In MiniFrame Ltd. v Microsoft Corp, Southern District of New York judge Richard J. Sullivan dismissed the plaintiff’s case, concluding that Microsoft’s Windows licensing rules and entry into the multi-user market did not constitute anti-competitive conduct and predatory pricing.
MiniFrame provides a service that enables multiple users to access a single PC. It argued that by changing the terms of its Windows licensing agreements to require payment on a per-user basis instead of on a per-computer basis, Microsoft forced all customers who utilized MiniFrame’s system to license Windows. As a result, MiniFrame’s value decreased because it would save its customers less money. When Microsoft introduced its own cheaper multiuser system, it effectively monopolized the market by combining higher licensing fees with a predatorily priced multi-user service.
The court rejected the plaintiff’s allegations. Microsoft was entitled, Judge Sullivan held, to set licensing terms for its Windows operating system, and it had no obligation to work with rivals or tailor terms to their benefit. Patent holders, he believed, are permitted to “curb the development of a derivative market by refusing to license their technology or doing so only in a limited manner.” Microsoft thus was within its rights in limiting the plaintiff’s ability to reproduce and distribute its software to many users.
With respect to the predatory pricing allegations, the court held that MiniFrame failed to show, as it was required to do, that Microsoft was setting prices below cost or below industry-standard charges.