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Welcome to Microsoft Pri0: That's Microspeak for top priority, and that's the news and observations you'll find here from Seattle Times reporter Sharon Chan.

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April 4, 2008 10:11 AM

Judge's order halts action in 'Vista Capable' lawsuit

Posted by Benjamin J. Romano

Last night, U.S. District Court Judge Marsha Pechman granted Microsoft's request to halt proceedings in the "Vista Capable" class action lawsuit pending results from the company's appeal to the Ninth Circuit Court of Appeals. More details coming...

In early March, Microsoft filed papers to appeal Pechman's Feb. 22 decision to certify the lawsuit as a class action. The company also asked Pechman to stay proceedings in the suit until the outcome of the appeal was known.

In her order Thursday, which was formally filed this morning, Pechman wrote:

All further proceedings, including discovery, in this action are stayed until the later of the (1) denial of Microsoft's petition for permission to appeal or (2) the Ninth Circuit's entry of its mandate following disposition of Microsoft's appeal, if accepted. The Court also vacates the scheduling order in this action.

This appears to be a significant win for the company in what has so far been an embarrassing trip to court. The case centers on Microsoft's "Vista Capable" marketing program. The plaintiffs' complaint stems from a Microsoft program to prop up PC demand after the release of Windows Vista was delayed, missing the 2006 holidays -- a key sales period for consumer PCs.

They alleged that PCs marked "Windows Vista Capable" could run only the "Basic" version of the operating system, not the "Premium" version, which they consider to be the "real" Vista, based on the company's marketing.

In asking for the stay, the Microsoft argued that proceeding with the case while "important legal questions ... which have significance far beyond this case" were under appeal, left the parties uncertain about the class-action status of the case. That meant that they would have to go to the extensive effort of preparing to argue a class-action case, when the Ninth Circuit could ultimately rule that the class certification was in error.

It would "cost Microsoft a substantial sum of money for discovery and divert key personnel from full-time tasks; would intrude on sensitive pricing decisions and strategies by OEMs, wholesalers, and retailers; and would jeopardize Microsoft's goodwill with class members all with respect to claims that might not
proceed on a class basis at all," the company's lawyers wrote in a filing last month.

Apart from the actual legal costs, Microsoft was facing a PR mess because of the discovery process in the case. Sensitive e-mails detailing executive concerns about Windows Vista and Microsoft's marketing strategy were disclosed as evidence in the case. Presumably, more documents would come out in the next few months as the case advanced toward trial. The judge's stay puts a lid on that, pending the Ninth Circuit's decision.

No comment so far from Microsoft. I'm checking with attorneys for the plaintiffs and will update if they have anything to say.

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