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DOJ rejects most Microsoft ideas in revised plan

Government lawyers agree to a few mechanical changes in their plan to split Microsoft as Judge Thomas Penfield Jackson prepares to issue his penalty decision.

    The government today gave up little ground to Microsoft in the continuing debate over a proposal on how to break up the software giant.

    In a scheduled court filing this morning, the Justice Department (DOJ) and 19 states accepted fewer than 20 changes and objected to more than 80 of the 100-plus alterations proposed by Microsoft.

    The few proposed changes accepted by the government revolved around clarifications Microsoft had requested about definitions, such as what constitutes a "manager," and typographical errors.

    "They accepted words and commas," said Microsoft spokesman Jim Cullinan. "We certainly have a history of the government agreeing to something and then changing its meaning later. We certainly want to ensure the details of whatever this is are specific and avoid the ambiguity and vagueness that is rampant through this document."

    U.S. District Judge Thomas Penfield Jackson is considering what remedy to impose to prevent Microsoft from further violating the nation's antitrust laws. He is seriously considering a proposal offered by the government to split the software giant in two.

    Jackson could issue his ruling as early as Thursday or Friday of this week. The judge is expected to largely rely on the government's remedy proposal, or revised final judgment, with some modifications based on this week's legal briefs.

    On Thursday, the government had asked Jackson for time to respond to Microsoft's proposed changes. "Some of those (changes) seem to make some sense to us, and we would like the opportunity to go through those in detail and give the court our view on that," DOJ lead attorney David Boies told Jackson during a conference call last week.

    The government instead aggressively attacked the majority of the proposed changes, arguing they "would create loopholes and permit Microsoft to continue to engage in anti-competitive practices like those found by the court or otherwise to frustrate or undermine the purposes of the final judgment."

    Some of the most controversial changes proposed by Redmond, Wash.-based Microsoft had to do with altering the case's schedule after Jackson issues his ruling. The government essentially dismissed all of those proposed changes.

    One proposal would have given Microsoft a year instead of four months to put together a detailed breakup plan. While the government would like to split Microsoft into separate companies selling operating systems and software applications, it has left the finer details to Microsoft.

    "It is in the public interest that the remedy contemplated by the final judgment be implemented as soon as possible, and the time periods proposed by plaintiffs are adequate to perform the specified tasks, which involve only preparation of and commenting on the plan of divestiture, not its implementation," wrote government lawyers.

    The majority of the government's objections focused on potential loopholes Microsoft's proposed changes could make in Jackson's final judgment, which is expected to be largely based on the government's proposal.

    In another instance, government lawyers balked at the deletion of "licensing terms" and "discounts" that "would allow (Microsoft) to reward or punish covered PC manufacturers, or OEMs, with different Windows prices and non-price licensing terms and conditions and thus to evade the purposes of the final judgment."

    University of Baltimore Law School professor Bob Lande said the government gave little to Microsoft "except the most minor of tiny, tiny technicalities, like the definition of 'manager.'"

    Lande said the government's unwillingness to bend on some of the timing issues is in some ways surprising. "If I was the judge, would I give Microsoft more time? Yeah, Microsoft convinced me maybe they are entitled to more time," he said. On the other hand, can you really expect the government, after saying four months is right, to say 12? They have to be consistent."

    While Jackson might be inclined to give into this one request, "he could be hesitant because the government said that if you accept any of Microsoft's recommendations, you're going to put a whole bunch of gigantic loopholes in," Lande said.

    Microsoft has until Wednesday morning to respond to the government's brief, which--once again--is expected to be the last filing in the case.

    "The government's latest effort simply represents cosmetic changes," Cullinan said. "Version 3.0 of their plan remains unprecedented, excessive and harmful to consumers and the high-tech industry. The exercise of the last week does not substitute for any legitimate process in which Microsoft could have challenged the government's assumptions and assertions based on simply hearsay declarations related to its unprecedented breakup plan and draconian regulations."

    Rich Gray, an intellectual property attorney with Outside General Counsel Silicon Valley in Menlo Park, Calif., dismissed the brief--and the one expected from Microsoft on Wednesday--as largely insignificant.

    "This is a routine exchange of comments about a proposed order that happens every day all over the country between lawyers at this stage of a case," he said. "When a winning side drafts the order--or the judgment in this case--the losing side does have the right to come in and quibble with the language. This is not to re-litigate the case, but just to make sure it's clear and consistent with what the judge is ready to order."