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Bill Gates Testifies in $1B Lawsuit Against Microsoft

Bill Gates Arrivest Salt Lake Courthouse AP

Nov. 21, 2011: Microsoft founder Bill Gates arrives at the Frank E. Moss federal courthouse in Salt Lake City to testify in a $1B antitrust lawsuit brought by Novell Inc. Gates, wearing a gray suit and a yellow tie, was the first witness as Microsoft lawyers presented their case in a trial that's been ongoing for about a month. (AP Photo/Jim Urquhart)

Microsoft's Windows 95 rollout presented the most challenges in the company's history, leading to several last-minute changes to technical features that would no longer support a rival software maker's word processor, Bill Gates testified Monday in a $1 billion antitrust lawsuit filed by the former owner of WordPerfect.

"We worked super hard," the Microsoft co-founder said. "It was the most challenging, trying project we had ever done."

Gates was the first witness to testify Monday as Microsoft lawyers presented their case in the trial that's been ongoing in federal court in Salt Lake City for about a month. He is set to resume testimony Tuesday morning.

Utah-based Novell Inc. sued Microsoft in 2004, claiming the Redmond, Wash., company violated U.S. antitrust laws through its arrangements with other software makers when it launched Windows 95. Novell says it was later forced to sell WordPerfect for a $1.2 billion loss. Novell is now a wholly owned subsidiary of The Attachmate Group, the result of a merger that was completed earlier this year.

Gates said Novell just couldn't deliver a Windows 95 compatible WordPerfect program in time for its rollout, and its own Word program was actually better. He said that by 1994, Microsoft's Word writing program was ranked No. 1 in the market above WordPerfect.

Gates called it an "important win."

He testified later that Microsoft had to dump a technical feature that would have supported WordPerfect because he feared it would crash the operating system.

"We were making trade-offs," he said.

Novell argues that Gates ordered Microsoft engineers to reject WordPerfect as a Windows 95 word processing application because he feared it was too good.

WordPerfect once had nearly 50 percent of the market for computer writing programs, but its share quickly plummeted to less than 10 percent as Microsoft's own office programs took hold.

Microsoft lawyers say Novell's loss of market share was its own doing because the company didn't develop a Windows compatible WordPerfect program until months after the operating system's rollout.

Novell attorney Jeff Johnson has conceded that Microsoft was under no legal obligation to provide advance access to Windows 95 so Novell could prepare a compatible version. Microsoft, however, enticed Novell to work on a version, only to withdraw support months before Windows 95 hit the market, he said.

Microsoft lawyer David Tulchin said Gates decided against installing WordPerfect because it couldn't be made compatible in time for the rollout. He argued that Novell's missed opportunity was its own fault, and that Microsoft had no obligation to give a competitor a leg up.

"Novell never complained to Microsoft," Tulchin said during arguments Friday. "There's nothing in the evidence, no documents."

Johnson maintains Novell was tricked in violation of federal antitrust laws so Microsoft could monopolize the market.

"We got stabbed in the back," he said.

Microsoft's arguments for a dismissal of the case resumed Monday afternoon.

Throughout arguments Friday, U.S. District Judge Frederick Motz openly expressed doubts that Novell's claims had merit.

"I don't see why I have to give a product to a competitor so he can beat me," Motz told Novell attorneys.

Gates, a billionaire, began by testifying about Microsoft's history. He was just 19 when he helped found the company. Today, Microsoft is one of the world's largest software makers, with a market value of more than $210 billion.

"We thought everybody would have a personal computer on every desk and in every home," Gates said. "We wanted to be there and be the first."