Judge asks Microsoft, regulators to explain value of source code

LUXEMBOURG — An EU judge asked Microsoft and the European Commission to explain how much lines of source code were worth as the company challenged an order requiring it to give rivals information to make their server software work more smoothly with Windows.

Judge John Cooke, in a terse exchange Thursday with commission lawyer Anthony Whelan, asked whether Microsoft's proprietary information, including patent details, should be given to rivals.

"The information, which forms interoperability, is hugely valuable commercial information. ... That's why it's difficult to understand the attitude of the commission that these are mere trade secrets," the judge said.

Whelan said the value Microsoft placed on the code was merely a reflection of the amount of time and effort it had put into creating it, nothing more.

The exchange came on the fourth day of a weeklong hearing on Microsoft's challenge to a 2004 EU antitrust ruling that found the company had taken advantage of its position as the leading supplier of operating systems to defeat rivals.

Microsoft maintains that it has worked strenuously to comply with the ruling that also ordered the company to pay a record $613 million fine.

On Thursday, European Commission supporters told the Court of First Instance that the software maker's claims of interoperability between its Windows system and other companies' servers were simply not accurate.

Judges also quizzed EU regulators on how long Microsoft would be expected to share code as it gears up to launch the next generation of Windows in 2007.

Cooke, who will write the court's draft decision in the coming months, wanted to know if "competition rules require that be taken away from Microsoft, conveying a huge commercial advantage."

James Flynn, a lawyer for the European Committee for Interoperable Systems — an industry group that includes Sun Microsystems, IBM and Oracle — said that Microsoft's "information is not kept secret because it is valuable. It is valuable because it is kept secret."

Microsoft argued that the commission forced it to effectively give rivals a "free ride" on the work the company did to acquire new customers and develop new technologies.

Microsoft lawyer Ian Forrester rejected any suggestion that the company had deliberately exaggerated the importance of certain algorithms it would have to disclose.

Microsoft and EU officials are still discussing just what needed to be handed over, he said, explaining that Microsoft believed that to meet the terms of the commission order and hand over "complete and accurate" information, it would have to give access to key parts of its code.