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COMES v. MICROSOFT CORP.6/12/2002
A group of computer consumers filed suit alleging Microsoft Corporation maintained or used a monopoly in conjunction with its Windows 98 operating system for the purpose of excluding competition or controlling, fixing, or maintaining prices in violation of the Iowa Competition Law. See Iowa Code §§ 553.4, 553.5 (1997). On appeal, the consumers urge us to find our state antitrust law is not controlled by federal law, and thereby allow them to sue in Iowa as indirect purchasers. We conclude the Iowa Competition Law is not controlled by federal law and indirect purchasers may maintain an antitrust action in state court. Therefore, the motion to dismiss should have been denied. We reverse and remand.
I. Background and Facts
Joe Comes is a resident of Polk County, Iowa. Comes Vending, Inc. is a corporation organized and existing under the laws of the State of Iowa. Comes and Comes Vending purchased a Gateway Solo Computer directly from Gateway. The computers came with Windows 98 operating system pre-installed. As a precondition to using Windows 98, they became end-user licensees of Microsoft as to the operation and use of Windows 98. Comes and Comes Vending registered its ownership of the licenses with Microsoft via electronic mail.
Microsoft is a for-profit corporation organized and existing under the laws of the State of Washington. Microsoft's focus is primarily on developing and licensing computer software. Microsoft is the world's leading supplier of operating systems for personal computers.
Comes and Comes Vending represent the group of all end-user licensees of Windows 98 living in Iowa as to whom Microsoft has an electronic mail address that is computer-accessible by Microsoft (all the foregoing the "Class"). Each member of the Class owns or leases an Intel-based personal computer. The Class filed suit alleging Microsoft maintained or used a monopoly in conjunction with its Windows 98 operating system for the purpose of excluding competition or controlling, fixing, or maintaining prices in violation of the Iowa Competition Law. See Iowa Code §§ 553.4, 553.5. The Class further stated,
ell aware of its unlawfully and willfully maintained monopoly power and in unlawful exercise of that monopoly power, Microsoft has knowingly, flagrantly, and with impunity licensed its Windows 98 operating system for Intel-based personal computers without regard to competition, at a monopoly price in excess of what Microsoft would have been able to charge in a competitive market.
The Class asserted that by virtue of its status as end-user licensees, it incurred a monopoly price charged by Microsoft for use of Windows 98. Microsoft filed a motion to dismiss claiming chapter 553 must be interpreted consistently with federal law and under federal law the Class was deemed to be comprised of indirect purchasers barred from recovering damages for alleged antitrust violation. See Illinois Brick Co. v. Illinois, 431 U.S. 720, 97 S.Ct. 2061, 52 L.Ed.2d 707 (1977).
The Iowa district court, persuaded by the policies of Illinois Brick, granted the motion to dismiss. The court concluded the indirect purchaser rule set forth in Illinois Brick applied to the Iowa Competition Law. The court noted the similarity between the federal and state statutes, prior interpretations by this court consistent with federal antitrust law, and the statutory directive to "harmonize" state and federal antitrust laws. The court further found this case did not fall within any of the limited exceptions to Illinois Brick. The Class appeals.
On appeal, the Class argues this court should hold Illinois Brick does not apply and that if it does apply they are direct,
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