E-Greeting card firm wins judgement against Microsoft

A California superior court has handed electronic greetings card maker Blue Mountain Arts a temporary victory in its lawsuit against Microsoft. The judge ordered Microsoft to help Blue Mountain redesign its e-greeting cards in a way that allows them to be received in the in-box of Outlook Express users, and not relegated to the junk mail filter. 'If they had indeed been willing to agree to this early on, we could have avoided these troubles, but they insisted on fighting us tooth and nail every step of the way,' said Blue Mountain VP Jared Schutz.

A California superior court has handed electronic greetings card maker Blue Mountain Arts Inc. a temporary victory in its lawsuit against Microsoft.

Judge Robert A. Baines of California Superior Court in Santa Clara ordered Microsoft to help Blue Mountain redesign its e-greeting cards in a way that allows them to be received in the in-box of Outlook Express users, and not relegated to the junk mail filter contained in the Microsoft software.

"If they had indeed been willing to agree to this early on, we could have avoided these troubles, but they insisted on fighting us tooth and nail every step of the way," Jared Schutz, Blue Mountain's vice president of business development, said in an interview today.

When the lawsuit was filed two weeks ago, a Microsoft spokesman said that the company had been willing to work with Blue Mountain to clear up the problem, but that Blue Mountain did not cooperate.

Under terms of a temporary restraining order issued by the judge, Microsoft must also post the following warning to users who download any future release of Internet Explorer 5.0 that contains a version of Outlook Express with a junk mail filter, court records show:

"WARNING: Users are advised that Outlook Express comes equipped with a 'junk' e-mail filter which, when turned on, may relegate legitimate e-mails, such as electronic greeting cards from family or friends, to the junk mail folder, and dispose of them according to the user's preferences."

The warning must be incorporated into the software download no later than 6:00 AM PST on Dec. 23, the court said.

"We assume they'll do it sometime today," Schutz said of the warning. As of noon PST, the warning had not been added, he said.

The order also requires Microsoft to give Blue Mountain 15 days notice if it makes any changes to the filter program that might affect missives sent using Blue Mountain's service, which provides the electronic greeting cards for free.

In its lawsuit filed with the superior court Dec. 8, Blue Mountain alleges that Microsoft set up a competing electronic greeting card Internet site, and late last month distributed a trial version of Internet Explorer 5.0 that includes an e-mail filter that sends Blue Mountain cards into a junk mail folder rather than to the intended recipient.

The lawsuit alleges that the actions against Blue Mountain are part of a pattern of unfair behavior to stamp out companies that compete with Microsoft. As such, yesterday's ruling represents an added legal headache for Microsoft, which is currently fighting similar charges of anticompetitive behavior in a federal antitrust suit being waged by the US government.

"We're not interested in ascertaining their motives," Schutz said, "but clearly the net effect was anti-competitive and illegal, in our opinion."

Regarding Microsoft's initial reaction when the company was contacted by Blue Mountain, "there was a great lack of concern and a lack of urgency and for greeting cards, this month and the Christmas season is the most important time of year," Schutz said. "We knew that unless we could solve this problem, our brand could suffer irreparable harm because reliability is a cornerstone of an electronic greeting card service."

In a statement posted on its Web site, Microsoft said it will comply with the superior court's order, and maintained its position that the charges leveled by Blue Mountain are groundless.

The software maker argued that its filtering program does not single out missives from Blue Mountain, but blocks all messages that the computer believes to be unsolicited e-mail or "spam" -- even electronic greetings that originate from Microsoft's MSN.com service.

Schutz countered that his company had outside sources test the filter and cards from Microsoft made it through while Blue Mountain's greetings did not. He said that Blue Mountain officials think that Microsoft might have begun blocking its own cards only after the lawsuit was filed.

Microsoft, however, contends that the company did indeed try to work with Blue Mountain when concerns were first raised.

"We are pleased that the court's order requires Blue Mountain to accept our previously unsuccessful attempts to supply them with the necessary information to resolve this issue quickly in the interest of consumers," Linda Norman, a senior corporate attorney at Microsoft, said in the statement.

Baines' ruling requires Microsoft to appear before the court on Jan. 21 to show why the temporary restraining order should not be incorporated into a preliminary injunction that will last for the duration of the lawsuit.

Blue Mountain has posted a copy of the court's order on its Web site, at http://www3.bluemountain.com/home/courtorder122198.html/.

Blue Mountain, in Boulder, Colorado, can be reached at +1-303-449-0536 or at http://www.bluemountain.com/. Microsoft, in Redmond, Washington, can be reached at +1-425-882-8080 or at http://www.microsoft.com/.

(Nancy Weil, in Boston, contributed to this report.)

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