Microsoft tells EU court €899 million fine too steep

According to the EU, the fine was set because Microsoft charged a royalty rate of 0.7 percent for each developed product from June 21, 2006 to October 21, 2007 that made use of the company's interoperability protocols. The problem, according to the EU? You guessed it: the royalty rate was too high. 

Microsoft's complaint against the EU Commission was filed on May 9, but it only recently has become available to the public. The software giant has outlined six reasons for the fine being too high, asking that it either be canceled entirely, or at the very least, lowered. The company is even asking for the EU Commission to pay costs. It looks like Microsoft is hoping to demand as much as possible with the hope that at least one of its requests will go through. Microsoft's six talking points:

1. The EU did not specify what "reasonable" price terms it wanted Microsoft to apply before subjecting the company to penalty payments for not applying them.
2. The Commission failed to consider that the rates adopted by Microsoft were intended to facilitate negotiations with prospective licensees, were proposed by Microsoft in consultation with the Commission, and the trustee had to agree to them. The Commission also failed to consider that the rates set by Microsoft were lower than the rates that a third party expert determined to be reasonable; no prospective licensee failed to reach agreement with Microsoft; and that licensees of the "no patent" license also obtain rights to use Microsoft's patents.
3. The Commission should not have required Microsoft to establish that its trade secrets were innovative so that it could justify the imposition of royalties for a license for them. Patent experts criticized the Commission's approach.
4. The Commission based its assessment reports prepared by the trustee "on the basis of documents obtained through powers of investigation that the Court of First Instance held to be unlawful."
5. The Commission denied Microsoft's right to be heard after the end of the reference period for which Microsoft is fined.
6. The amount of the periodic penalty payment is excessive and disproportionate. Among other reasons, the Commission only finds the royalties allegedly established by Microsoft under the "no patent" license unreasonable, and therefore, doesn't challenge the royalties allegedly established by Microsoft for all of its intellectual property rights.

In short, Microsoft feels that the EU has made various "manifest errors" in its fining of the software giant. Microsoft's lawyers seem to have been hard at work. Attempting to prove the EU wrong is an approach that the company has tried before, but it has failed over and over again. This time, though, Microsoft has some solid ammo, but success is by no means a given.