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The 9th U.S. Circuit Court of Appeals on Monday denied Microsoft’s appeal that the term “windows” be considered only as it is understood by the public today—not as it was when the company’s Windows was introduced in 1985—as the company’s trademark litigation against Lindows continues.

The case has been sent back for trial to Judge John Coughenour of the U.S. District Court in Seattle, who issued the order that Microsoft Corp. was appealing.

Lindows Inc. has been battered in its most recent legal go-arounds with Microsoft. It’s been forced to change its name in some areas of business from Lindows to Linspire.

It has also had to defend itself against numerous Microsoft legal actions in Europe. But according to lawyers familiar with the case, this latest decision bodes well for the desktop Linux distributor.

“We’re looking forward to getting this trial back on the fast track and presenting our piles of evidence—videos, magazines, internal Microsoft documents—which clearly show the generic use of ‘windows’ before Microsoft commandeered the word,” Lindows CEO Michael Robertson said in a statement.

“This outright denial of Microsoft’s appeal confirms that the trial will focus on how consumers and the software industry used the term ‘windows’ in the 1980s, before Microsoft dominated the landscape.”

Michael R. Graham, intellectual property attorney and partner with Chicago-based law firm Marshall, Gerstein & Borun LLP, said he considers this a major move in the ongoing legal war between Microsoft and San Diego-based Lindows.

“Although it is merely a straightforward denial of Microsoft’s petition for permission to appeal, this is a significant decision,” Graham said. “And one which substantially strengthens Lindows’/Linspire’s challenge of the Windows trademark.

“This ruling is vital to Lindows’/Linspire’s case because if a term is generic, or once it becomes generic, trademark law holds that no amount of advertising or exclusivity of use can make that term a protectable trademark,” Graham said.

The company “hopes to prove that prior to the adoption of Windows by Microsoft, ‘windowing’ and ‘windows’ were used for a particular feature of computer graphic user interfaces: namely, the ability to open files within so-called ‘windows’ and of opening multiple ‘windows’ on the computer screen to work on different programs or files.

“Although Microsoft owns numerous registrations for trademarks which include the Windows designation, it only gained these without disclaiming exclusive rights in the Windows term by claiming that the term has gained trademark distinctiveness by reason of its advertising, marketing and sale of goods under the mark, a so-called Sec. 2(f) basis,” Graham said.

“But if the jury determines that the ‘windows’ term was not only merely descriptive, but was in fact generic prior to Microsoft’s use of the term, then no amount of advertising, sales or secondary meaning would entitle Microsoft to monopolize the generic term,” he said. “Thus, this is an important victory for Lindows and a defeat for Microsoft.”

Next Page: The ruling could wind up having much larger implications for Microsoft.

Glenn Peterson, intellectual property attorney and shareholder with the Sacramento-based law firm McDonough Holland & Allen PC, agreed when he said, “The denial of Microsoft’s appeal does not bode well for its trademark infringement case directed at Lindows.”

“The trial judge has made it clear that this case will be controlled by whether ‘windows’ was a generic term at the time Microsoft’s Windows 1.0 entered the market in November 1985,” Peterson said.

“The judge made clear that this issue would be controlling at trial and also made clear that he would instruct the jury that generic-ness should be determined by the circumstances existing prior to Windows 1.0 going to market.

“The judge went even further, however, and stated that he would not instruct the jury that, if ‘windows’ was a generic term prior to November 1985, Microsoft could still have a protectable trademark so long as the ‘primary significance’ of the term wasn’t generic.

“Stated in plain English, this just means that the generic term originally was understood to refer to something else, but now everyone knows it refers to Microsoft’s products,” Peterson said.

“Combined, these statements by the judge make indelibly clear that, if Windows is found by the jury to be generic prior to November 1985, then it cannot be the subject of trademark protection under any circumstances.”

That’s bad news for Microsoft, but Peterson said he thinks there’s worse in store for the Redmond, Wash., software giant.

“Here’s the really daunting aspect for Microsoft: If it is determined in this trial that ‘windows’ is a generic term, then Microsoft’s Windows and Windows-related trademarks are invalid—i.e., they can’t be enforced under any circumstances,” he said.

“This means much more than a win for Linux. It means a hall pass for all competitors in the software marketplace. Stated simply, any person or company who wishes to utilize ‘windows’ in their name or marketing material would be free to do so without fear of suit by Microsoft.

“In the final analysis, this would mean a small win for Linux, because its rights will be no greater than the general public’s, but a huge loss for Microsoft,” Peterson said.

“This is what happened to nylon and teflon. They used to be trademarks but became generic. Today, you can go into any department store and find hundreds of products that use those words on their labels and packaging.

“This is also why Xerox would prefer that you ask for a ‘photocopy’ instead of a Xerox copy,” he said. “Trademarks can become generic through common usage.

“In the Microsoft case, Lindows is arguing the converse scenario, i.e., that ‘windows’ was generic before Microsoft adopted it—Linus [Torvalds] is fond of saying ‘commandeered it’—as a trademark.”

Peterson said he doubts that the case will go to trial. If it does, he said, “It will become a zero-sum game for the contestants. One side will lose big, and the inevitable appeal that follows will become as familiar to software purveyors as ‘Roe v. Wade’ is to law students. I will not be surprised at all to hear a settlement announced before Thanksgiving this year.”

If it does go to court, the trial is on a timetable to take place in the second half of 2004 in Seattle, with Coughenour presiding. The trial is expected to last about two weeks, with each side having one week to present its case.

Witnesses already designated to testify include Bill Gates, Microsoft’s chairman and chief software architect; Steve Ballmer, the company’s president and CEO; and Lindows’ Michael Robertson.

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