Dell Complained of Contracts With Microsoft, States Allege

The federal deal required that Microsoft have uniform contracts with computer makers for licensing its Windows operating system. Microsoft had been accused of using its contracts to reward friends and punish companies that displeased it.

Howard Gutman, a lawyer for the states, quoted an unnamed employee of Dell Computer writing to Microsoft executives complaining about the new contracts.

"Dell cannot imagine that the intent of the [federal settlement decree was an even greater degree of control by Microsoft," Gutman read.

He said the states also have evidence from other computer makers, including Gateway and Sony.

The e-mails--as well as a host of other documents--are at issue because Microsoft this week pared down its witness list, removing Microsoft executive Richard Fade, who handles Microsoft's deals with computer manufacturers.

During Fade's deposition interview with lawyers for the states, Fade agreed that many computer makers were unhappy with the new contracts, which were supposed to create equity among the many computer makers.

But since Microsoft will not call Fade, the states now may not be able to use Fade's deposition or e-mails it planned to use during his questioning on the witness stand. Microsoft lawyer John Warden on Tuesday objected to their use.

"We are in our case, they have rested their case," Warden told U.S. District Judge Colleen Kollar-Kotelly. "That is not what a conduct of a trial is in our system, that a plaintiff presents a moving target to a defendant."

Gutman said the states referred to some of the documents during the states' opening statement when the case began in mid-March.

"They've known about this being a central part of our case from day one," Gutman said.

Kollar-Kotelly did not say when she would rule on the issue, but indicated that she was skeptical of the states' tactic.

"You don't usually use somebody else's documents during their part of the case," she said.

Citing confidence in its defense, Microsoft cut the remaining witnesses in its case by half, leaving only eight.

The states want to let computer manufacturers remove Microsoft Internet Explorer and other features of Windows and substitute competing software.

Other provisions would require Microsoft to disclose technical information to software and hardware developers, and make the company license its Office business software for use on competing operating systems.

The original judge in the antitrust case, U.S. District Judge Thomas Penfield Jackson, ordered Microsoft broken into two companies after concluding that it illegally stifled competitors. An appeals court upheld many of the violations but reversed the breakup order and appointed Kollar-Kotelly to determine a new punishment.

Microsoft executive Robert Short testified Tuesday in his company's defense, saying Microsoft does all it can to help other software makers write programs that work well with Windows.

But states' lawyer Laurie Fulton brought out shortcomings related to technical disclosure in the federal settlement, saying that Microsoft can charge for the technical information. Now, it routinely gives that information away for free.

"We can disclose them, I think, with or without a license," Short said.

Fulton pointed out mistakes in Short's testimony, prompting Short to admit that he got help from Microsoft lawyers.

"I didn't do the typing, but I was very active with the attorneys," Short said.

States that rejected the government's settlement with Microsoft last fall were Iowa, Utah, Massachusetts, Connecticut, California, Kansas, Florida, Minnesota and West Virginia, along with the District of Columbia.

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