12/11/2006

By DAVID PITT  / Associated Press

Microsoft Corp. attorneys began opening statements Monday in a class-action lawsuit, which claims the company unfairly shut out software competitors and cost Iowa consumers more than $330 million in software overcharges.

Microsoft attorney David Tulchin told jurors that despite the six days of opening statements by plaintiffs' attorneys, the case is quite simple.

"The real issues are not complicated. No one in Iowa has been harmed by anything that the plaintiffs can show that Microsoft has done," he said. "It is the plaintiffs' burden to prove to you that they were overcharged. The evidence will show that the price is not too high. That there is no overcharge."

Roxanne Conlin and Richard Hagstrom, attorneys for the group of Iowa businesses and individuals that filed the lawsuit in 2000, wrapped up their opening arguments Monday after talking to jurors for about 20 hours over six days.

Microsoft attorneys say they'll take far less time to introduce their case to the seven-man, five-woman jury.

Tulchin said prices for Microsoft software at issue in the lawsuit have declined since the late 1980s and evidence will show that consumers were not charged too much.

The average cost of Microsoft Word, for example, was $235 in 1988 and was $38 in 2005, he said. The company's Excel spreadsheet program cost an average price of $249 in 1988 and $36 last year, Tulchin said.

He said the company's high market share in spreadsheet, word processing and office suite software has been the result of good products and low prices and not anticompetitive conduct.

The lawsuit, filed in 2000, claims the Redmond, Wash.-based software company illegally used its monopoly power in the Windows operating market to fight off competitors by using threats, intimidation, deception and restrictive contracts with computer manufacturers.

Jurors must determine whether Microsoft broke Iowa's competition law and that its actions made consumers pay more for software than they would have otherwise.

If jurors determine that is so, they must assess damages for Iowans who bought Microsoft word processing, office productivity and spread sheet products since mid-1994.

Conlin and Hagstrom say their experts will show damages of at least $330 million.

Tulchin told jurors that they would be hearing significant testimony from economists who have created models about how software prices would have been different in a more competitive market.

Tulchin said the economic models the experts have created are "imaginary."

"It is not in any way, shape or form a reasonable or realistic alternative world, a world that could have ever existed in the absence of the conduct that the plaintiff say was wrongful," he said.

Tulchin also challenged Conlin's portrayal of Microsoft contracts with computer manufacturers. She said the company used its leverage to sign contracts that discouraged computer makers from using software from Microsoft competitors. She called it the company's chokehold on the competition.

Tulchin said Conlin failed to mention that the contracts called processor licenses haven't been used since July 1994.

"When they told you it was the most effective tactic and the chokehold they left out a little piece of information," he said. "Those contracts have not been used in alomst 12 1/2 years."

Tulchin will likely finish his opening statement by midweek and Conlin is expected to begin presenting evidence.

She likely will begin with a 10-hour deposition of Microsoft Chairman Bill Gates videotaped in 1998.