Antitrust ruling will damage WINDOWS mark, says Microsoft

Software giant Microsoft Corporation has started appeal proceedings in the European Court of First Instance against the European Commission's antitrust ruling regarding Microsoft's abuse of its market dominance in relation to operating systems (OS) (Case T-201/04).

In March of this year, following a five-year investigation, the commission ruled that Microsoft had abused its dominant position in the OS market so that it could exploit its edge over its competitors in similar markets, such as media players. Microsoft was ordered to (i) pay a fine of over £250 million, and (ii) offer a version of its Windows OS in Europe, without its Windows Media Player software. As a result, Microsoft would be releasing a version of its Windows OS without software that offers users access to audio and visual content.

Microsoft is seeking an annulment of the decision and interim relief. Microsoft's main argument is that its trademark rights would be damaged as it is being forced to (i) create and offer to users a version of Windows that it would not otherwise have created, and (ii) apply the WINDOWS trademark to the resulting product. Microsoft stated its case on the basis that some websites would not work without the missing software and that as a result consumers buying the Windows OS were likely to feel deceived.

It went on to argue that the ruling could significantly affect the way in which Microsoft conducts business, impacting as it does on the very core of Microsoft's design of the Windows OS and the "quality" signifier of its trademark. Not only could consumers be "short changed" but there was also a risk that they could be confused by the lack of unity of the Windows platform.

The commission's response to these concerns was that any possible dilution of IP rights would only have a temporary effect and, consequently, would not be irreversible.

This case is particularly interesting as it demonstrates the tension between competition issues and monopoly rights. If Microsoft's appeal does not succeed, it will be forced to apply the valuable WINDOWS trademark and other Microsoft branding to a product that, in Microsoft's opinion, is "substandard". Whether this could lead to significant long term tarnishing of the WINDOWS trademark, or whether the commission is right in its analysis that any effects will be only temporary and therefore "palatable", remains to be seen.

Christina Pettit, DLA LLP, London