Commission: solid legal ground?
OUT-LAW Radio, 17/01/2008
We look at whether the court case underpinning the European
Commission's anti-Microsoft case is really as solid as was thought,
and we look at how front-running landed Network Solutions in hot
water.
A text transcription follows.
This transcript is for anyone with a hearing impairment or who
for any other reason cannot listen to the MP3 audio file.
The following is the text spoken by OUT-LAW journalist Matthew
Magee.
Hello and welcome to OUT-LAW Radio, the weekly podcast that
keeps you up to date on all the twists and turns in the world of
technology law.
Every week we bring you the latest news and in depth features
that help you to make sense of the ever-changing laws that govern
technology today.
My name is Matthew Magee, and this week we wonder is the
European Commission's second massive monopoly case against
Microsoft on quite as solid legal ground as everyone thinks? And we
talk to domain giant Network Solutions about the controversial
measures it took to beat the web's latest scam.
But first, the news:
- US ISP will block pirated material; and
- Intel faces new competition probe
One of the largest telecoms firms in the US is contemplating the
introduction of a filter to block copyright-infringing traffic in
its internet service. AT&T said that the network-level
filtering was the "optimal" way to deal with piracy.
ISPs in the US and the UK have to date relied on their status as
carriers of information to avoid legal responsibility for traffic
they carry whose content they are unaware of.
But James Cicconi, one of the company's lawyers, said: "we are
very interested in a technology based solution and we think a
network-based solution is the optimal way to approach this. The
proposal involves an ISP examining all information transmitted on
its network to identify and block material it thinks is copyrighted
and being used improperly.
Free speech and privacy activists oppose the examination of all
of a user's ISP communications, while digital rights activists
claim that filters do not take account of the exceptions from
copyright legislation for fair use, including those for news
reporting, criticism and review and educational use.
The state of New York will probe Intel to determine whether the
world's biggest microchip maker has behaved anti-competitively. The
company is already the subject of a European Commission case
following a six-year investigation.
New York attorney general Andrew Cuomo's office has issued a
subpoena intended to help it gather evidence into Intel's
practices. It will investigate whether or not Intel forced its
customers to exclude competitor Advanced Micro Devices (AMD).
Cuomo's office said that it would investigate whether Intel
penalised computer manufacturer customers when they chose to build
some machines using competing chips; whether it improperly paid
customers to use only Intel chips; and whether it illegally blocked
distribution channels for competitors.
It said that the investigation would focus on state and national
laws. The grounds for investigation are very similar to charges
laid at Intel's door by the European Commission.
That was this week's out-law news
Maybe it's the power of OUT-LAW Radio or maybe it's just
coincidence, but just days after Opera Chief Executive Jon von
Tetchzner told OUT-LAW Radio of his crusade against a monopolistic
Microsoft, the European Commission took up his cause.
It stunned the world of competition law this week when the
Commission announced that it would take another massive competition
case against the software giant. The news came just weeks after a
court ruling settled a competition dispute between the two that had
lasted almost a decade.
Based on Opera's complaint, the case is clearly the result of a
surge of confidence in the Commission following the Court of First
Instance, or CFI, ruling in September which backed their 2004
anti-Microsoft decision.
But how well founded is that confidence? We talk to one
competition lawyer who says that the CFI ruling may not be the
solid litigation foundation many have taken it to be.
But first I talked to von Tetchzner about how he feels now that
the commission has taken up his company's cause.
von Tetchzner Obviously very happy that they have moved so
swiftly. We obviously sent a complaint to get action and we have
been getting very swift action so we are very happy with that. I
mean we did not really know what to expect.
Last year's anti-Microsoft verdict has had big companies
reconsidering their practices looking over their shoulder at an
emboldened Commission. Competition lawyer Giles Warrington of
Pinsent Masons behind Out-law explains.
Warrington: There is an element that the
Commission is becoming more confident in this area. Over the long
term this will have a significant impact on technology companies
and their perception of competition law but whilst the court's
judgment is not necessarily a restatement of the law it is
certainly a high profile case in which the Commission has been
supported and so could well make technology companies, particularly
those who have access to technology which has established a strong
market position, or as a gateway or seen as a gateway to the
provision of other services, it could make them stand up and worry
more about competition law.
The European Commission conducted a long investigation into
Microsoft, culminating in a 2004 ruling, fining it €497 million for
abusing its market dominance. It took until last September 2007 for
a court, the CFI, to back that decision and for Microsoft to decide
not to appeal.
The Commission is now taking on Intel, Qualcomm and Microsoft
again in the aftermath of that ruling and is seen as riding high on
competition issues. But should it?
Adrian Wood, another Pinsent Masons competition lawyer, said
that the CFI ruling was very far from an era-defining, big-picture
recalibration of competition law.
Wood: There is still no real consensus on
what Microsoft tells us for the future. In a sense that is partly
because of the way the judgment is written. It is disjointed in
places, the little bits of relevant material tucked away in one
area that ought to be brought back to earlier discussion. The
ability to have some form of overarching broad set of principles
was lost a little bit and so in that sense there is a
disappointment there. In many ways we did not get crisp, clear,
practical pointers of generic use.
The case centres on Microsoft's inclusion of internet explorer
in its Windows operating system and that system's interoperability
with other people's software.
Competition cases may be the order of the day but it should not
follow that a victory in September makes victory in the next case
any more likely.
Wood: In terms of the tying story, the bundling
of Media Player to the Windows environment the CFI took on board
all of the Commission's arguments without question. I think there
are certain elements of the judgment where the Commission is going
to hesitate somewhat before relying fully on Microsoft as a way for
the going forward.
Opera's von Tetchzner disagrees. He says that the new case is
very similar to the old, and that a similar result is likely.
von Tetchzner: This is in some way it is a
very similar case to the recent Windows Media case and I think if
anything the browser case is even clearer. I do believe there are
similarities. We are expecting good results out of this.
What all parties do agree on is that more guidance is needed on
how the European Commission is actually going to enforce
competition law. Even Europe's National Competition Authorities,
such as the UK's Office of Fair Trading, are pressing for a clue
from Brussels.
Wood: The Commission has produced draft
guidance on Article 82 and has had a wealth of comments on its
draft guidance but as yet we have not been given any serious
indication that following Microsoft that the Commission will
publish final guidance. Even within the UK, John Fingleton of the
Office of Fair Trading, has gone on record and publicly to
encourage the Commission to produce more guidance in this area.
There are hopes out there for a speedy resolution to this case,
but with no Commission guidance and the waters as muddy as ever
over the meaning of the CFI's ruling, don't hold your breath, the
last case took almost ten years.
A scam long-rumoured in the world of domain names has broken
into the open recently. Front running is when you check with a
registrar to see if a domain name is available and then have a
think about whether you want it or not. In the meantime someone has
found out what you searched for and registered the name. They can
then hold you to ransom for it.
One huge domain name registration company, Network Solutions,
decided to try to do something about it, but soon found itself in
very hot water and was even itself accused of front running.
Network Solutions had decided to block searched-for domains so
that they could only be bought from it. Though the company said
that this was designed to stop unscrupulous registrars engaging in
front running, the internet exploded with the indignation of users
who were furious that they were now tied to one company for a
domain they wanted.
We talked to Susan Wade of Network Solutions about the
controversy. She maintained that the company thought it was acting
in the best interests of users.
Wade: By implementing this we are not
front running, we are just merely holding it for four days. We are
not monetising it, we have no intention of keeping it or selling it
in the secondary market, we are just holding it for if you want to
come back to our store front and buy it you can, after that we are
letting it go.
Critics said that the system didn't stop front running because
once the domain name was held by Network Solutions anyone – and not
just the original enquirer – could register the name. Users felt
their addresses were being held hostage.
But Wade revealed to OUT-LAW that the company is going to
release a modification to the system that will hold the domain just
for the person who enquired about it.
Wade: So we have been looking into
possibly implementing something where we could register it and hold
it for whomever initially searched on it. We're looking at those
options but we have not implemented anything like that yet. I think
it is possible, it's just the development time, how do we capture
the information, that type of thing so you know it's definitely
something we are looking into.
The company has already retreated on some of its plans, but it
still holds on to names searched for from some parts of its
website. The situation just underlines how controversial front
running is and it is unlikely to be the last time it provokes
outrage in the tech world.
Magee: That's all we have time for this week,
thanks for listening.
Why not get in touch with OUT-LAW Radio? Do you know of a
technology law story? We'd love to hear from you on radio@out-law.com. Be sure to tune
in next week, for now goodbye.
OUT-LAW Radio was produced and presented by Matthew Magee for
international law firm Pinsent Masons.
