Microsoft v EU Commission – Latest Instalment

July 1, 2012

In its judgment of 27 June, the General Court has essentially upheld the EU Commission’s decision to impose a periodic penalty payment on Microsoft for failing to allow its competitors access to interoperability information on reasonable terms.  However, the Court has reduced the amount of the periodic penalty payment from €899 million to €860 million to take account of the fact that the Commission had permitted Microsoft to apply, until 17 September 2007, restrictions concerning the distribution of ‘open source’ products. 

The full judgment can be accessed here

The case concerns Microsoft’s behaviour in the period from 1998 to 2004 and the subsequent dialogue with the Commission that resulted in the Commission decision imposing substantial penalties. There followed subsequent decisions and penalties arising from Microsoft’s failure to comply. By decision of 27 February 20084, a fresh periodic penalty payment amounting to €899 million was imposed on Microsoft for the period from 21 June 2006 to 21 October 2007, on the ground that the remuneration rates proposed by Microsoft for granting access to the interoperability information were unreasonable. Microsoft brought an action before the General Court for annulment of that decision or, in the alternative, for cancellation or reduction of the periodic penalty payment.

The Court’s view was that, taking account of the pricing principles drawn up by Microsoft and the Commission, Microsoft was in a position to assess whether the remuneration rates it was seeking up to 21 October 2007 for granting access to the interoperability information were reasonable for the purposes of the 2004 decision.

Second, the Court holds that the criterion relating to the innovative character of the technologies in question – which was used by the Commission in the assessment of the reasonableness of Microsoft’s remuneration rates – gives an indication of whether those rates reflect the intrinsic value of a technology rather than its strategic value, namely the value stemming from the mere ability to interoperate with Microsoft’s operating systems.

In that regard, third, the Commission is entitled to assess those technologies’ innovative character by reference to its constituent elements, namely novelty and inventive step, Microsoft in any event not having argued that the inventiveness of the technologies at issue cannot be assessed in a context other than that of a patent grant. The effect, in the context of this case, of assessing the innovative character of the technologies covered by the contested decision by reference to novelty and inventive step is not to extinguish generally the value of intellectual property rights, trade secrets or other confidential information, let alone make innovative character a precondition for a product or information to be covered by such a right or to constitute a trade secret in general. The sole purpose of such an assessment is to preclude, as required by the 2004 decision, any remuneration received by Microsoft from reflecting the strategic value of the interoperability information.

Furthermore, the Court considers that Microsoft has failed to invalidate the Commission’s assessment that 166 of the 173 technologies relating to the interoperability information were not innovative.

However, the Court considers it necessary to alter the amount of the periodic penalty payment in order to take account of a letter from the Commission of 1 June 2005. In that letter, the Commission accepted that Microsoft could restrict distribution of products developed by its ‘open source’ competitors on the basis of non-patented and non-inventive interoperability information until delivery of the Court’s judgment in Case T-201/04, that is to say, until 17 September 2007. Even though the contested decision was based on the unreasonable nature of the remuneration rates proposed by Microsoft and not on the refusal to allow access to the interoperability information, the Commission’s acceptance, in the light of the pending case, that Microsoft could apply, for a certain period, a practice that might entail the preservation of a situation which the 2004 decision was intended to bring to an end, could be taken into account in determining the gravity of the conduct found to be unlawful and, therefore, the amount of the periodic penalty payment.

In that connection, having regard to the material in the documents before it, the Court considers that the possibility afforded by the letter of 1 June 2005 was relevant only to a marginal part of the effects produced by the conduct found to be unlawful; the amount of the periodic penalty payment imposed on Microsoft must therefore be fixed at €860 million.