The lawyers who attacked Big Tobacco have discovered a new villain: Microsoft.
Less than a week after a federal judge branded the software giant a brute and monopolist, veterans from the cigarette wars are plotting to sue the company in a wave of private litigation. If the onslaught unfolds as expected, teams of lawyers will turn Microsoft into the next Philip Morris, tangling the company in courts across the country.
"We're looking at it, we're seriously looking at it," said Stanley Chesley, a prominent class-action tobacco lawyer. "Millions of people bought Windows, and if the company overcharged consumers, it should be held responsible."
Lawyers have been emboldened by a blunt ruling by Thomas Penfield Jackson, the federal judge hearing the government's antitrust suit against Microsoft Corp. This past Friday, the judge issued findings of fact that concluded that Microsoft ruthlessly exploited its market power to strong-arm corporate customers and competitors alike. The judge also determined that a range of Microsoft tactics stifled innovation, reduced consumer choice and led to higher prices.
Jackson's words are viewed in some parts of the legal community as the combination to a padlocked fortune. Antitrust law grants triple damages to plaintiffs who prevail, so if consumers overpaid for copies of Windows by just $10 apiece, verdicts could easily wind up in the billions of dollars, say specialists.
Typically, private lawyers must spend fortunes marshaling the manpower and research needed to prove that a company is a monopolist and bully. With Jackson's ruling in hand, plaintiffs could effectively piggyback off the government's research and the opinions of its experts.
"It makes a hell of a road map," said John Coale, a Washington plaintiffs' lawyer who played a leading role in negotiating the $260 billion tobacco settlement in 1998.
One company has already found its way to the courthouse. On Monday, Seastrom Associates, a small advertising firm, filed a lawsuit in New York seeking class status for all that the state's consumers, alleging that Microsoft abused its power by overcharging for Windows.
Microsoft officials say that the contemplated suits are baseless and ironic given the judge's findings that the company charges less than its rivals, such as IBM, in the operating system market.
"We think it's a sad day for consumers when there's litigation threatened against a company that brought enormous innovation to the market place and helped drive down prices," said Mark Murray, a Microsoft spokesman. He added that the courts findings "do not have any weight or bearing on any other lawsuit until they are entered in a final ruling by Judge Jackson."
But some lawyers don't plan to wait the months it might take for Jackson to issue his conclusions of law. Some contend that the findings of fact alone could be deployed in private litigation; judges, they maintain, are granted discretion about what is allowed into evidence and many might conclude that the findings are carefully enough considered to stand on their own.
Most lawyers, however, are likely to pounce after Jackson's conclusion and remedies are announced, figuring that those will hold more sway then with other judges. Indeed, the threat of an outpouring of lawsuits is one reason that experts believe Microsoft might try to settle the case in the coming months.
Regardless, Microsoft won't be an easy target. One lawyer estimated that a national class action would cost at least $3 million, a price that might daunt all but the deepest pocketed firms.
Then there is the matter of finding plaintiffs. Antitrust law generally blocks actions by indirect purchasers of products, so anyone whose version of Windows came pre-loaded into their computers would likely be prohibited from suing. That, of course, leaves the multitudes who purchased the Windows 98 upgrade in retail stores. And at least one lawsuit has been filed alleging that computer makers conspired with Microsoft to inflate prices, a theory that would bring millions of computer buyers into any class of litigants.
Other possible plaintiffs could include companies that lost market share or were put out of business by Microsoft. Jackson repeatedly asserted that Microsoft stifled innovation, statements that could buttress claims of lost profits by, for instance, rival makers of spreadsheets.
"You can imagine a software maker arguing, 'We had a very viable program here and through your monopolization of the operating system you stomped all over it,' " said Michael Williams of PM Industrial Economics, a San Francisco consulting firm. "The company then says, 'But for Microsoft's actions we would have earned X.' "
The problem is that many of Microsoft's rivals also have agreements with the company and are unlikely to jeopardize their commercial relationships with a lawsuit. Corel Corp., for instance, would seem a possible litigant because its product, WordPerfect, has lost market share to Microsoft's own word-processing product. But Corel also joint-partners with Microsoft on Visual Basic, a progamming language, and isn't considering litigation any time soon.
"We compete with Microsoft, but we also cooperate with them," said Catherine Hughes, Corel's spokeswoman.
Computer makers themselves could get into the action. According to experts, companies such as Gateway Inc. and Dell Computer Corp. could allege that they lost money because Microsoft exerted strict control over the desktop space that users see when they log on to their computers. Lawyers might argue that those start-up screens, viewed every day by countless consumers, could have generated advertising revenue for the companies.
But the Dells of the world also need peace with Microsoft, which, after all, sells a product that nearly all of its customers demand. Officials at Gateway and International Business Machines Corp. declined to comment. Dell and Compaq Computer Corp. officials did not return calls.
Still, there could be dozens of companies ready to allege that they have been mortally wounded by Microsoft. "Antitrust doesn't require you to be dead and buried six feet under the ground to get some relief and compensation," said Keith Shugarman of Goodwin, Proctor & Hoar. "Companies don't need to wait for Microsoft to drive them out of business to sue."
Staff researcher Richard Drezen contributed to this report.
CAPTION: Microsoft Chairman Bill Gates signs autographs after the firm's annual meeting Wednesday in Bellevue, Wash.