Microsoft filed a response in U.S. District Court to the lawsuit initiated earlier this month by Sun. The response denies Sun's claims both factually and legally and requests that the Court dismiss Sun's complaint.

Microsoft also sued Sun for breach of contract, bad faith conduct, and undertaking other wrongful activities such as knowingly making false statements about Microsoft Internet Explorer 4.0 technology and Microsoft products in an attempt to interfere with Microsoft's business.

A year and a half ago, Sun and Microsoft, two large, sophisticated companies, entered into an agreement. The agreement was good for both of them at the time. Now, one party — Sun — has decided that it no longer likes the agreement. Microsoft lived up to its end of the agreement. Sun needs to live up to its end too.

Microsoft denies Sun’s charges. Specifically, as the response and the agreement show,

• Microsoft has the right to determine if and how it will distribute the technology it licensed from Sun
• Microsoft has the right to modify, adapt and create derivative works of the technology
• Microsoft has fully performed its obligations under the agreement
• Sun has consistently failed to honor its own obligations
• Sun expressly agreed to limit its remedies. In particular, under no circumstance could Sun seek injunctive relief to interfere with Microsoft's business.

Microsoft is countersuing Sun for breach of contract, breach of covenant of good faith and fair dealing, and unfair competition. In particular, the response specifies that, contrary to the agreement:

1. Sun failed to deliver upgrades of Java that were compatible with previous versions
2. Sun failed to deliver technology which complies with the agreement, including supplemental classes which run on the Microsoft Reference Implementation and upgrades which pass Sun’s own test suites as required
3. Sun failed to provide Microsoft with all upgrades and all betas
4. Sun failed to promptly notify Microsoft of planned modifications of Java
5. Sun failed to license Microsoft's Java Reference Implementation to all third parties on a non-discriminatory basis on terms no less favorable than the terms upon which Sun licenses other implementations to third parties
6. Sun failed to deliver and use publicly available Java test suites
7. Sun falsely stated that all of its Java licensees had substantially the same terms when in fact they do not.
8. Sun falsely stated that Microsoft's software development tools are "incompatible" and that developers should choose not to use them
9. Sun falsely stated that Microsoft Internet Explorer is "incompatible" and that it has failed to pass the tests that it is required to pass
10. Sun took these actions willfully and deliberately with intent to cause competitive injury

The parties' agreement, which was made public at Microsoft's request on October 15. Under the agreement, Microsoft has the right to modify, adapt, and create derivative works of Sun's Java technology. Section 2.1 (a) In addition, Microsoft has the right to determine if and how it will distribute the technology it licensed from Sun or any derivative works. Section 8.2 Sun agreed to these terms. Sun's lawsuit is an attempt to change the agreement, not enforce it.

While Microsoft has met all of its obligations under the agreement, Sun has repeatedly failed to hold up its end of the bargain and is therefore in breach of contract. Examples of how Sun has broken the license agreement are included in Microsoft’s response. Sun has failed to live up to its obligations, even after Microsoft helped Sun on numerous occasions with technical assistance and other resources. Instead of cooperating with Microsoft, Sun essentially sought to rewrite the agreement after the fact. Microsoft has asked the court to confirm the agreement signed by the parties, not rewrite the deal.

Microsoft would like the court to:

• dismiss all of Sun’s claims
• declare Sun in breach of contract
• confirm Microsoft's right to terminate Sun’s licenses to Microsoft Java technology
• grant Microsoft damages due to Sun’s failure to meet its obligations under the agreement and its intentional interference with Microsoft’s business

As has been widely reported, Microsoft's technology is more compatible than any other major browser implementation. The public is right to be suspicious of Sun's claims since they have never made any test suites publicly available (as required by the agreement) so that people could test for themselves. What is at issue in the lawsuit is the agreement between Sun and Microsoft. Microsoft has fully complied with all of its obligations under the agreement.

No. Sun is well aware that after shipment of Internet Explorer 3.0, there was no requirement that Microsoft use or distribute any of Sun’s technology. This is clearly stated in Section 8.2 of the agreement. We have chosen not to ship JNI because it is redundant with and inferior to features already supplied in Microsoft’s virtual machine.

RMI is not an issue as it was posted on Microsoft's Internet site before Sun filed its lawsuit. Sun has confirmed publicly that this is all Microsoft is obligated to do with RMI.

Q. What is Microsoft's response to Sun's claim for $35,000,000?

The claim is totally without merit - Sun is trying to distract people from looking at the details of the contract now that it's public. For the details regarding this issue, look at Section 11.2(a). The section only applies in limited circumstances where an executive at Microsoft intentionally and willfully makes source code generally available to the public - which Microsoft has not done.

No. In Section 11.2(d) Sun explicitly agreed that an injunction against any Microsoft Product was not an available remedy.

Microsoft use of the Java Compatible Logo is authorized under the agreement. Since Microsoft has complied with all of its obligations under the agreement, Microsoft still has the right to use the Java Compatible Logo if it wishes to do so.