New judge assigned in Microsoft trial

Earlier in the day, a federal appeals court, as expected, returned the Microsoft case to the trial court for further proceedings.

That order, issued by the U.S. Court of Appeals for the District of Columbia Circuit, opens up another chapter in the antitrust saga. The assignment of Kollar-Kotelly means the case can move forward fairly quickly, say legal experts.

"We are pleased the case is back in District Court, and we're anxious to proceed," said Justice Department spokeswoman Gina Talamona.

Kollar-Kotelly was appointed to the U.S. District Court for the District of Columbia in May 1997 by President Bill Clinton. She is a graduate of Catholic University of America.

As proceedings resume before the District Court, two issues dealt with previously will take center stage. The new judge must rehear the issue of tying--whether it was illegal for Microsoft to integrate its Internet Explorer Web browser with Windows 95 and 98. Kollar-Kotelly also will hold hearings on remedies, which could span at least several months.

"In some ways it will almost be like another full-blown trial, with depositions, affidavits and testimony," said Bob Lande, an antitrust professor with the University of Baltimore School of Law.

In its June 28 order upholding eight separate antitrust violations against Microsoft, the Court of Appeals struck down the earlier remedy: U.S. District Judge Thomas Penfield Jackson's order that Microsoft be broken into separate operating system and software application companies. The seven appellate judges also removed Jackson from the case for statements made to the media behind closed doors during the trial.

The Court of Appeals threw out Jackson's order, in part, because he failed to hold his own remedy hearings. At the time, Microsoft had indicated that several major executives, including Chairman Bill Gates, would testify at the hearings.

Kollar-Kotelly is expected to meet with the sides soon to work out a schedule for moving the case forward quickly. But legal experts warn that Microsoft faces a tough road ahead.

"These guys have lost a major lawsuit at the trial level and had it upheld by a unanimous Court of Appeals panel," said Rich Gray, a Silicon Valley-based lawyer closely watching the trial. "Although they certainly were right in thinking they wanted to get out of Judge Jackson's court, that's the baggage they're going to be carrying no matter whose court they walk into. And that's heavy baggage."

"We're proceeding with a case that was significantly narrowed by the Court of Appeals ruling in June," said Microsoft spokesman Jim Desler. Besides throwing out the earlier remedy, "the Court of Appeals rejected many of the judge's findings." Desler also emphasized Microsoft's willingness "to address the remaining issues through settlement."

Gauging how tough the new judge may be on Microsoft could be difficult, say legal experts.

"Remember that Judge Jackson initially looked good for Microsoft," Lande said. "He was a conservative and Reagan appointee--and look what happened."

Clinton appointee Kollar-Kotelly doesn't necessarily look as good for Microsoft, but she brings tremendous experience to bear on the case, which could benefit both sides.

After graduating from law school, Kollar-Kotelly served as a law clerk to Judge Catherine Kelley at the District of Columbia Court of Appeals. She later--1969 to 1972--worked in the Justice Department's criminal division as an attorney. In October 1984, after serving as chief legal counsel to St. Elizabeth's Hospital, she took an appointment as an associate judge at the District of Columbia Superior Court. There she served as deputy presiding judge of the criminal division from 1995 to her appointment as a federal judge.

"Most judges appointed to the federal bench come from prosecutorial backgrounds," said Emmett Stanton, an antitrust attorney with Fenwick & West in Palo Alto, Calif. "Clearly her background is much stronger on the criminal law side than the civil law side. There's nothing in her background that suggests she has any background with antitrust cases or complex economic issues, but so what? Like a lot of judges, she will just have to learn on the job."

Jackson also had to learn on the job, particularly regarding complex high-tech issues, so Kollar-Kotelly would not be the first in the case's history to be required to be a quick study.

But she is likely to learn one thing from her predecessor: Don't blab about the case.

"The one thing I can predict is that she won't talk to anybody in the media," Stanton said.

How the new judge initially handles the case could be determined by the main protagonists--the Justice Department and 18 states. The government must decide what kind of schedule it wants to propose, whether to seek an injunction against Windows XP, and how much the new operating system will play in the remedy proceedings.

Microsoft on Friday released Windows XP to PC makers, which are expected to begin selling computers with the new operating system Sept. 24.

In a Wednesday research note, Merrill Lynch analyst Henry Blodget said he didn't think the court had enough time to act against Windows XP.

"We continue to believe that, as a practical matter, it becomes more difficult to stop the release of XP once it has been installed on new PCs--regardless of whether those PCs have actually started shipping to customers," he wrote.

Still, in a recent legal filing, the government made clear its intention to include the new operating system in remedy hearings.

Stanton explained: "You have to understand that a remedy is forward-looking, and that means it can go beyond the scope of trial. So the government can go after XP. Absolutely."

The government could argue that with Windows' commanding lead in the PC market, it is a necessary utility that could unfairly affect collateral markets, such as instant messaging or streaming media.

Two of XP's most important integrated features--Windows Messenger and Windows Media Player--could then be targeted by trustbusters for being anti-competitive, even though neither is a threat to Windows, Gray said.

The larger question is what the government might ask for in a remedy and what Kollar-Kotelly would be willing to impose on Microsoft.

"No remedy is off the table--certainly not breakup," Gray said. "A judge sitting in equity at the remedy phase has tremendous power in fashioning that remedy."