Sun pact could cast shadow on Microsoft-EU case

Friday's industry-rattling announcement that Microsoft and Sun Microsystems have finally come to an accord, agreeing to drop pending litigation and collaborate on technical issues, could potentially sway Microsoft's challenge to the European Union's (E.U.'s) antitrust ruling, industry experts said Monday.

The pact is seen as possibly affecting Microsoft's challenge to the E.U.'s March 24 ruling that it disclose details of interfaces used to communicate with its Windows operating system, but is not seen as affecting the ruling that it unbundle its media player.

Some experts thought the move might paint the software giant as a more fair-playing competitor, while others predicted that Microsoft's willingness to share server information with Sun would weaken its appeal argument that its intellectual property rights are being compromised by the E.U. ruling.

"If Microsoft has let by agreement Sun have what would it would have otherwise had to give competitors under the E.U. ruling, it could hurt its case," said Chris Bright, a London-based antitrust attorney with Shearman and Sterling LLP.

But other industry watchers see the alliance as a potential feather in Microsoft's newly donned team player cap.

IDC analyst Chris Ingle said that although the exact details of the technical information Microsoft has agreed to give to Sun are not clear -- making it difficult to say whether that information is the same as that dictated by the E.U. ruling -- he believes that the pact "relieves a source of pressure to Microsoft."

The software giant does not have to worry about dedicating further money and resources to fighting litigation fired from the Santa Clara, California, company. Furthermore, Sun has agreed to remain silent against Microsoft's appeal.

Sun can still be called to give further evidence, however.

"Theoretically, the competition authorities can force (Sun) to disclose more information," said Robert Harrison, a European patent and trademark attorney with Rouse Patents in Germany. "But they already gave them the smoking guns and jewels ... that's all in the background of the E.U.'s case."

Though Lee Patch, vice president of legal affairs for Sun, said that the company would be "less visible" in the E.U. case going forward, he also said it still supports the ruling.

"We still value very highly what the Commission is doing and consider it to be constructive to establish the principles of competition," Patch said.

Sun lawyer Michael Reynolds declined to comment Monday on the company's further cooperation in the E.U. case.

"(The Microsoft agreement) only just happened and we are still considering all that," he said

Legal details aside, RedMonk LLC analyst James Governor believes that the overarching effect of the agreement will be a softening of Microsoft's image.

"It's hard to see this as not in Microsoft's favor. When they sit down with the E.U., they can say we work with Sun and we can work with anyone," he said.

Given that Sun originally led the antitrust challenge against Microsoft, its ability to befriend its past nemesis may show that it has been tamed, he said.

However, both Microsoft and the E.U. see the Sun agreement as separate from the antitrust ruling, and forecast no subsequent change in the case.

"Our decision stands," European Commission spokeswoman Amelia Torres said Monday. "Our decisions work in the interest of competition and consumers and are not related to any one competitor or any one contract."

Microsoft, likewise, sees no ripple effect from the truce.

The E.U. case and the Sun agreement need to be seen separately, according to Microsoft spokesman said Tom Brookes.

"There's a massive difference between an order of compulsory license of Microsoft's intellectual property to a number of industry players and a reciprocal agreement between two industry players in which the exchange of IP (intellectual property) is a part. The effect and practicality is completely different even if some of the technical information could be the same," he said.

However, a Microsoft spokesman acknowledged that the company's competitive image could be bettered by the agreement.

"Clearly, the main protagonist in the case is no longer finding fault with us," said Hugh Davies, a spokesman for Microsoft UK.

Despite this, industry experts' view of the new-found friendship still appear cloudy.

(Additional reporting by Joris Evers of the IDG News Service in San Francisco.)

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