The Commercial Court recently handed down its judgment following an application by the Defendants in the case of JJH Enterprises Limited (trading as ValueLicensing and represented by Charles Fussell & Co LLP) (“VL”) against three Microsoft entities, namely Microsoft Corporation, Microsoft Limited and Microsoft Ireland Operations Limited.
The judgment was in respect of Microsoft’s applications to strike out or seek summary judgment dismissing VL’s claims against Microsoft Limited, a UK based entity and the anchor defendant; and in respect of Microsoft Corp’s and Microsoft Ireland Operations Limited’s applications for declarations that the English Court was not the appropriate forum to hear VL’s claims against them.
The dispute between VL and Microsoft has arisen in the context of Microsoft’s ongoing efforts to replace historic perpetual licences with new time-limited subscription licences, and its campaign to incentivise its customers to sign up to new licence terms and pricing arrangements.
VL purchases and resells pre-owned perpetual software licences in the UK and EEA. Given Microsoft’s dominant position in these markets, VL argues that Microsoft has sought to stifle competition in the pre-owned sector since 2016 by effectively paying customers switching to Microsoft’s subscription model not to resell their old perpetual licences. In particular, VL claims to have suffered losses amounting to £269 million (and counting) as a result of breaches by Microsoft of Article 102 (which prohibits the abuse of a dominant position), and of Article 101 (which prohibits anti-competitive agreements) of the Treaty for the Functioning of the European Union and its equivalent provisions of the EEA Agreement and the UK Competition Act 1998.
Mr Justice Picken, following a careful and detailed analysis of the arguments, dismissed Microsoft’s applications in their entirety.
Application for strike-out/summary judgment
In dismissing Microsoft’s application to strike out the claims against Microsoft Limited, Mr Justice Picken considered the roles, relationship and interplay of the various Microsoft entities and, with reference to applicable case law, accepted VL’s assertion that they all formed a single economic undertaking. This is sufficient to fix a legal entity with liability, so that it is not necessary to allege that Microsoft Limited (i.e. Microsoft’s UK-based entity) itself did anything to infringe Articles 101 and 102. Liability (if established) of all the Microsoft entities concerned would be joint and several.
As a result, the judge held that VL’s pleaded case against Microsoft Limited has reasonable prospects of success and, therefore, dismissed Microsoft’s strike-out/summary judgment application and jurisdiction challenge based upon the necessary and proper party gateway.
The Judge also held in the alternative that VL had a good arguable case against Microsoft Limited as a tortfeasor in its own right.
The forum challenge
Mr Justice Picken accepted VL’s arguments in favour of England being the appropriate forum principally because the claims against Microsoft Limited would proceed in England in any event, and because English law applied to much of VL’s claims. It also made sense for Microsoft’s argument that English competition law should diverge from that of the EU to be determined by the English Court.
ValueLicensing has been advised by Charles Fussell, Jonathan Cohen, Catherine Stockler and Harry Prebensen of Charles Fussell & Co LLP, and represented by Maya Lester QC and Max Schaefer of Brick Court Chambers.