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AOL sues Microsoft

Netscape Communications, a subsidiary of AOL Time Warner, has filed a lawsuit against Microsoft, alleging that the software giant harmed Netscape with anti-competitive practices.

The lawsuit was filed in the US Federal district court for the District of Columbia.

Best known for its Netscape Navigator Web browser, Netscape was acquired by America Online in 1999. AOL in turn merged with Time Warner last year.

Microsoft's illegal anti-competitive practices were confirmed in a ruling by a federal district court in June 2000 and upheld by a US appeals court in June 2001. Netscape argued that those anti-competitive practices "resulted in harm to competition and antitrust injury to Netscape in particular".

One observer was not surprised by Netscape's move. "The district court found that liability in connection with Microsoft's conduct was in large part directed at suppressing Netscape," said Mark Schechter, a Washington-based lawyer. "The court of appeals affirmed it. It's not surprising [Netscape] would piggy-back on those findings."

Microsoft said it was disappointed at AOL's course of action. "The company has been using politics and legalese to compete against Microsoft for years. It's our feeling that this is just the next tactic in their plans," said Microsoft spokesman Matt Pilla.

Netscape claimed its suit is similar to the US government's federal antitrust case against Microsoft. That case centred on a claim that Microsoft abused its monopoly power by making deals with PC manufacturers that ultimately hindered sales of Netscape Navigator.

The US Department of Justice and nine state attorneys general have reached a tentative settlement in the federal case, but nine other states and the District of Columbia have refused the deal and continue to pursue legal action against Microsoft.

The injunction Netscape is seeking resembles a settlement offer submitted in December by the nine dissenting states.

According to Randall J Boe, general counsel to America Online, the aims of Netscape's lawsuit are "entirely consistent" with the efforts of the nine states.

The lawsuit alleges that Microsoft used illegal anti-competitive behaviour to harm Netscape starting in 1995, when Microsoft began promoting its own Internet Explorer browser in a way that Netscape argues was detrimental to its own product.

Rulings handed down against Microsoft in the federal antitrust case provide its competitors with ripe opportunities to file private antitrust suits against the software maker, said Emmett Stanton, an attorney with Fenwick & West LLP who has closely followed the legal battle.

"Netscape was the clearest target of the actions that the court found illegal," Stanton said.

Sun Microsystems might be in a position to benefit from the federal rulings against Microsoft. The district court cited Microsoft's opposition to Sun's Java programming language in its criticism of the company. However, Netscape is in a better position than Sun to argue that it has been harmed, said Tom Bittman, vice-president and research director with Gartner.

"I don't think there are really that many [companies] that can take advantage of the rulings" Bittman said. "This is the big one."

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