PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

NOVELL, INCORPORATED, 

Plaintiff-Appellee,

v.  No. 06-1134

MICROSOFT CORPORATION,

Defendant-Appellant. 

NOVELL, INCORPORATED, 

Plaintiff-Appellant,

v.  No. 06-1238

MICROSOFT CORPORATION,

Defendant-Appellee. 

Appeals from the United States District Court

for the District of Maryland, at Baltimore.

J. Frederick Motz, District Judge.

(1:05-cv-01087-JFM; 1:00-md-01332-JFM)

Argued: December 1, 2006

Decided: October 15, 2007

Before WIDENER1 SHEDD, and DUNCAN, Circuit Judges.

Affirmed by published opinion. Judge Duncan wrote the opinion, in

which Judge Shedd joined. 

1

Judge Widener heard oral argument in this case but died prior to the

time the decision was filed. The decision is filed by a quorum of the

panel. 28 U.S.C. § 46(d). 
COUNSEL

ARGUED: Steven Lyon Holley, SULLIVAN & CROMWELL, New

York, New York, for Appellant/Cross-Appellee. Charles Justin Cooper, COOPER & KIRK, P.L.L.C., Washington, D.C., for

Appellee/Cross-Appellant. ON BRIEF: Thomas W. Burt, Steven J.

Aeschbacher, MICROSOFT CORPORATION, Redmond, Washington; Robert A. Rosenfeld, HELLER, EHRMAN, WHITE &

MCAULIFFE, L.L.P., San Francisco, California; David B. Tulchin,

SULLIVAN & CROMWELL, New York, New York; G. Stewart

Webb, VENABLE, L.L.P., Baltimore, Maryland, for

Appellant/Cross-Appellee. R. Bruce Holcomb, Jeffrey M. Johnson,

Milton A. Marquis, David L. Engelhardt, DICKSTEIN, SHAPIRO,

MORIN & OSHINSKY, L.L.P., Washington, D.C.; David H. Thompson, Howard C. Nielson, David M. Lehn, COOPER & KIRK,

P.L.L.C., Washington, D.C., for Appellee/Cross-Appellant. 

OPINION

DUNCAN, Circuit Judge: 

We are asked here to review cross appeals from two interlocutory

orders in an antitrust action by Novell, Inc. ("Novell") against Microsoft Corp. ("Microsoft"). Novell seeks treble damages under § 4 of the

Clayton Act, 15 U.S.C. § 15, for injuries allegedly suffered as a result

of Microsoft’s anticompetitive conduct in violation of §§ 1 and 2 of

the Sherman Act, 15 U.S.C. §§ 1, 2. In its suit filed in the District of

Utah and transferred by the Judicial Panel on Multidistrict Litigation

to the District of Maryland, Novell made six specific claims for damages to software applications it owned between 1994 and 1996. Two

of the six claims allege that Microsoft’s conduct injured competition

in the market for PC operating systems, a market in which Novell’s

products did not directly compete. The district court declined to dismiss these claims over Microsoft’s objection that Novell, as neither

a consumer nor a competitor in the relevant market, lacks antitrust

standing to bring them. Microsoft appeals the denial of this motion to

dismiss. 

2 NOVELL v. MICROSOFT
The remaining four claims allege harm to competition in the

software-application market, in which Novell did compete. The district court dismissed these claims as untimely, and Novell appeals. 

For the reasons that follow, we affirm both rulings.

I.

A.

Novell is a software company that owned WordPerfect, a wordprocessing application,2

 and Quattro Pro, a spreadsheet application,3

from 1994 until 1996.4 WordPerfect and Quattro Pro are "officeproductivity applications," which Novell marketed together as an

office-productivity package called "PerfectOffice." Microsoft is a

software company that owns Windows, a personal-computer ("PC")

operating system, as well as office-productivity applications of its own.5

An operating system is software that controls the computer’s

resources, including memory, disk space, keyboards, and the central

processing unit. An operating system also facilitates communication

between the computer’s resources and software applications, including word-processing and spreadsheet applications. United States v.

Microsoft Corp. ("Microsoft II"), 253 F.3d 34, 53-55, 60, 74 (D.C.

Cir. 2001) (en banc); United States v. Microsoft Corp. ("Microsoft I"),

84 F. Supp. 2d 9, 12 (D.D.C. 1999). Therefore, computer users need

an operating system to serve as a "platform" for the applications they

wish to run.6 Microsoft II, 253 F.3d at 53. At one time, PCs were used

2A word-processing application is software that enables an end-user to

create, edit, and print text-based documents. 

3A spreadsheet application is software that enables an end-user to

organize and manipulate quantitative data. 

4

In March 1996, Novell sold its office-productivity applications to

Corel Corporation. 

5Microsoft’s office-productivity suite is called "Microsoft Office" and

includes Word, a word-processing application, and Excel, a spreadsheet

application. 

6Operating systems serve as platforms for software applications by

making available to software developers protocols that perform certain

NOVELL v. MICROSOFT 3
primarily for word-processing, and even today, office-productivity

applications remain among the most widely used types of applications

available for PCs. 

Although Microsoft overwhelmingly dominates the PC operatingsystems market,7

 other operating systems exist.8 Because these operating systems work differently from each other, software developers

must create separate versions of their applications for each operating

system in order for the applications to function properly on it. Modifying an application written for one operating system so that it can run

on another is time-consuming and costly. Because of this, a new or

less popular operating system faces significant obstacles to gaining

market share. As the D.C. Circuit has explained, 

the "applications barrier to entry"—stems from two characteristics of the software market: (1) most consumers prefer

operating systems for which a large number of applications

have already been written; and (2) most developers prefer to

write for operating systems that already have a substantial

consumer base. This "chicken-and-egg" situation ensures

that applications will continue to be written for the already

dominant Windows, which in turn ensures that consumers

will continue to prefer it over other operating systems.

Microsoft II, 253 F.3d at 55 (internal citations omitted). 

widely-used functions. Microsoft II, 253 F.3d at 53. These protocols are

referred to as Application Programming Interfaces ("APIs"). Id. For

example, Windows includes an API that allows users to draw a box on

the computer screen. Id. Software developers wishing to include that

function in their applications for the Windows operating system may utilize the Windows API. Id.

7

In Microsoft II, Microsoft did not challenge the district court’s finding

that Windows controlled greater than 95% of the PC operating-systems

market. 253 F.3d at 54. 

8These other PC operating systems include (or at one time included)

Linux, Unix, and IBM OS/2. See Microsoft II, 253 F.3d at 52. Additionally, Apple’s Macintosh operating system, Mac OS, exists outside of the

PC operating-systems market. See id.

4 NOVELL v. MICROSOFT
In Microsoft II, the United States government and the governments

of several states challenged activities by Microsoft that allegedly

harmed competition in the PC operating-system market.9 The United

States Department of Justice filed a complaint against Microsoft on

May 18, 1998 (the "DOJ complaint"). The DOJ complaint is based on

allegations of anticompetitive conduct in violation of §§ 1 and 2 of

the Sherman Act, 15 U.S.C. §§ 1, 2, by Microsoft in two product markets: the market for PC operating systems and the market for Internet

browsers. J.A. 343 (DOJ Compl. ¶ 53). In a per curiam opinion, the

D.C. Circuit, sitting en banc, found that Microsoft was not liable for

attempted monopolization of the market for Internet browsers because

the government had failed to carry its burden in two ways: (1) it failed

to define the relevant market and (2) it failed to demonstrate that such

a market could be monopolized, i.e., "that a hypothetical monopolist

in that market could enjoy market power" because substantial barriers

to entry protect it. Microsoft II, 253 F.3d at 81. Nevertheless, the

court affirmed liability with respect to the claim that Microsoft unlawfully maintained a monopoly in the PC operating-system market. Id.

at 58-80. 

The government litigation in Microsoft II forms the basis of Microsoft’s statute-of-limitations challenge to two of Novell’s claims, as

discussed below. 

B.

Novell pursues six claims on appeal. Four of these, styled Counts

II, III, IV, and V, allege monopolization or attempted monopolization

of the markets for office-productivity applications. Novell’s products,

Word Perfect and Quattro Pro, directly competed in such markets.

The other two claims, Counts I and VI, are based on the same alleged

conduct as Counts II through V and seek recovery for damage to the

9Since that time, Microsoft has faced a number of private antitrust suits

for allegedly unlawfully monopolizing or otherwise harming competition

in the PC operating-systems market. See, e.g., Kloth v. Microsoft Corp.,

444 F.3d 312 (4th Cir. 2006); Deiter v. Microsoft Corp., 436 F.3d 461

(4th Cir. 2006); In re Microsoft Corp. Antitrust Litig., 355 F.3d 322 (4th

Cir. 2004); In re Microsoft Corp. Antitrust Litig., 333 F.3d 517 (4th Cir.

2003). 

NOVELL v. MICROSOFT 5
same Novell products, but are predicated on the theory that Microsoft’s conduct injured competition in the market for PC operating systems, a market in which Novell did not directly compete.10

All six of Novell’s claims arose prior to March 1996, when Novell

sold WordPerfect and Quattro Pro to Corel Corporation. The statute

of limitations for federal antitrust claims is four years. See 15 U.S.C.

§ 15b. Therefore, all of Novell’s claims asserted in its November

2004 complaint are time-barred unless the statute of limitations is

tolled by the filing of the DOJ complaint in May 1998. See 15 U.S.C.

§ 16(i). Section 5(i) of the Clayton Act provides that government antitrust proceedings toll the statute of limitations for private antitrust

actions "based in whole or in part on any matter complained of" by

the government. Id.

Novell’s Counts I and VI are indeed based on Microsoft’s anticompetitive conduct in the PC operating-systems market, which was at

issue in the DOJ complaint. Novell’s four other Counts, however,

allege Microsoft’s monopolization or attempted monopolization of

the markets for office-productivity applications, which conduct was

not specifically alleged in the DOJ complaint. 

Microsoft moved to dismiss all six Counts in the complaint.

Because Counts II through V allege injury that is not specifically

alleged in the DOJ complaint, Microsoft argued these claims were not

tolled by the DOJ complaint and thus were time-barred. Microsoft

sought dismissal of Novell’s claims of injury to competition in the PC

10Novell does not market an operating system comparable to Microsoft

Windows. Novell did at one time own an operating system known as

Novell DOS, which it sold to Caldera, Inc. ("Caldera") in 1996. Before

the district court, Microsoft argued that Novell sold its claims for monopolization and attempted monopolization of the PC operating-system market to Caldera along with its PC operating-system business. Therefore,

Microsoft asserted that in addition to lacking antitrust standing as to

Counts I and VI, Novell no longer owned the claims therein. 

The district court rejected Microsoft’s argument. However, as noted

above, we granted Microsoft’s petition for interlocutory appeal on the

antitrust-standing issue only, and thus the question of ownership of the

claims is not before us. 

6 NOVELL v. MICROSOFT
operating-systems market (the same market at issue in the DOJ complaint) in Counts I and VI on different grounds. Microsoft contended

that Novell did not have antitrust standing to raise such claims and

also that Novell did not own these claims. 

The district court agreed with Microsoft regarding Counts II

through V and dismissed those claims as untimely. However, the district court rejected Microsoft’s arguments regarding antitrust standing

and ownership of the claims and declined to dismiss Counts I and VI.

The district court certified its antitrust-standing and ownership rulings on Counts I and VI pursuant to 28 U.S.C. § 1292(b),11 and

Microsoft petitioned this court for leave to appeal. We granted the

petition with respect to the antitrust-standing issue only. Thereafter,

Novell cross-appealed the dismissal of Counts II through V. We

address, in turn, the issues of whether Novell has antitrust standing to

bring Counts I and VI and the timeliness of Novell’s claims in Counts

II through V. 

II.

We review de novo the district court’s rulings on a motion to dismiss under Rule 12(b)(6). See Holly v. Scott, 434 F.3d 287, 288-89

(4th Cir. 2006). In assessing rulings on dismissals under Rule

12(b)(6), we accept the allegations of the plaintiff’s complaint as true.

Advanced Health-Care Servs., Inc. v. Radford Cmty. Hosp., 910 F.2d

139, 143-44 (4th Cir. 1990). 

1128 U.S.C. § 1292(b) provides, in pertinent part: 

When a district judge, in making in a civil action an order not

otherwise appealable . . . , shall be of the opinion that such order

involves a controlling question of law as to which there is substantial ground for difference of opinion and that an immediate

appeal from the order may materially advance the ultimate termination of the litigation, he shall so state in writing such order.

The Court of Appeals which would have jurisdiction of an

appeal of such action may thereupon, in its discretion, permit an

appeal to be taken of such order . . . . 

NOVELL v. MICROSOFT 7
We first review the district court’s ruling that Novell has antitrust

standing to bring Counts I and VI. 

A.

Novell concedes that its products did not directly compete in the

market for PC operating systems. Nevertheless, Novell contends that

the technological connection between operating systems and applications gives rise to a significant barrier to entry into the operatingsystems market and thus protects Microsoft’s Windows monopoly.

Novell maintains that its office-productivity applications could perform well on a variety of operating systems and that, during the relevant time period, they were the dominant office-productivity

applications in the market.12 The thrust of Novell’s argument is that

its popular applications, though themselves not competitors or potential competitors to Microsoft’s Windows, offered competing operating

systems the prospect of surmounting the applications barrier to entry

and breaking the Windows monopoly.13 That is, Novell argues its

products could provide a path onto the operating-system playing field

for an actual competitor of Windows, because a competing operating

system, running the popular Novell software applications, would offer

consumers an attractive alternative to Windows. 

Novell relies on certain unique characteristics of technological

markets in making this argument. Courts have recognized that such

markets are "characterized by network effects," and thus behave

somewhat differently from more traditional markets. Microsoft II, 253

F.3d at 49. Because "‘the utility that a user derives from consumption

12Novell claims that in 1990, WordPerfect controlled 47% of the wordprocessing market but that Microsoft’s "assault" on its officeproductivity applications resulted in a precipitous decline in WordPerfect’s market share: to 40% in 1993, 30% in 1994, and less than 10% in

1996. Appellee’s Br. at 15-16. At the same time, Microsoft Word’s market share skyrocketed from 20% to 90%. Id. at 16. 

13According to Novell, monopolizing the office-productivity- applications market was "an end in itself for Microsoft" (and the subject of

Counts II through V of Novell’s complaint), but "the primary purpose of

Microsoft’s anticompetitive scheme" was to protect Microsoft’s PC

operating-system monopoly, its "real cash cow." Appellee’s Br. at 8. 

8 NOVELL v. MICROSOFT
of the good increases with the number of other agents consuming the

good,’" one product "‘tends towards dominance.’" Id. (quoting

Michael L. Katz & Carl Shapiro, Network Externalities, Competition,

and Compatibility, 75 Am. Econ. Rev. 424, 424 (1985)). In this way,

then, competition "is ‘for the field’ rather than ‘within the field.’" Id.

(quoting Harold Demsetz, Why Regulate Utilities?, 11 J.L. & Econ.

55, 57 & n.7 (1968) (emphasis omitted)). Put another way, firms compete to dominate the market, and once dominance is achieved, threats

come largely from outside the dominated market, because the degree

of dominance of such a market tends to become so extreme. Indeed,

in Microsoft II, Microsoft did not dispute the finding that Windows

controlled more than 95% of the operating-system market. Id. at 54.

Building on this same theory, the government in Microsoft II

argued that Microsoft preserved its advantage in the PC operatingsystem market by targeting certain "middleware" products, specifically Sun’s Java programming environment and Netscape’s Navigator

web browser.14 253 F.3d at 53-54, 60. Java and Navigator were

defined by the D.C. District Court as outside of the PC operatingsystem market, a finding affirmed by the D.C. Circuit. See id. at 53-

54. Notwithstanding the fact that the primary threats at issue in the

government action stood outside of the PC operating-system market,

Microsoft was found to have unlawfully monopolized that market. Id.

at 64, 71, 74, 76, 77. 

14"Middleware" is a term used to refer to software products that have

the capability to serve as platforms for software applications themselves.

Microsoft II, 253 F.3d at 53. They expose, or make available, their own

APIs, see supra note 6, and theoretically, software developers could rely

upon these APIs rather than Windows’s APIs for basic routines. Id.

Because Java and Navigator were written for multiple operating systems,

software developers could potentially use them as platforms for their

applications rather than rewriting them for each operating system. Id.

However, no middleware product could expose nearly enough APIs to

serve as a platform for popular applications or to usurp operating-system

functions. Id. Nor, the district court found and the D.C. Circuit affirmed,

would any middleware product do so in the foreseeable future. Id. Notably, Microsoft did not challenge these findings, apparently conceding

that Java and Navigator were not present competitors of its Windows

operating system. Id. Microsoft does not argue to this court that Java and

Navigator are now its competitors either. 

NOVELL v. MICROSOFT 9
Novell’s present claims echo the government’s theory in Microsoft

II. Just as the middleware threat posed by Java and Navigator came

from outside the Microsoft dominated PC operating-system market,

Novell now argues that its products, though also outside the relevant

market, similarly threatened Microsoft Windows. 

Novell alleges three specific unlawful actions on the part of Microsoft that harmed its products and also harmed competition in the PC

operating-systems market. First, Novell claims Microsoft withheld

from Novell key technical information necessary to make wellfunctioning office-productivity applications for Windows 95, an

updated version of Windows launched by Microsoft during the period

that Novell owned WordPerfect and Quattro Pro. Because PC users

would, upon the launch of Windows 95, upgrade their applications en

masse, Novell’s office-productivity applications would lose critical

market share if Novell did not have viable Windows 95 versions

ready at the time of the launch. Because of the network effects that

favor already popular applications, Novell’s applications’ loss of market share could in turn lead to a decrease in demand for the competing

operating systems that support these applications. Thus, WordPerfect

and Quattro Pro’s loss of market share would reduce the potential for

Novell’s products to enable an alternative operating system to surmount the applications barrier to entry and compete with Windows.

Second, Novell argues that Microsoft impeded Novell’s access to

distribution channels, including original equipment manufacturers

("OEMs"). OEMs manufacture PCs and typically preinstall an operating system and certain commonly used applications. Because Windows’s monopoly in the operating-system market means most

consumers want to buy Windows-equipped PCs, OEMs desire Windows licenses that enable them to install Windows on PCs. Novell

asserts that OEMs’ dependence on Windows licenses furnished

Microsoft with leverage that it used to impose restrictive and exclusionary agreements on OEMs. These agreements rewarded, or

required as a condition of obtaining a Windows license, the preinstallation of Microsoft’s office-productivity suite, and prohibited or punished the installation of competing applications. As with Microsoft’s

alleged conduct regarding Windows 95 described above, this action

would have the effect of decreasing Novell’s once-dominant market

10 NOVELL v. MICROSOFT
share and its products’ popularity, hampering Novell’s ability to make

an alternative operating system attractive to PC users. 

Finally, because Windows is the dominant operating system serving as a platform for software applications, software makers seek to

have their products certified as Windows-compatible. Such certification is a signal to software consumers that a product is compatible

with the most popular operating system. Novell claims that Microsoft

required it, as a condition of being certified as Windows-compatible,

to use Windows-specific technologies that degraded the performance

of Novell’s office-productivity applications on other operating systems. This requirement neutralized Novell’s applications’ purported

advantage of working well on a variety of operating systems. Novell

claims that such an advantage, along with Novell’s applications’ popularity, could have enabled other operating systems to bridge the

"moat" that protected Microsoft’s Windows monopoly.15

B.

We now turn to the legal underpinnings of antitrust standing. In a

private antitrust action, a plaintiff must go beyond a showing that it

meets the Article III standing requirements of injury, causation, and

redressability; it must also demonstrate "antitrust standing." Section

4 of the Clayton Act, 15 U.S.C. § 15, provides:

[A]ny person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws

may sue . . . and shall recover threefold the damages by him

sustained, and the cost of suit, including a reasonable attorney’s fee. 

Although a literal reading of § 4 is "broad enough to encompass every

15Microsoft official Jeff Raikes described this "moat" in an email to

investor Warren Buffett: 

If we own the key ‘franchises’ built on top of the operating systems, we dramatically widen the ‘moat’ that protects the operating system business . . . . 

J.A. 91. 

NOVELL v. MICROSOFT 11
harm that can be attributed directly or indirectly to the consequences

of an antitrust violation," the Supreme Court has interpreted the provision more restrictively. See Assoc. Gen. Contractors of Cal., Inc. v.

Cal. State Council of Carpenters ("AGC"), 459 U.S. 519, 529-30

(1983). "Congress did not intend the antitrust laws to provide a remedy in damages for all injuries that might conceivably be traced to an

antitrust violation." Hawaii v. Standard Oil Co., 405 U.S. 251, 262

n.14 (1972). "An antitrust violation may be expected to cause ripples

of harm to flow through the Nation’s economy; but despite the broad

wording of § 4 there is a point beyond which the wrongdoer should

not be held liable." AGC, 459 U.S. at 534 (internal quotation omitted).

A plaintiff sufficiently connected to the violation propagating these

"ripples of harm" is said to have "antitrust standing."16 Id. at 535 n.31.

The Supreme Court has held that a multi-factor analysis is required

to determine whether a private plaintiff has antitrust standing. See id.

at 536-38. These factors "circumscribe and guide" courts’ judgments

on whether plaintiffs have antitrust standing. Id. at 537. The Courts

of Appeals have since relied on the AGC factors to determine antitrust

standing. See Bodie-Rickett & Assocs. v. Mars, Inc., 957 F.2d 287,

291 (6th Cir. 1992); Reazin v. Blue Cross & Blue Shield of Kan., Inc.,

899 F.2d 951, 962-63 (10th Cir. 1990); Crimpers Promotions, Inc. v.

Home Box Office, Inc., 724 F.2d 290, 294-95 (2d Cir. 1983). This

court recently had the occasion to apply the AGC factors, distilling

them to five:

(1) the causal connection between an antitrust violation and

harm to the plaintiffs, and whether that harm was intended;

(2) whether the harm was of a type that Congress sought to

redress in providing a private remedy for violations of the

16The concept of antitrust standing is narrower than constitutional

standing. "Harm to the antitrust plaintiff is sufficient to satisfy the constitutional standing requirement of injury in fact," but courts must make an

independent determination of whether "the plaintiff is a proper party to

bring a private antitrust action." AGC, 459 U.S. at 535 n.31 (citing Daniel Berger & Roger Bernstein, An Analytical Framework for Antitrust

Standing, 86 Yale L.J. 809, 813 n.11 (1977)). This inquiry requires us to

focus on the multiple factors identified by the Supreme Court in AGC.

Id. at 537-44. 

12 NOVELL v. MICROSOFT
antitrust laws; (3) the directness of the alleged injury; (4) the

existence of more direct victims of the alleged antitrust

injury; and (5) problems of identifying damages and apportioning them among those directly and indirectly harmed. 

Kloth v. Microsoft, 444 F.3d 312, 324 (4th Cir. 2006) (internal quotations and citations omitted).17

The first two of these antitrust-standing factors together encompass

the concept of "antitrust injury." See Cargill, Inc. v. Monfort of Colo.,

Inc., 479 U.S. 104, 110 n.5 (1986); Brunswick Corp. v. Pueblo BowlO-Mat, Inc., 429 U.S. 477, 489 (1977). Antitrust injury has been

defined as "injury of the type the antitrust laws were intended to prevent and that flows from that which makes [the] defendants’ acts

unlawful." Brunswick, 429 U.S. at 489.18 The other three AGC factors

focus on the directness or remoteness of the plaintiff’s alleged antitrust injury. 

Before applying the AGC factors to the facts of this case, however,

we must first consider Microsoft’s argument that Novell’s claims fail

as a threshold matter. Microsoft asks us to adopt a bright-line rule that

only consumers or competitors in the relevant market have antitrust

17The plaintiffs in Kloth were indirect purchasers of Microsoft’s operating system; that is, they did not buy the software directly from Microsoft. Therefore, we held that they were barred from seeking recovery for

illegal pass-through overcharges under the principles of Illinois Brick Co.

v. Illinois, 431 U.S. 720 (1977). Kloth, 444 F.3d at 317. The holding in

Illinois Brick, that only direct purchasers of products affected by the antitrust violations can sue for treble damages under § 4 of the Clayton Act,

see 431 U.S. at 729-30, is generally inapplicable to the instant appeal. In

Kloth, however, we also applied the AGC factors and found that the

plaintiffs lacked standing to seek recovery for injuries other than overcharges. 444 F.3d at 324-25. 

18In Brunswick, the plaintiff, a retail bowling center, sued the defendant, who acquired several rival retail bowling centers that otherwise

would have closed. 429 U.S. at 488. The plaintiff was denied antitrust

standing because losing profits as a result of enhanced competition is not

the type of injury the antitrust laws were designed to prevent. Id. Awarding damages for that type of injury, the Supreme Court noted, "is inimical to purposes of these laws." Id.

NOVELL v. MICROSOFT 13
standing to bring private treble-damages claims under § 4. Were we

to adopt this proffered rule, Microsoft argues, we would be compelled

to find, before reaching the five-factor analysis, that Novell does not

have standing in this case because its products did not directly compete in the operating-system market. 

We must decline to adopt Microsoft’s "consumer-or-competitor"

rule. We note that the Supreme Court has rejected the utility of the

very type of bright-line approach on which Microsoft seeks to rely:

"The infinite variety of claims that may arise make it virtually impossible to announce a black-letter rule that will dictate the result in

every case." AGC, 459 U.S. at 536. In fact, a careful examination of

the cases on which Microsoft relies for support of its proposed rule

reveals that in most instances the claims were defeated by the absence

of an antitrust injury, rather than the plaintiff’s failure to demonstrate

consumer or competitor status.19

For example, in AGC, the plaintiff-union claimed that the

defendant-contractors’ association and its members violated the antitrust laws by coercing third parties and some of the association’s

members into doing business with nonunion firms. Id. at 520-21. In

denying standing to the union, the Supreme Court noted that the

plaintiff was "neither a consumer nor a competitor in the market in

which trade was restrained." Id. at 539. But the Court went on to discuss other factors, and ultimately concluded that the plaintiff-union’s

injury did not flow from a breakdown in competition. Indeed, it was

"not clear whether the Union’s interests would be served or disserved

by enhanced competition in the market" for contractors’ services. Id.

The Court cited Brunswick for the proposition that unions will be

unlikely to have antitrust standing, "especially in disputes with

employers with whom [they] bargain[ ]," because in those instances

the unions’ injuries will most likely not be "of the type the antitrust

statute was intended to forestall." Id. at 540. 

19It may be more likely that a consumer or competitor in the relevant

market will suffer an antitrust injury than a plaintiff who is neither a

competitor nor a consumer. This does not necessarily preclude, however,

a party who is neither from having an antitrust injury. Thus, like the

Supreme Court in AGC, we do not stop our analysis merely because

Novell is neither a competitor nor a consumer. 

14 NOVELL v. MICROSOFT
Significantly, had the Supreme Court in AGC intended that

consumer-or-competitor status be a necessary prerequisite for antitrust standing, it need not, after noting that the plaintiff was neither,

have then discussed the other relevant factors and instructed lower

courts to do the same. Id. at 537-38 & n.32 ("[C]ourts should analyze

each situation in light of [these] factors."). That a plaintiff’s status as

a consumer or a competitor in the restrained market is relevant to the

issue of antitrust standing is clear; the cases upon which Microsoft

relies do not compel the conclusion that it is necessary. 

Microsoft nevertheless insists that our own precedents rely on its

proposed consumer-or-competitor rule.20 See Thompson Everett, Inc.

v. Nat’l Cable Adver., L.P., 57 F.3d 1317, 1325 (4th Cir. 1995); White

v. Rockingham Radiologists, Ltd., 820 F.2d 98, 101 (4th Cir. 1987).

Careful consideration of those cases, however, reveals that they do

not provide direct support for the position Microsoft advances.

Indeed, the cases are not antitrust-standing decisions on the merits at

all but rather arise in the context of plaintiffs’ appeals from grants of

summary judgment in favor of defendants. Because of the relevant

differences in procedural posture between these two cases and the

case at bar, neither Thompson Everett nor White is supportive of

Microsoft’s position at this stage of the litigation. 

20Microsoft further relies on cases from the Third and Ninth Circuits

which appear to adopt a consumer-or-competitor rule. Barton & Pittinos,

Inc. v. SmithKline Beecham Corp., 118 F.3d 178, 184 (3d Cir. 1997);

Exhibitors’ Serv., Inc. v. Am. Multi-Cinema, Inc., 788 F.2d 574, 579 (9th

Cir. 1986). However, the courts in both circuits later explicitly moved

away from those narrowing decisions. See Carpet Group Int’l v. Oriental

Rug Importers Ass’n, Inc., 227 F.3d 62, 76-77 & n.12 (3d Cir. 2000)

(noting that Barton & Pittino’s’s holding "rest[ed] on an overstated

premise," that, "if construed as an absolute . . ., may in some circumstances lead to results that conflict with Supreme Court and other precedent"); Amer. Ad Mgmt., Inc. v. Gen. Telephone Co. of Calif., 190 F.3d

1051, 1058 (9th Cir. 1999) (declaring that limiting antitrust standing to

consumers and competitors would contravene Supreme Court precedent).

For further discussion of the possible myopia of limiting antitrust standing to consumers or competitors in the relevant market, see Ronald W.

Davis, Standing on Shaky Ground: The Strangely Elusive Doctrine of

Antitrust Injury, 70 Antitrust L.J. 697, 760-65 (2003). 

NOVELL v. MICROSOFT 15
Microsoft correctly notes that we found the plaintiff in Thompson

Everett to be neither a consumer nor a competitor.21 57 F.3d at 1325.

The decision to affirm summary judgment in favor of the defendants,

however, was not based on this finding alone. Rather, we focused in

Thompson Everett on the patent lack of any antitrust injury proven by

the plaintiff at the summary-judgment stage. Id. ("[Plaintiff] is not

being denied access to the cable company sales service market by any

act in violation of the antitrust laws."). The plaintiff in Thompson

Everett was a firm that sought to place advertising on cable television

and other media for clients. Id. at 1321. Defendants were traditional

cable representatives, retained by cable-television companies to sell

cable-company air time. Id. Thompson Everett complained that the

traditional cable representatives engaged in a horizontal conspiracy

with one another and a vertical conspiracy with the cable companies

to use their exclusive contracts to exclude independent cablerepresentative firms, like the plaintiff, from competition. Id. at 1321-

22. However, at summary judgment, the district court found no evidence to support the plaintiff’s claim of a horizontal conspiracy or

that the short-term exclusive agreements between the cable companies

and traditional cable representatives had an anticompetitive effect. Id.

at 1322. Thus, Thompson Everett could not recover under the antitrust

laws because it failed to show it had suffered antitrust injury, not

because it was neither a consumer nor a competitor. 

Similarly, White involved a plaintiff-doctor’s appeal from the district court’s grant of summary judgment in favor of a defendanthospital. The plaintiff alleged that the hospital had violated antitrust

laws in designating a certain radiology practice as its preferred interpreter of CT scans. White, 820 F.2d at 100-01. As in Thompson Everett, we noted that the plaintiff was "neither a provider nor consumer"

of hospital services. Id. at 104. But we affirmed summary judgment

for other reasons, among them that the defendant-hospital was not a

competitor in the market for interpreting CT scans and therefore could

not be held liable as a monopolist in that market. Id. at 104-05. Additionally, we found a lack of antitrust injury because there was no evi21Unlike Novell, the plaintiff in Thompson Everett maintained that it

was a competitor of the defendant. However, this court rejected that

characterization. Thompson Everett, 57 F.3d at 1325. 

16 NOVELL v. MICROSOFT
dence of a conspiracy between the hospital and the preferred

radiology practice. Id. at 103. 

We find additional support for our understanding that the AGC factors are not confined by a consumer-or-competitor rule in a Supreme

Court case decided one Term earlier. See Blue Shield v. McCready,

457 U.S. 465, 479-84 (1982). In McCready, the plaintiff challenged

her group health plan’s refusal to reimburse subscribers for psychologists’ services while reimbursing comparable treatment by psychiatrists. The Supreme Court affirmed that the plaintiff did have standing

under § 4 of the Clayton Act. Id. at 484-85. Although the plaintiff was

a "consumer" in the relevant market, the Supreme Court focused not

on this status, but rather on the directness of the plaintiff’s injury and

the fact that her loss was of the type the antitrust laws were intended

to prevent. Id. at 478. The Supreme Court stated: "Denying reimbursement to subscribers for the cost of treatment was the very means

by which it is alleged that Blue Shield sought to achieve its illegal

ends." Id. at 479. Additionally, the plaintiff’s injury—bearing the

unreimbursed cost of her psychologist’s services—was "inextricably

intertwined with the injury the conspirators sought to inflict on psychologists and the psychotherapy market." Id. at 483-84. 

Notably, the Court in a footnote specifically contemplates a party

other than a consumer or competitor having antitrust standing: "If a

group of psychiatrists conspired to boycott a bank until the bank

ceased making loans to psychologists, the bank would no doubt be

able to recover the injuries suffered as a consequence of the psychiatrists’ actions." Id. at 481 n.21. Even if this footnote is read as dicta,

it provides further evidence that the Supreme Court does not limit the

universe of proper plaintiffs under § 4 as narrowly as would Microsoft. The Court’s decision not to adopt a bright-line rule the next year

in AGC bolsters this conclusion. See 459 U.S. at 536. 

Finally, the government’s May 1998 antitrust suit against Microsoft detailed Microsoft’s anticompetitive activities in the operatingsystem market that harmed "middleware" products, Sun’s Java programming environment and Netscape’s Navigator web browser,

defined by the D.C. Circuit as outside of the operating-system market.

Microsoft II, 253 F.3d at 52-54. Although standing was not at issue,

an implication of the government action is that Sun or Netscape—

NOVELL v. MICROSOFT 17
neither consumers nor competitors in the PC operating-systems

market—would have had standing to sue Microsoft privately under

§ 4, and Microsoft concedes as much.22

22Microsoft does not deny that Sun and Netscape would have had

standing for a private suit. Instead, Microsoft focuses on the fact that

middleware products such as Java and Navigator had the technological

potential to compete with operating systems in the future. See Microsoft

II, 253 F.3d at 53-55. The hypothetical future capabilities of Java and

Navigator do not meaningfully distinguish such products from Novell’s

applications, however. Indeed, Java and Navigator, like WordPerfect and

Quattro Pro here, exist outside the market unlawfully monopolized by

Microsoft. As with Novell’s office-productivity applications, the primary

threat that Java and Navigator posed to Windows was not that they were

competitors or potential competitors in the operating-system market

(indeed, the court found that they were not competitors or potential competitors within the relevant time frame) but rather that, from outside that

market, they could enable an alternative operating system to compete

with Windows. Id. at 55, 60, 74-80. 

The anticompetitive activities that harmed Java and Navigator are

undeniably similar to those alleged by Novell. For example, the D.C.

Circuit found that provisions in Windows licenses issued to OEMs

restricting them from distributing browsers other than Microsoft’s own

served to reduce Netscape’s browser’s market share: 

Therefore, Microsoft’s efforts to gain market share in one market

(browsers) served to meet the threat to Microsoft’s monopoly in

another market (operating systems) by keeping rival browsers

from gaining the critical mass of users necessary to attract developer attention away from Windows as the platform for software

development. 

Id. at 60. Additionally, the D.C. Circuit cited internal Microsoft memoranda indicating an objective "to thwart Java’s threat to Microsoft’s

monopoly in the market for operating systems," in which Microsoft

espoused an intent to deceive Java developers into writing applications

that only performed properly on Windows. Id. at 76-77 (citing a Microsoft document that stated, "Cross-platform [i.e., multiple operating system] capability is by far the number one reason for choosing/using

Java"). 

As noted above, we are not sufficiently persuaded by Microsoft’s proffered distinction between Novell’s products and middleware to consider

irrelevant the parallels between Novell’s claims and the government’s

claims. 

18 NOVELL v. MICROSOFT
C.

Having rejected Microsoft’s argument that a bright-line consumeror-competitor rule strips Novell of antitrust standing, we now consider whether the five AGC factors, as formulated in our decision in

Kloth, compel dismissal of Novell’s claims on antitrust-standing

grounds. The first two factors—"(1) the causal connection between an

antitrust violation and harm to the plaintiffs, and whether that harm

was intended; and (2) whether the harm was of a type that Congress

sought to redress in providing a private remedy for violations of the

antitrust laws"—are closely related. See Kloth, 444 F.3d at 324 (citations and internal quotations omitted). They ensure that the plaintiff

claims the proper type of injury to be accorded antitrust standing. See

AGC, 459 U.S. at 540 ("[E]ach [plaintiff’s] alleged injury must be

analyzed to determine whether it is of the type that the antitrust statute

was intended to forestall."). The other factors, which involve examination of the directness or remoteness of the plaintiff’s injury and the

ease or difficulty of apportioning damages, may further constrict the

number of private plaintiffs eligible to bring a treble-damages action

under the federal antitrust laws.23

1.

We begin by reviewing the first two AGC factors. For ease of analysis, we reverse their order and examine first whether Novell has

alleged an injury that the antitrust laws were intended to prevent, and

then the causal connection between Microsoft’s conduct and Novell’s

injuries. It is helpful in this regard to briefly revisit the purposes of

antitrust laws. 

23The Supreme Court has likened the common-law tort concept of

proximate cause to the directness inquiry required by the additional AGC

factors, emphasizing that both are somewhat elusive. See McCready, 457

U.S. at 477, 478 n.13 ("The traditional principle of proximate cause suggests the use of words such as ‘remote,’ ‘tenuous,’ ‘fortuitous,’ ‘incidental,’ or ‘consequential’ to describe those injuries that will find no remedy

at law . . . . And the use of such terms only emphasizes that the principle

of proximate cause is hardly a rigorous analytic tool.") (internal citations

omitted). 

NOVELL v. MICROSOFT 19
"Antitrust laws . . . are the Magna Carta of free enterprise." United

States v. Topco Assocs., Inc., 405 U.S. 596, 610 (1972). As the

Supreme Court clarified in Brunswick, they "were enacted for the protection of competition not competitors." 429 U.S. at 488 (internal quotation omitted). Thus, the Sherman Act does not protect competitors

from being destroyed through competition; on the contrary, such

destruction can signal healthy functioning of the free-enterprise system. See id. The Sherman Act was enacted to protect the freedom to

compete by curtailing the destruction of competition through anticompetitive practices. For example, a firm violates § 2 of the Sherman Act

"when it acquires or maintains, or attempts to acquire or maintain, a

monopoly by engaging in exclusionary conduct ‘as distinguished

from growth or development as a consequence of superior product,

business acumen, or historic accident.’" Microsoft II, 253 F.3d at 58

(quoting United States v. Grinnell Corp., 384 U.S. 563, 571 (1966)).

Taking Novell’s allegations as true, as we must, the injury that

Novell alleges here is plainly an injury to competition that the antitrust laws were intended to forestall. Microsoft’s activities, Novell

claims, were intended to and did restrain competition in the PC

operating-system market by keeping the barriers to entry into that

market high.24 Thus, we conclude that Novell has alleged harm of the

type the antitrust laws were intended to prevent.

We now turn to the second facet of antitrust injury: the causal connection between Novell’s injuries and Microsoft’s alleged antitrust

violations. Novell claims that its market share in the officeproductivity-applications market was eroded as a result of Microsoft’s

activity, which was designed to and effectively did elevate the barriers to entry into the PC operating-systems market. As chronicled earlier in this opinion, Novell complains that Microsoft withheld key

technical information from its software designers, disadvantaging

Novell in preparing for the launch of the Windows 95 operating system; that Microsoft exploited its monopoly power to require or

encourage OEMs to refrain from installing Novell’s products on their

24Of course, in the absence of Microsoft’s alleged violations (i.e., in an

unrestrained market), Novell’s products still may have suffered from the

competition from Microsoft’s applications, but damage from competition

is not what the antitrust laws protect. See Brunswick, 429 U.S. at 488. 

20 NOVELL v. MICROSOFT
computers, cutting off Novell’s distribution channels; and that Microsoft required Novell to use Windows-specific technologies in order to

be certified as Windows-compatible, degrading Novell’s products’

performance on other operating systems and harming their advantageous compatibility. All of these activities allegedly had the effect of

thwarting the ability of Novell’s products to lower the applications

barrier to entry into the operating-system market, therefore harming

competition in that market. 

The analysis of the causal link between these activities and the

decline in Novell’s office-productivity-applications market share is

straightforward. Microsoft’s use of its monopoly power in the

operating-system market to foreclose the distribution channels for

Novell’s applications, for example, would have naturally tended to

decrease Novell’s market share and consequently decrease the value

of its applications. Likewise, withholding crucial data on its soon-tobe-released Windows 95 operating system would have put Novell at

a competitive disadvantage vis-a-vis Microsoft’s office-productivity

applications, leading naturally to a loss of market share for Novell.

This loss of market share could make a competing operating system

featuring Novell’s office-productivity applications less attractive to

consumers, harming that competing operating system’s potential to

surmount the barrier protecting the Windows monopoly. 

In examining causation, we also consider "whether [the] harm was

intended." Kloth, 444 F.3d at 324; see also AGC, 459 U.S. at 537

n.35. While mindful that the defendant’s specific intent to injure the

plaintiff is "not a panacea that will enable any complaint to withstand

a motion to dismiss," we recognize that "there no doubt are cases in

which such an allegation would adequately support a plaintiff’s claim

under § 4." AGC, 459 U.S. at 537 & n.35. Here, Novell alleges that

Microsoft specifically targeted its products for destruction as a means

to damage competition in the operating-systems market. Novell’s

allegations go beyond mere speculation. They are supported by internal Microsoft communications. For example, Microsoft Chairman

Bill Gates specifically suggested waiting to publish critical technical

specifications of Windows 95 until "we have a way to do a high level

of integration [between Microsoft Office and Windows 95] that will

be harder for [the] likes of . . . WordPerfect to achieve." J.A. 95. Otherwise, Gates noted, "[w]e can’t compete with . . . WordPerNOVELL v. MICROSOFT 21
fect/Novell." Id. Additionally, Novell proffers the following email

from senior Microsoft official Jeff Raikes to investor Warren Buffett:

If we own the key ‘franchises’ built on top of the operating

systems, we dramatically widen the ‘moat’ that protects the

operating system business . . . . We hope to make a lot of

money off these franchises, but even more important is that

they should protect our Windows royalty per PC. 

J.A. 91. The "moat" protecting Windows to which Raikes refers is the

applications barrier to entry; the email therefore supports Novell’s

assertions that its products were directly targeted. 

In sum, the first two AGC factors weigh in favor of granting Novell

antitrust standing. The facts alleged by Novell, taken as true for the

purposes of this appeal, are sufficient to demonstrate that Novell suffered an antitrust injury and that its injury can be traced to Microsoft’s

alleged antitrust violations. While the showing of an antitrust injury

demonstrates that a case is of the type for which antitrust standing is

recognized, such a showing is not necessarily sufficient to demonstrate that the particular plaintiff has antitrust standing. Thus, we now

turn to an analysis of the remaining AGC factors.

2.

The latter three AGC factors require us to consider "the directness

of the alleged injury; . . . the existence of more direct victims of the

alleged antitrust injury; and . . . problems of identifying damages and

apportioning them among those directly and indirectly harmed."

Kloth, 444 F.3d at 324 (internal quotations omitted). These additional

factors are intended to further restrict entry into the federal courts for

private enforcement of the antitrust laws. "[I]f afforded to every person tangentially affected by an antitrust violation or for all injuries

that might conceivably be traced to an antitrust violation," the trebledamages remedy would open the door to much mischief, including

the filing of claims that are remote from the forbidden anticompetitive

activity and the risk of duplicative lawsuits. Cargill, 479 U.S. at 111

n.6 (internal quotations omitted). That said, the Supreme Court has

recognized that "in enacting § 4[,] Congress sought to create a private

enforcement mechanism that would deter violators and deprive them

22 NOVELL v. MICROSOFT
of the fruits of their illegal actions, and would provide ample compensation to the victims of antitrust violations." See McCready, 457 U.S.

at 472. The broad language of the statute, "and the avowed breadth

of the congressional purpose, caution[ ] us not to cabin § 4 in ways

that will defeat its broad remedial objective." Id. at 477. 

Considerations of the directness of the plaintiff’s injury and of the

existence of more-directly harmed parties are closely related. Antitrust law favors granting standing to the most direct victims of defendants’ anticompetitive conduct and denying standing to more remote

victims on the theory that the direct victims have the greatest motivation to act as "private attorney[s] general" and "to vindicate the public

interest in antitrust enforcement." AGC, 459 U.S. at 542. Further,

compensating only direct victims avoids duplicative recoveries. Id. at

543-44. Therefore, the existence of an identifiable, more-directly

harmed class of victims with the incentive to sue under the antitrust

laws weighs against granting standing to a more remote plaintiff. If,

however, there is no more-directly harmed party with motivation to

act as a private attorney general than the plaintiff, the "risk of duplicative recoveries on the one hand, or the danger of complex apportionment of damages on the other" is mitigated. AGC, 459 U.S. at 543-44;

cf. Ill. Brick Co. v. Ill., 431 U.S. 720, 735 (1977) (limiting standing

to recover money damages in price-fixing claim to direct purchasers

in order to avoid duplicative recoveries and difficult damageallocation problems). 

For example, in AGC, the plaintiff-union sued a contractors’ association, alleging that the defendants coerced members of the association and certain nonmembers to hire nonunion contractors and

subcontractors. 459 U.S. at 540-41. The Court found that the union’s

injuries were derivative of any harm that may have been suffered by

certain of its members. Id. at 541. By contrast, in McCready, there

was no more direct victim of the defendants’ anticompetitive acts than

the plaintiff-consumer; she had paid for the services of a mental

healthcare provider that itself could not complain of Blue Cross’s

refusal to reimburse McCready.25 457 U.S. at 475.

25The psychologists harmed by the anticompetitive activity at issue in

McCready had, in fact, already maintained a successful suit against the

insurer. 457 U.S. at 470 n.4. However, their injury (lost profits in selling

their services) was distinct from that of McCready (reduced coverage on

her health insurance policy). 

NOVELL v. MICROSOFT 23
Here, Novell alleges that its software applications’ popularity,

quality, and ability to function well on multiple operating systems

posed a potential threat to Microsoft’s Windows monopoly by offering competing PC operating systems a bridge across the applications

barrier to entry (i.e., the "moat" that protects Windows’s monopoly)

into that market. Novell claims that because of this threat, Microsoft

directly targeted its products. As noted above, Microsoft’s specific

intent with respect to Novell is not the decisive factor, but it is evidence that Microsoft viewed Novell as a threat that could enable competitors to gain a foothold in the operating-systems market.

Furthermore, Microsoft’s withholding of information from Novell’s

software developers relating to Windows 95 clearly has no more

direct victim than Novell. Finally, Microsoft’s exclusive deals with

OEMs that ensured that Novell’s products would not be preinstalled

on new PCs built by those OEMs directly curtailed Novell’s distribution channels. 

Although Microsoft argues that a long list of better-situated plaintiffs than Novell exists, it mentions none by name or by category.

Nevertheless, we surmise that such plaintiffs might include potentially competing operating systems, the OEMs who were restrained

from installing Novell’s products on computers they manufactured, or

even consumers who purchased computers installed with Microsoft

products at an inflated price because of a lack of competition. Without

addressing whether plaintiffs representing each of these groups would

have antitrust standing, we note that none of these parties has sued

Microsoft on the theory that Microsoft’s alleged destruction of

Novell’s dominant office-productivity applications harmed competition in the PC operating-system market. It may be that OEMs, for

example, are too dependent on relationships with Microsoft for their

business livelihood to have the incentive to pursue claims under § 4.

See Berger & Bernstein, An Analytical Framework for Antitrust

Standing, 86 Yale L.J. 809, 879 (1977) (noting some parties "affected

by an antitrust violation may well not sue because of their stake in an

ongoing commercial relationship with the violator."). This suggests

that Novell may be the best-situated plaintiff to assert these claims.

Indeed, today Novell may be one of the few private plaintiffs whose

claims in this regard are neither time-barred26 nor too tenuous to support antitrust standing. 

26With a November 2002 consent decree ending the government’s suit

and triggering, one year later, the ticking of the statute of limitations’

24 NOVELL v. MICROSOFT
Certain characteristics of the PC operating-systems market also

weigh in favor of finding Novell to be the most direct victim with

incentive to serve as a private attorney general. As noted earlier in

this opinion, in technologically dynamic markets characterized by

network effects, one dominant product typically reigns supreme. See

supra II.A. Microsoft Windows thus competes more "for the field,"

parrying threats from outside the field instead of from within. See id.

Given the apparent absence of a more-directly harmed party than

Novell outside the filed and the dominance of Microsoft Windows

within the field, we conclude that the AGC directness factors weigh

in favor of finding antitrust standing here. 

Finally, we turn to the fifth AGC factor which considers whether

a finding of antitrust standing would lead to "problems of identifying

damages and apportioning them among those directly and indirectly

harmed." Kloth v. Microsoft, 444 F.3d 312, 324 (4th Cir. 2006)(internal quotations omitted). Cases where this factor has been found to bar

standing often involve potential plaintiffs indirectly injured by the

allegedly anticompetitive behavior, raising the specter of complex

apportionment of damages among, or duplicative recoveries by, direct

and indirect victims of such conduct. See AGC, 459 U.S. at 545

(denying standing to the union in part because damages would have

to be allocated between directly victimized union subcontractors and

their indirectly victimized employees); Ill. Brick, 431 U.S. at 737-38

(prohibiting a plaintiff down a distribution change from bringing a

private treble-damages action for an overcharge that may have been

passed on to it by a middleman). Because we have already determined, on the record before us, that Microsoft’s allegedly anticompetitive conduct was directly aimed at Novell, there is little risk that any

damages Novell might prove would need to be allocated or apportioned among any more-directly injured parties. 

We therefore find that the AGC factors favor granting standing to

Novell to assert Counts I and VI. We thus affirm the district court’s

clock, any plaintiff’s similar claims arising before the end of the government suit would appear to be untimely. See 15 U.S.C. § 16(i); United

States v. Microsoft Corp., 231 F. Supp. 2d 144 (D.D.C. 2002). 

NOVELL v. MICROSOFT 25
denial of Microsoft’s motion to dismiss as to these claims on the

antitrust-standing issue.

D.

We wish to emphasize here that we address the limited issue of

Novell’s antitrust standing on these facts. We do not view our decision with respect to Novell as unduly expanding the universe of private antitrust plaintiffs. We recognize, as has the Supreme Court in

its consideration of the scope of antitrust standing, that trebledamages suits under § 4 of the Clayton Act are not to be wielded

indiscriminately. We merely hold that Novell, like the owners of the

middleware products at issue in Microsoft II, is a member of a limited

class of plaintiffs for whom the AGC factors support antitrust standing, even though they are outside the restrained PC operating-systems

market. 

III.

A.

Having concluded that Novell does have antitrust standing to assert

Counts I and VI, we now turn to Novell’s argument that the district

court erred in dismissing as untimely Counts II through V, which

allege injury to competition in the office-productivity-applications

market. 

As noted earlier, this action was commenced more than eight years

after Novell’s claims arose; therefore, all of the claims are timebarred, see 15 U.S.C. § 15b (federal antitrust claims barred if brought

more than four years after accruing), unless saved by the tolling provision of § 5(i) of the Clayton Act. This section provides in relevant

part:

Whenever any civil or criminal proceeding is instituted by

the United States to . . . punish violations of any of the antitrust laws . . . the running of the statute of limitations in

respect of every private . . . right of action . . . based in

whole or in part on any matter complained of in said pro26 NOVELL v. MICROSOFT
ceeding shall be suspended during the pendency thereof and

for one year thereafter . . . . 

15 U.S.C. § 16(i) (emphasis added). 

The tolling statute contemplates an analysis of the relationship

between the violations alleged in the government action and those

alleged in the private action. Leh, 382 U.S. at 59. For the tolling provision to apply, the private plaintiffs must prove, by "comparison of

the two complaints on their face[s]," a significant overlap of subject

matter between the two actions. Id. at 59, 65. There is no requirement,

however, of complete identity of the means, objectives, or statutory

violations in the public and private lawsuits. Id.; Minn. Mining &

Mfg. Co. v. N.J. Wood Finishing Co., 381 U.S. 311, 323 (1965). 

Section 5(i) represents a balance struck by Congress between competing policy objectives. On the one hand, a "grudging interpretation"

of § 5(i) "would collide head-on with Congress’s . . . belief that private antitrust litigation is one of the surest weapons for effective

enforcement of the antitrust laws." Minn. Mining & Mfg. Co., 381

U.S. at 318, 320. On the other hand, § 5(i) reflects a "congressional

emphasis on certainty and predictability in the application" of the tolling provision so as to avoid "undue prolongation of [antitrust] proceedings." Greyhound Corp. v. Mt. Hood Stages, Inc., 437 U.S. 322,

335 (1978) (citing S. Rep. No. 619, 84th Cong., 1st Sess., 6 (1955)).

Beyond these broad principles, the district court here relied upon

the general rule that limitations are not tolled when "the government

and subsequent private suits . . . arose in distinct markets." 2 Philip

E. Areeda & Herbert Hovenkamp, Antitrust Law ¶ 321a, at 241 (2d

ed. 2000). Other courts have also applied this rule. For example, in

In re Coordinated Pretrial Proceedings in Petroleum Prods. Antitrust

Litig., 782 F. Supp. 481 (C.D. Cal. 1991), the markets defined by the

government and the private plaintiffs were the same ("refined oil

products")—except that they covered different geographical areas—

and nearly all of the same producers were active in both areas. Id. at

483-84. Nonetheless, the court rejected tolling because the markets

were not identical, as they covered different geographical areas. See

id. at 486; see also Charley’s Tour and Transp., Inc. v. Interisland

Resorts, Ltd., 618 F. Supp. 84, 86 (D. Haw. 1985) (stating, in a case

NOVELL v. MICROSOFT 27
involving the hotel-room-rental market in the government action and

the charter-bus-use market in the private action, that § 5(i) does not

"mean that a defendant [in a government action] doing business in

different markets [has] the statute of limitations tolled as to all of its

markets").

B.

Novell argues that the tolling provision preserves Counts II through

V because its complaint overlaps significantly with the DOJ complaint. The DOJ complaint, as discussed earlier, was based on allegations of anticompetitive conduct by Microsoft in two product markets:

the market for PC operating systems and the market for Internet

browsers. J.A. 343 (DOJ Compl. ¶ 53). Novell argues that the "core

elements" of its claims "echo allegations made throughout the government’s complaint against Microsoft," even though Novell’s claims in

Counts II through V are for harm to a market distinct from those specifically at issue in the DOJ complaint. Appellee’s Br. at 54. Novell

cites, inter alia, paragraph 5 of the DOJ complaint, which alleges,

"Microsoft’s conduct includes . . . exclusionary agreements precluding companies from distributing, promoting, buying, or using products of Microsoft’s software competitors . . .," J.A. 327 (DOJ Compl.

¶ 5); paragraph 13 of the DOJ complaint, which avers that Microsoft’s

conduct with respect to browsers is an example of Microsoft’s activities "with the purpose and effect of maintaining its PC operatingsystem monopoly and extending that monopoly to other related markets," J.A. 330 (DOJ Compl. ¶ 13)(emphasis added); and the government’s prayer for relief, which is peppered with references to "other

software products," J.A. 375-76. Novell argues that because the DOJ

complaint references other software markets, the complaint should be

interpreted as "complain[ing] of" harm to office-productivity applications as well as the two markets to which it clearly did allege harm,

markets for PC operating systems and for Internet browsers. Appellee’s Br. at 53-57. 

We cannot accept Novell’s proffered interpretation. Though we are

mindful of the tolling provision’s purpose of providing private plaintiffs the opportunity to wait to assert claims that are the subject of a

government action during the pendency of that action, Novell’s reading would require us to look beyond the face of the DOJ complaint,

28 NOVELL v. MICROSOFT
in contravention of Leh, 382 U.S. at 65. The DOJ complaint only

expressly alleges harm to the markets for PC operating systems and

for Internet browsers. Novell’s allegations of harm to the officeproductivity-applications market, therefore, overlap little with the

subject matter of the DOJ complaint. 

A straightforward application of the different-markets rule also

bars application of the tolling provision here. Though Novell characterizes the different-markets rule as merely "a helpful rule of thumb,"

Appellee’s Br. at 63, Novell cites only cases involving either the same

markets in the government and private suits, or markets much more

closely linked than the PC operating-system market and the officeproductivity-applications market. Indeed, the Supreme Court has

accepted tolling only where the private plaintiffs make claims in markets identical to, or completely encompassed by, those at issue in the

earlier government suit. See Zenith v. Hazeltine Research, Inc., 401

U.S. 321, 323-25, 333-34 (1971) (same markets); Leh, 382 U.S. at 64

(market in government suit was that for distribution of refined gasoline in Pacific Coast states, whereas private suit focused on the same

market in Southern California only); Minn. Mining & Mfg. Co., 381

U.S. at 315, 322-23 (same markets).27 Because the office-productivity

market at issue in Counts II through V is neither identical to nor com27Novell points to several lower-court decisions in which statutes of

limitations were tolled when the markets involved in the private suit and

the government suit were not identical. See In re Ariz. Dairy Prods.

Litig., No. CIV 74-569A (D. Ariz. Nov. 5, 1984) (finding limitations

period tolled for filing of claim in private action for price-fixing conspiracy in retail milk market based on government suit for price-fixing in

wholesale milk market); In re Antibiotic Antitrust Actions, 333 F. Supp.

317, 320-31 (S.D.N.Y. 1971) (finding limitations period tolled for claim

for damages suffered in a foreign broad spectrum antibiotics market for

agricultural consumption by government suit for conduct in domestic

broad spectrum antibiotics market for human consumption). The markets

in both of the above cases were defined rather specifically, however, and

a broader market definition could have included both that at issue in the

government action and that at issue in the private action (e.g., the "milk

market" or the "broad spectrum antibiotics market"). No reasonably

broader market definition could encompass both the operating-system

market at issue in the government action against Microsoft and the

office-productivity-applications market at issue here. 

NOVELL v. MICROSOFT 29
pletely encompassed by the PC operating-system market at issue in

the government action, these cases are of little service to Novell. 

Supporting our conclusion regarding the distinct nature of the markets is the fact that the government’s decision to pursue claims

involving only the operating-system and Internet browser markets

rested on a deliberate choice. The Department of Justice knew that

state Attorneys General originally included a claim in their action

against Microsoft, filed on the same day as the DOJ complaint in the

same court, for harm to a market for office-productivity applications.

See Compl. at ¶¶ 88-95, 98, 117-19, New York v. Microsoft Corp.,

No. 98-1233 (D.D.C. Nov. 12, 2002). This claim was subsequently

dropped in an amended complaint. See First Am. Compl., id.28

On these facts, we do not believe § 5(i) of the Clayton Act should

be construed to permit private plaintiffs to "sit on their rights" and to

assert, years after the traditional statute of limitations has run, "claims

so much broader than those asserted by the government that they open

entirely new vistas of litigation." Novell, Inc. v. Microsoft Corp., Civ.

No. 05-1087, 2005 U.S. Dist. LEXIS 11520, at *14 (D. Md. June 10,

2005). To allow Novell to go forward with Counts II through V now

would have precisely this undesirable effect, in addition to extending

the tolling effect of § 5(i) beyond what the Supreme Court has

accepted or condoned in this area. Such an extension of the tolling

provision would contravene the goals of certainty and predictability

in this area, as well as avoidance of the "undue prolongation of [antitrust] proceedings." Cf. Greyhound Corp., 437 U.S. at 334-35 (quotation omitted). 

We therefore hold that the tolling provision of § 5(i) of the Clayton

Act does not preserve Counts II through V of Novell’s complaint.

After tarrying with these claims for more than eight years, Novell

cannot now resurrect stale causes of action, and Microsoft is entitled

"to the comfort of repose." Novell, Civ. No. 05-1087, 2005 U.S. Dist.

LEXIS 11520, at *14. 

28Section 5(i) applies only to actions brought by the United States, so

the Attorneys’ General action did not toll the limitations period. 

30 NOVELL v. MICROSOFT
IV.

The judgment of the district court is 

AFFIRMED.

NOVELL v. MICROSOFT 31