DOJ, states to rebut Microsoft's antitrust arguments

Government lawyers this week will counter Microsoft arguments in the company's federal antitrust trial, releasing rebuttal papers that are expected to portray the software giant as a monopolist, and a confrontational one at that.

The U.S. Justice Department and 19 states will file a rebuttal brief to proposed "conclusions of law" Microsoft delivered to the court last week.

The brief may be filed as early as tomorrow. The government had been scheduled to file its rebuttal today, but a snowstorm roaring up the East Coast forced a delay. The court, along with all other federal offices, is closed today in Washington.

Negotiations between the government and Microsoft have been taking place in Chicago for weeks, but with little progress, according to sources.

Part of the government's strategy will be to highlight the salient points in the findings of fact issued last November by U.S. District Judge Thomas Penfield Jackson. He concluded that Microsoft misused monopoly power and tied companies to restrictive contracts.

"I expect the government to go back through the facts and point out to Judge Jackson there are other findings that appear to undercut Microsoft's arguments in its proposed conclusions of law," said George Washington University Law School professor Bill Kovacic.

The government also will use the papers to test Microsoft's credibility. "The government will likely focus on some of what I call the silliness of Microsoft's argument, particularly their definition of the market to include every device known to man plus even those that haven't been invented yet," said Glenn Manishin, an antitrust attorney with Patton Boggs in McLean, Va.

Trustbusters have alleged Microsoft violated antitrust law by, among other acts, attempting to monopolize the browser market, tying browser sales to the operating system, and imposing boot-up screen restrictions on computer makers.

Microsoft in its conclusions of law used sections of Jackson's findings, which numbered 207 pages in all, and case law going back 30 years to argue that it did nothing wrong. The Redmond, Wash.-based software maker also skillfully relied on an appeals court ruling to break down the argument it illegally tied two products--Internet Explorer and Windows 95/98--into one product, said legal experts.

The government will contend Microsoft liberally interpreted some areas of Jackson's findings and used some original, but also flawed, case law citations to refute some allegations, Kovacic said

"The Justice Department will say that Microsoft has selectively searched the record for supporting information and will try to provide the context to go around some of those factual observations and reinforce its original proposed conclusions," Kovacic said.

Dana Hayter, an antitrust and intellectual property attorney with Fenwick & West in San Francisco, thinks the government will focus first and foremost on its strongest argument: monopolization. "The government will rebut Microsoft's contention that it doesn't have market power in a relevant market," Hayter said.

Microsoft dedicated 25 pages of its 70-page conclusions of law to the monopoly issue. Among other things, Microsoft tried to show BeOS and Linux are viable alternatives to Windows for a significant number of users and software developers. If so, Microsoft concluded, it does not meet the definition of monopolist.

But Hayter scoffed at that argument as not credible, especially with regard to Be.

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"Be is a great example of why network effects matter and why the applications barrier to entry is so effective," he said. "Rather than a case against market power, it is a great case study of the effects of market power."

The government is also expected to deal with Microsoft's response to allegations it forced PC makers to accept certain boot-up screen restrictions, which effectively locked out Netscape's browser from reaching customers. Microsoft relied on several copyright cases, including one involving the creators of "Monty Python's Flying Circus" and ABC TV, to show it could impose the restrictions.

University of Baltimore School of Law professor Bob Lande said Microsoft cut too fine a line between intellectual property and antitrust laws. "There are limits on behavior," Lande said. "Just because you have a copyright doesn't mean that you can use it in a scheme to monopolize. That is really complicated interaction, and the government is going to have to grapple with that in their response."

Jackson originally asked Microsoft to file its conclusions of law on Jan. 17, with rebuttal briefs scheduled for the following two Mondays. The judge later revised the schedule because of the Martin Luther King Jr. holiday, with Microsoft filing its conclusions of law on Jan. 17 and government and Microsoft rebuttal briefs due, respectively, on Jan 24. and Feb. 1.

Typically in antitrust cases, the parties submit findings of fact and conclusions of law simultaneously. But in an unusual move, Jackson broke up the process, giving the government and Microsoft the benefit of basing their conclusions of law on the judge's findings of fact.

Jackson will largely base his conclusions of law, essentially his ruling, on the document filed by the government, said legal experts. But he also will weigh heavily Microsoft's conclusions of law, the two rebuttal briefs, an amicus brief by Harvard Law School professor Lawrence Lessig and additional oral arguments scheduled for Feb. 22.