Antitrust – Antitrust Standing – Consumer & Competitor Rule – Tolling

Novell Inc. v. Microsoft Corp. (Lawyers Weekly No. 07-01-1218, 31 pp.) (Duncan, J.) No. 06-1134, Oct. 15, 2007; USDC at Baltimore, Md. (Motz, J.) 4th Cir.
In these cross-appeals from interlocutory orders in an antitrust action against Microsoft by Novell Inc., the owner of WordPerfect and Quattro Pro, the 4th Circuit affirms the district court’s rejection of Microsoft’s contention that Novell lacked antitrust standing as neither a consumer nor a competitor in the relevant market, but the appellate court upholds the district court’s dismissal of Novell’s additional claims as time-barred.
Novell seeks treble damages under the Clayton Act, 15 U.S.C. 15, for injuries allegedly suffered as a result of Microsoft’s anticompetitive conduct in violation of Sections 1 and 2 of the Sherman Act. In its suit transferred from Utah federal court to the District of Maryland, Novell made six specific claims for damages to software applications it owned between 1994 and 1996. Two of the six claims allege that Microsoft’s conduct injured competition in the market for PC operating systems, a market in which Novell’s products did not directly compete. The district court declined to dismiss these claims over Microsoft’s objection that Novell, as neither a consumer nor a competitor in the relevant market, lacks antitrust standing to bring them. Microsoft appeals the denial of this motion to dismiss.
The remaining four claims allege harm to competition in the software-application market, in which Novell did compete. The district court dismissed these claims as untimely, and Novell appeals.
All six of Novell’s claims arose prior to March 1996, when Novell sold WordPerfect and Quattro Pro to Corel. All of its November 2004 claims are time-barred unless the statute of limitations is tolled by the filing of a Department of Justice complaint in May 1998.
We review the district court ruling that Novell has antitrust standing to bring counts I and VI.
We must first consider Microsoft’s argument that Novell’s claims fail as a threshold matter. Microsoft asks us to adopt a bright-line rule that only consumers or competitors in the relevant market have antitrust standing to bring private treble-damages claims under Sec. 4. We decline to adopt this “consumer or competitor” rule. A careful examination of the cases on which Microsoft relies for support of its proposed rule reveals that in most instances the claims were defeated by the absence of an antitrust injury, rather than the plaintiff’s failure to demonstrate consumer or competitor status.
Having rejected Microsoft’s argument that a bright-line consumer-or-competitor rule strips Novell of antitrust standing, we now consider whether the five factors in Assoc. Gen. Contractors of Cal. Inc. v. Cal. State Council of Carpenters (AGC), 459 U.S. 519 (1983), compel dismissal of Novell’s claims on antitrust-standing grounds.
The first two AGC factors weigh in favor of granting Novell antitrust standing. The facts alleged by Novell, taken as true for the purposes of this appeal, are sufficient to demonstrate that Novell suffered an antitrust injury and that its injury can be traced to Microsoft’s alleged antitrust violations. While the showing of an antitrust injury demonstrates that a case is of the type for which antitrust standing is recognized, such a showing is not necessarily sufficient to demonstrate that the particular plaintiff has antitrust standing. We turn now to an analysis of the remaining AGC factors.
The remaining three factors require us to consider the directness of the alleged injury, the existence of more direct victims of the alleged antitrust injury, and problems of identifying damages and apportioning them among those directly and indirectly harmed.
It is evident that Microsoft viewed Novel as a threat in the operating-systems market. Microsoft’s withholding of information from Novell’s software developers relating to Windows 95 clearly has no more direct victim than Novell. Finally, Microsoft’s exclusive deals with OEMs that ensured that Novell’s products would not be preinstalled on new PCs built by those OEMs directly curtailed Novell’s distribution channels. Given the apparent absence of a more directly harmed party than Novell outside the field and the dominance of Microsoft Windows within the field, we conclude the AGC directness factors weigh in favor of finding antitrust standing here.
Because we have already determined that Microsoft’s alleged anticompetitive conduct was directly aimed at Novell, there is little risk that any damages Novell might prove would need to be allocated or apportioned among any more directly injured parties.
We find the AGC factors favor granting standing to Novell to assert counts I and VI. We affirm the district court s denial of Microsoft’s motion to dismiss as to these claims on the antitrust standing issue.
We turn now to Novell’s argument that the district court erred in dismissing as untimely counts II through V, which allege injury to competition in the office productivity applications market.
Novell argues the tolling provision preserves counts II through V because its complaint overlaps significantly with the DOJ complaint. We cannot accept Novell’s proffered interpretation. The DOJ complaint only expressly alleges harm to the markets for PC operating systems and for Internet browsers. Novell’s allegations of harm to the office productivity applications market therefore overlap little with the subject matter of the DOJ complaint.
The office productivity market at issue in counts II through V is neither identical to nor completely encompassed by the PC operating system market at issue in the government action.
We hold the tolling provision of Sec. 5(i) of the Clayton Act does not preserve counts II through V of Novell’s complaint. After tarrying with these claims for more than eight years, Novell cannot now resurrect stale causes of action, and Microsoft is entitled to the comfort of repose.
District court judgment affirmed.