. The commission says the clause hurts fair competition and discourages Japanese manufacturers from innovating because they can’t sue for damages. Microsoft says the clause is legal and benefits consumers. Microsoft said after commission officials raided its Japan offices in Feburary that it had dropped the clause from new contracts. On July 13, the commission ordered Microsoft to drop it retroactively from past contracts. Microsoft rejected the demand on July 26. If a decision at the commission hearings goes against Microsoft and the Redmond, Wash. company appeals, the fight will move to a Japanese court. And the wrangling could be long, lasting several years. In Monday’s hour-long hearing, Microsoft attorney Hideto Ishida said the company was prepared to fight the allegations “on all fronts.” “We want to stress that the purpose of the clause is proper,” he told commission officials, adding that the clause, called the “non-asssertion of patents provision,” is accepted in the United States. Commission officials reiterated its position that manufacturers, such as Sony Corp. and Matsushita Electric Industrial Co., have expressed concern that their own audio-video technology has no protection against dubious uses by Microsoft. The computer makers have no choice but to sell products with Windows given that the operating system dominates more than 90 percent of the world’s personal computers, they said. Because of the disputed clause, Japanese manufacturers including Toshiba Corp., NEC Corp. and Hitachi Ltd. also face problems trying to develop unique products because of concerns that innovations may be stolen by rivals, the commission said. The next hearing was set for Dec. 20. The Japanese government has been worried about Microsoft’s domination for years and has publicly promoted the use of alternatives such as the open-source system Linux. But this is the first time official hearings have been held that reflect those concerns. In 1998, the Fair Trade Commission ordered Microsoft to stop bundling software pre-installed in personal computers in a way that put competitors at a disadvantage. There were no fines. In March, the European Commission found that Microsoft abused its domination with Windows, levied a fine of some $600 million, demanded Microsoft disclose technical specifications to rivals and ordered an additional version of Windows that doesn’t include Media Player. Microsoft is appealing. In the United States, an antitrust settlement was reached in 2002 between Microsoft and the Justice Department and several states. An appeals court approved the settlement in July. Microsoft is also settling other separate class-action lawsuits brought on by consumers. Copyright 2004 Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.

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