Microsoft faces more perils in new lawsuit

Currenex Inc., a global currency exchange, still uses Netscape Communications Corp. servers, and other corporate enterprises do so as well. But Netscape isn’t the emerging power it once was, having lost the so-called browser war and what would have been a pathway into corporate markets.

Netscape’s biggest asset today may be its history. And that history may be worth billions of dollars to New York-based parent company AOL Time Warner Inc. if it succeeds in winning the lawsuit that it filed against Microsoft Corp. last week.

But AOL Time Warner is seeking more than money. It’s a Microsoft competitor in instant messaging and online services, and it will urge the court to rein in some of Microsoft’s business practices.

It will be a battle of titans, but it’s a battle that will have no impact on Jim Kleckner, chief technology officer at Currenex in Menlo Park, Calif., or his servers. “Both companies are so big that this type of action wouldn’t affect an independent product,” he said.

Netscape was the government’s star witness in its antitrust case against Microsoft. “A large percentage of the case focused on Microsoft’s predatory conduct toward Netscape,” said Stephen D. Houck, former lead trial counsel for the 18 states that were involved in the case against Microsoft.

Netscape can use the key finding in the government’s antitrust case to build its own case, according to legal experts.

“This is a clear attempt by Microsoft’s competitors to strip down the operating system,” said Hillard Sterling, an antitrust attorney at Chicago-based law firm Gordon & Glickson LLC. “These competitors want to use Windows as a vehicle for their competitive software.”

The nine holdout states that have refused to back the settlement the U.S. Department of Justice reached last fall also want to force Microsoft to produce a version of Windows that’s unbundled from software add-ons. Remedy hearings are due to begin in March.

If Netscape succeeds, the financial damages could be massive. “There is little doubt that Netscape was driven out of business by Microsoft,” said Steven Newborn, a litigation chief at the Federal Trade Commission until 1994. He’s now an attorney at law firm Clifford Chance Rogers & Wells LLP in Washington.

In its defense, Microsoft can point to Dulles, Va.-based America Online Inc.’s own history with Internet Explorer. Company spokesman Jim Desler noted that in 1997, AOL chose to integrate Microsoft’s Internet Explorer as its Web browser client. It then purchased Netscape but continued to use Explorer as the Web browser for AOL.

“So it’s quite ironic that AOL seems to be suing Microsoft for this . . . when it’s mismanaging its own business,” said Desler