DOJ: Microsoft is "unreasonable"

The Justice Department today accused Microsoft of applying a "twisted" and "patently unreasonable" interpretation to a judge's order forbidding the software giant from packaging Web browsing software with its dominant Windows 95 operating system.

"Microsoft admits that its reading of the injunction yields a senseless result," stated the motion, filed in U.S. District Court in Washington, D.C. "But rather than draw from this the obvious inference--that its construction of the injunction is incorrect--Microsoft asserts that this court entered a senseless order."

Today's document is the last filing scheduled to address whether Microsoft is complying with a preliminary injunction, and sets the stage for a mid-January hearing on the matter. The injunction, issued in mid-December by U.S. District Judge Thomas Penfield Jackson, ordered Microsoft to stop requiring PC vendors--also called original equipment manufacturers or OEMs--to preinstall the Internet Explorer browser as a condition of licensing Windows 95.

Six days after the injunction was issued, the Justice Department was back in court, arguing that Microsoft had violated the order and should be slapped with a $1 million fine for each day it remained in contempt of court.

Government attorneys accused Microsoft of intentionally circumventing Penfield's order by offering PC makers one of two inadequate options: installing either a current version of Windows 95 with all the IE browser code removed--rendering the operating system virtually useless--or an "outdated, commercially worthless" version of the operating system. Computer vendors that wanted a more advanced version of Windows 95 still would have to carry IE, a move the DOJ alleged had "the practical effect of perpetuating the very condition the court enjoined."

In court documents filed early last week, Microsoft said the latest allegations demonstrated a major reversal in the government's initial stance. Where Justice once sought the removal of all IE code from Windows, Microsoft argued, it now wants to pick and choose what files remain and what files are purged.

"This acknowledgment that Internet Explorer is so integral to Windows 95 that it cannot be removed from the operating system undermines the DOJ's entire case," Microsoft attorneys argued.

The contempt filings are part of a larger action, launched in late October, in which the government alleged that Windows 95 licenses requiring the preinstallation of the Internet Explorer browser breached key terms of a 1995 antitrust settlement. Microsoft is vigorously fighting the charges, saying that the consent decree allows new features to be rolled into its operating systems.

Today's 13-page brief argues that a simple "uninstall" utility shipped with Windows pokes holes in Microsoft's contentions that it is impossible to fully comply with Jackson's order without harming underlying features of the Windows 95 operating system.

"The proposed remedy simply requires Microsoft to stop enforcing its licensing agreements in a manner that prevents OEMs from obtaining the benefits of the uninstall capability that Microsoft already includes in Windows 95 and makes available to end users," the Justice Department argued today. "Although Microsoft now claims that invoking this feature will 'degrade' Windows 95 in some unspecified way, this belated assertion is belied by Microsoft's own promotion of Internet Explorer."

The document went on to contest Microsoft's assertions that the government was unfairly intruding into complex software-design decisions by trying to dictate what code should and should not be included with the Windows operating system. "The purpose of the injunction is not to determine the composition of Microsoft's products," the brief argues, "but rather to prevent Microsoft from achieving through its licenses the practical conditioning that threatens to protect and extend its monopoly power."

Microsoft spokesman Mark Murray said the document raised no new issues and reiterated the company's contention that it is not in contempt of court. "We believe we are complying with the judge's order in good faith," said Murray. "Contrary to what the DOJ is alleging, we have done exactly what the DOJ demanded and exactly what the court order appears to require of Microsoft."

With today's filing, the Justice Department's motion to find Microsoft in contempt is one step closer to being submitted. The only remaining hurdle is the January 13 hearing, in which each side will call one expert witness to the stand.

But numerous other issues continue to go forward in the case, and the Justice Department will respond to them in the coming days. For one, Microsoft is appealing Jackson's preliminary injunction with a higher court. At the same time, the company is challenging the court's appointment of a computer law expert to serve as a "special master" in the case, as reported last week. The expert, visiting Harvard Law School professor Lawrence Lessig , is charged with collecting and weighing evidence in the case, and is to issue a final report by May 31. Even though Lessig's appointment has been challenged, the two sides will sit down with him tomorrow for a closed meeting to discuss the case, a Justice Department spokesman said.

But Jackson need not wait for these other matters to be resolved before ruling on the contempt issue, and, given the urgency with which government attorneys are framing the issue--and the quick turnaround time of Jackson's last ruling in the case--a decision may be handed down as early as mid-January.

A number of legal observers are predicting that Microsoft will lose the motion, saying that Jackson's actions thus far indicate that he sees Microsoft's plans as defiant foot-dragging.

"I would be surprised if the judge doesn't order Microsoft to make available the most current Windows 95 operating system without Internet Explorer installed," said Rich Gray, an antitrust attorney with Bergeson, Eliopoulos, Grady & Gray in San Jose, California. He added that Jackson also is likely to impose some sort of monetary penalty on the company.

Ronald Katz, an antitrust attorney at Coudert Brothers in San Francisco, agreed that Jackson's past actions indicate he is likely to side with the government, but predicted that such a ruling wouldn't be the end of the legal wrangling.

"Contempt is something that is very strict. You have to disobey a clear order," said Katz, who added that Jackson's order was anything but straightforward. "I think [Microsoft] observed the letter of the injunction, and they have the better of the argument both logically and legally. I believe that Microsoft is going to prevail on appeal."