Novell to Microsoft: Too Little, Too Late

Talk about eating your words. Microsoft's recent cereal-box advertising campaign wasn't much of a success—unless your definition of "success" is "being taken to court by Novell."

The problem started when Microsoft sent 3000 Novell customers an imitation cereal box, labeled Microsoft Server Crunch, that contained outrageous claims about Novell and its NetWare product. "What's the expiration date on that NetWare platform?" the box read. "As a result of the recent Cambridge Technology Partners merger, Novell is shifting its focus from software development to consultancy services." And "you're left with a server platform without the full support of its manufacturer. Which means increasing costs as it rapidly becomes obsolete, forcing you to implement time-consuming retrofits."

Not surprisingly, Novell took offense. "These questions and statements are completely false and misleading," said Novell Executive Vice President and Chief Operating Officer (COO) Stewart Nelson.

In response to Novell's complaints, Microsoft halted the campaign and sent out "clarifying" notes to the boxes' recipients, but Novell wasn't satisfied and quickly took Microsoft to court. Microsoft agreed to stop disseminating false statements in advertising about Novell and its NetWare products and to issue a revised letter to the Novell customers who received the cereal boxes. The updated letter explained that "Contrary to the statements made about Novell on the package by Microsoft, Novell has advised Microsoft that it is growing and expanding its software business, while adding significant resources to its existing consulting services business. Accordingly, Microsoft retracts its statements that Novell will not fully support NetWare, that NetWare has an 'expiration date' or that it is or will become 'obsolete,' and that NetWare will become costly and time-consuming to maintain."

Still, Novell wasn't quite ready to forgive and forget. At the time of this writing, the company is continuing its lawsuit to recover financial damages resulting from the Microsoft campaign. "We are pleased ... because Microsoft represented to a court of law that it will no longer disseminate the statements Novell contends constitute false advertising, whether on the original marketing piece in question or by any other means," said Novell Senior Vice President, General Counsel, and Secretary Joe LaSala. "We are also satisfied with Microsoft's agreement to send out an amended retraction to our customers. We believe this is recognition by Microsoft that its initial 'corrective action' was insufficient and shows Microsoft's initial attempt to correct its false and misleading statements about Novell was half-hearted at best. While the revised retraction is a good beginning, it does not adequately redress the harm to Novell caused by Microsoft's campaign of false statements. We are anxious to move to the next phase of the litigation where discovery will begin, and we will put together our case for damages." Maybe next time, Microsoft should just skip breakfast.

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