Texas Suit Against Microsoft Dismissed

Microsoft Corp scored a victory on Tuesday in its battle against government regulators when a judge dismissed a Texas state lawsuit over the software giants use of non-disclosure agreements.

Travis County District Judge Joseph Hart in Austin, the state capital, dismissed the lawsuit filed in November by Texas Attorney General Dan Morales, who had contended the agreements could hamper efforts to investigate the software giant.

Texas and at least 10 other states as well as federal antitrust authorities continue to investigate Microsoft business practices.

Microsoft routinely asks computer makers, software developers, analysts and even journalists to sign non-disclosure agreements, or NDAs, promising not to disclose proprietary information until it becomes public.

 

The agreements require those who sign to notify Microsoft before disclosing any such information even to government authorities a provision that Morales argued has had a chilling effect on his efforts to gather information.

Microsoft argued for dismissal of the lawsuit, saying its NDAs were similar to others used throughout the industry and had not interfered with Texas investigation of the companys business practices.

We are pleased that the court recognised the important role non-disclosure agreements play in protecting Microsofts intellectual property our most valuable asset, Microsoft Associate General Counsel Tom Burt said in a statement.

These agreements do nothing to prevent the government from doing its job, Burt said. Microsoft has cooperated with the states investigation, and we will continue to cooperate with the attorney generals office as its investigation continues.

Microsofts business practices long have been criticized by rivals and some regulators who believe the Redmond, Washington-based company is improperly taking advantage of a monopoly position to dominate new markets.

Despite the fact that the judge denied our request for an injunction, obviously we are going to go forward with our investigation, said Ron Dusek, a spokesman for Morales.

Microsoft is on notice that the state of Texas is willing to take legal action if it is even hinted that Microsoft is attempting to intimidate witnesses or tamper with witnesses, he said.

State and federal antitrust officials have had little success attacking the NDAs on those grounds.

In December, US District Judge Thomas Penfield Jackson, who oversees Microsofts 1995 agreement settling antitrust charges, rejected similar arguments made by the US Department of Justice.

There is no evidence of record that the NDAs are meant for any purpose other than to require that Microsoft be given notice and an opportunity to object before any confidential information is disclosed that might be of value to a commercial adversary, Jackson wrote in a December 11 opinion.

At a hearing in Austin on Tuesday, Texas officials argued the states case for an injunction against the NDAs but did not present any witnesses who had signed the agreements.

Duske said state attorneys chose to maintain the confidentiality of its sources rather than bring them into open court.