Judge knocks the thunder out of 'Vista-capable' class-action suit

Though the likelihood of Microsoft's prevailing actually looks worse than it did last week, if it ends up losing, it might not be much after the judge says plaintiffs failed to prove its actions harmed a plurality.

When Microsoft decided to present consumer editions of Windows Vista with multiple versions, some of which lacked the very features the company advertised as defining the product, was it with the willful intent to defraud the public? An internal e-mail from then-president Jim Allchin to his colleagues suggests he was indeed afraid that the multiple versions could lead to consumer confusion and frustration...but that memo, made public during the discovery phase of the "Vista-capable" class-action case in Washington state district court, also appears to indicate a lack of willfulness on the part of at least one of the company's senior executives to deceive the public.

"I believe we are going to be misleading customers with the Capable Program," Allchin's e-mail reads. "OEMs will say a machine is Capable and customers will believe that it will run core Vista features." (PDF available here, with thanks to our friend Todd Bishop and the TechFlash blog.)

The most likely interpretation is that this is a warning to colleagues, not a note of approval for the fiendishness of some evil plan. But despite Allchin's warning -- assuming that's what it is -- the plan went forward anyway. Did that end up harming consumers?

The keyword in that last sentence is "consumers," plural. As US District Court Judge Marsha Pechman ruled yesterday, the original plaintiff Dianne Kelley may have a case, assuming she pursues how Microsoft's actions affected her specifically. But as far as proving a plurality of customers were harmed, Kelley's case fell apart.

"Plaintiffs' evidence fails to establish class-wide causation because it does not attempt identify a specific shift in the demand for Vista Capable PCs," Judge Pechman wrote. The judge cites the testimony of plaintiffs' expert Dr. Keith Leffler, an economist with the University of Washington, who was called to the stand to demonstrate, among other things, how the breakdown of Vista's stock-keeping units (SKUs) created an artificial premium for the full Vista featured on "Vista Ready" or "Premium Ready" PCs, versus the reduced version on "Vista Capable" machines. But Dr. Leffler was unable to supply the court with a key variable: an estimate of how many customers would have willfully purchased PCs that were only "Vista Capable," had the marketing program distinguishing the two categories not existed.

In other words, maybe we can assume customers wouldn't possibly have wanted the lesser version, but how do we know for sure if we can't estimate the number of customers who would? Whether the class-action status of the suit went forward depended on the economist expert's ability to classify the harm caused to a plurality, and the judge found that ability was lacking.

Another strike on Dr. Leffler's part came when he suggested the very existence of the Vista Capable program actually drove up sales of Windows XP for a time. If it could be argued that owning XP prior to the advent of Vista didn't harm anyone, why would owning it afterward necessarily be harmful? (Ask any Windows user who persists on running XP SP3 even today.)

But these strikes on the part of the plaintiffs' expert may not mean the case is lost; in fact, at least for plaintiff Kelley, it could have just been saved. Judge Pechman also denied Microsoft's motion for a summary judgment in its favor, citing the Allchin memo as a key factor. Obviously the memo indicates the possibility of deception was discussed at a high level. If Allchin's warning was considered and rejected, does that willfulness to reject translate into a willfulness to deceive? And if Allchin was ignored, does that constitute negligence?

"The question is not whether Basic can be called 'Vista' based on computer code similarity or whether Microsoft as a software developer has the right to offer multiple permutations of its product; it is whether Microsoft's use of the 'Vista Capable' designation had the capacity to deceive," the judge wrote. "In this sense, Microsoft's internal communications raise a serious question about whether customers were likely to be deceived by the WVC campaign. Summary judgment is inappropriate on this issue."

The judge closed her ruling yesterday with a warning to Microsoft that terminating class-action status should not be interpreted as an indicator that the plaintiff's (singular) case isn't worthy of trial.