In a significant decision issued today, the Court of First Instance (CFI) has upheld a 2004 decision of the European Commission (EC) against Microsoft.

The 2004 decision found that Microsoft had abused its dominant position contrary to Article 82 of the EC Treaty. Microsoft was fined €497 million and required to: (a) offer an unbundled version of Windows, without Windows Media Player; and (b) supply technical information which would enable non-Microsoft work group server operating systems to interoperate with Windows PCs and servers. Microsoft is required to provide the interoperability information on a royalty-free basis, unless the information is "innovative".

The EC appointed a Monitoring Trustee to oversee Microsoft's compliance with these remedies and has since imposed additional fines of €280.5 million on the grounds that Microsoft had failed to comply with the so-called 'interoperability remedy'. This fine is subject to a separate appeal by Microsoft.

In its judgment today, the CFI agreed with the EC's reasoning and found that Microsoft's bundling practices and refusal to supply certain technical information risked significantly weakening or eliminating competition from rival suppliers. The CFI therefore upheld the €497 million imposed on Microsoft.

However, the CFI overruled the EC in relation to its handling of the remedies imposed on Microsoft. The CFI found that there was no legal basis in EU law for the appointment of a Monitoring Trustee who is given independent powers to access information, documents, premises and employees of Microsoft and also the source code of its products. Further, the CFI found that Microsoft should not have been ordered to pay the Monitoring Trustee's costs.

The CFI's verdict will come as a disappointment not only to Microsoft, but also to other intellectual property owners who had argued that the EC's 2004 decision went beyond the "exceptional circumstances" in which a dominant firm should be obliged to provide access to its intellectual property rights. The CFI's decision makes clear that the impact of requiring a dominant firm to provide valuable information or technology must be balanced against the competitive benefits and product innovation that may result from competitors having access to that information or technology.

Microsoft may decide to appeal points of law to the European Court of Justice. In the meantime, Microsoft has recently responded to the EC's preliminary finding that the prices being charged by Microsoft for its interoperability data are unreasonable, because it does not contain "significant innovation".