The New York Times
January 26, 1999
At Microsoft Trial, Accounts Differ on Dealings With Apple
By STEVE LOHR
WASHINGTON -- The Justice Department's lead lawyer in the Microsoft antitrust case clashed Monday with the company's highest-ranking witness as the government charged that the software maker had used its market power as "a club" in its dealings with Apple Computer Inc., while the Microsoft executive countered that his company was responding to a threat of "patent terrorism" from Apple.
The conflicting accounts of how Microsoft convinced Apple to make Microsoft's Internet software the preferred choice over that of its browser rival, the Netscape Communications Corp., was the main focus of the government's early cross-examination of Paul Maritz, a Microsoft group vice president, who took the stand Monday afternoon.
But David Boies, the Justice Department's lead trial lawyer, also questioned Maritz sharply on what he said to an executive of the Intel Corp. and about Microsoft's intentions toward Netscape.
After weeks of dry testimony from economic experts for both sides, the trial shifted into a higher gear, taking on the some of the feel of a legal prize fight. Boies is a leading trial litigator, and Maritz is the stand-in at the trial for his boss, Bill Gates, the Microsoft chairman. Both sides, it seemed, scored a few points Monday afternoon in a cross-examination that will continue on Tuesday.
Throughout the trial, the government has shown excerpts of Gates' videotaped deposition, taken last year, showing him to be combative, evasive and forgetful. Maritz presents a different face of Microsoft, answering questions in his deep baritone, directly, with clipped precision.
Put simply, he contends that there is nothing in evidence that really shows the company did anything other than compete vigorously to bring consumers better products.
In his cross-examination, Boies is seeking to discredit Microsoft's story and to raise doubts about the credibility of its leading corporate witness.
Boies introduced a series of internal Microsoft e-mail to try to show that the company's current account of its thinking in negotiating a deal with Apple is very different from the language of its own documents in 1996 and 1997.
The government alleges that Microsoft used the threat of no longer developing its Office productivity software for the Macintosh -- the most widely used applications software on Apple machines -- as a way to ensure that Apple favored Microsoft's Internet Explorer. Microsoft replies that the main consideration in an August 1997 deal with Apple -- which continued Office development and gave Microsoft's browser preferential status -- was to settle a lingering patent dispute with Apple.
Boies presented Maritz with a series of e-mails, including one from Gates to Maritz on June 23, 1996, identifying "two key goals" in dealing with Apple. One was to keep a high share of the market for applications software on Macintosh machines, and the second, Gates wrote, was to "get them to embrace our Internet Explorer in some way."
Gates did mention the patent issue in the e-mail, but only as an aside later in the message.
Maritz replied to that e-mail, and other similar messages, by saying that resolving the patent issue was an underlying theme in all negotiations with Apple. "He didn't have to tell me," he said of one message from Gates. "It was a constant refrain that unless we settle the patent issue nothing else goes forward."
For years, Apple had claimed that Microsoft's industry-standard Windows operating system and Office programs violated Apple's patent rights. With Apple's fortunes declining sharply, Maritz said, Microsoft feared that Apple would try to cash in with a desperate patent suit, possibly seeking an injunction to stop Microsoft from shipping its main products, Windows and Office.
"We were concerned what in the industry is called patent terrorism," Maritz testified. "You're dealing with a company in danger of going out of business, and there is no way of using your patents in defense because they essentially have no business left."
Boies also questioned Maritz sharply on whether he ever told a group of Intel executives that Microsoft's plan for competing with Netscape was to "cut off their air supply" and that "everything they're selling, we're going to give away for free."
Earlier in the trial, an Intel executive testified that Maritz had made that statement in a meeting with Intel executives in September 1995. But in his written trial testimony, released last Friday, Maritz denied ever saying any such thing.
Boies presented Maritz with his deposition testimony taken last October. When asked about the comment, Maritz replied that "it's possible but I just don't recall."
Maritz said he sharpened his denial after reviewing the matter in preparation for his trial appearance. Boies replied that the quotation appeared in an article in The New York Times in January 1998, long before his deposition was taken.
Yes, Maritz replied, but added that back then it was not attributed to him but only to "a Microsoft executive." In fact, the article in The Times, on Jan. 12, 1998, quoted an Intel executive who attributed the remark to Maritz by name.