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April 24, 2000

Microsoft wants Zurich to pay its legal bills

Zurich American contends Microsoft's liability insurance simply does not cover antitrust issues.

Microsoft Corp.'s general insurer has asked a federal court that it not be required to pay for legal bills stemming from the tide of third-party antitrust lawsuits filed in the wake of the U.S. Justice Department case.

Both Microsoft and Zurich American Insurance Inc. confirmed April 21 that they have each filed suit against the other over the issue. Zurich American, which filed first, contends Microsoft's liability insurance simply does not cover antitrust issues.

"This kind of litigation is not unusual when a company asserts coverage on a theory that we don't think has justification," says Tom Brunner, attorney for Zurich. There are nearly 140 private antitrust suits that have been filed in 38 states against Microsoft, all stemming from the ruling by U.S. District Judge Thomas Penfield Jackson's rulings that Microsoft acted anticompetitively and broke antitrust law.

Since each of those private suits has the potential for triple damages under antitrust law, Microsoft could be out millions of dollars even if only a fraction of the suits are successful.

"We signed a policy, and we believe it covers the cost of these pending class action lawsuits," says Microsoft spokesman Jim Cullinan. "We asked our insurance company about it, and before they even got back to us, they had filed their suit. That's why we responded."

Brunner said the insurance company felt that a court opinion would settle the matter best. He added that Zurich is seeking a preliminary injunction against Microsoft's suit until Zurich's claim is dealt with. "This is a general liability policy, like when you go to Microsoft headquarters, slip on a banana peel, and break your leg," Brunner says. "We certainly don't believe it covers these third-party antitrust suits."

Microsoft officials say it is not seeking insurance coverage for its battle with the Justice Department and the 19 states that banded together to file the initial antitrust complaint. The states and federal prosecutors are expected to file a brief on potential remedies — actions they hope will keep Microsoft from using anticompetitive practices — by April 28.


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