Government fights Microsoft delay

On Tuesday, Microsoft asked the Supreme Court to consider an appeal in the case, arguing that a federal judge's comments to reporters before rendering his decision warrants throwing it out.

The Redmond, Wash.-based company also asked the U.S. Court of Appeals for the District of Columbia Circuit to stay the mandate that would return the case to a lower court for further proceedings.

But in a scathing 9-page legal brief filed Friday, the Justice Department and 18 states asked the appeals court to reject that request and allow proceedings to continue while the Supreme Court decides whether to hear Microsoft's appeal.

In opposing the delay, government lawyers also emphasized the importance of the upcoming launch of Windows XP, making it clear the new operating system's competitive aspects would be explored when the case moves forward.

"Microsoft has announced that it will soon introduce Windows XP, the next generation of its monopoly operating system," the brief states. "The sooner remedial proceedings begin, the sooner a resolution can be crafted to assure competitive conditions...Until that remedy is in place, each day of delay contributes additional injury to the public interest in competition."

The government also suggested that Microsoft was trying to delay the case's return to the U.S. District Court for the District of Columbia, where a new judge will be chosen before new proceedings commence in the case.

In its June 28 decision, which upheld eight separate antitrust claims against Microsoft, the Court of Appeals sent two portions of the case back to the District Court. The new judge must rehear the tying claim--that Microsoft illegally tied, or integrated, Internet Explorer with Windows 95 and 98--and craft a new remedy. In their decision, the seven appellate judges also threw out U.S. District Judge Thomas Penfield Jackson's order breaking Microsoft into two companies.

Switching sides
The battle over jurisdiction is not the first for Microsoft and the government, but the sides have switched. After Jackson's breakup order, trustbusters asked the Supreme Court to skip appellate review and take the case directly, while Microsoft maneuvered to keep the case with the Court of Appeals. The Supreme Court later rejected the government's request.

Now it is Microsoft asking the Supreme Court to hear an appeal while the government seeks to move the case back to the lower court.

Many legal experts believe it is unlikely the Supreme Court would hear Microsoft's request for appeal. Rather than attacking the merits of the case, Microsoft lawyers argued that Jackson should have disqualified himself "as of September 1999, the date of his earliest known violation" of codes of conduct for federal judges. "Such disqualification would require (vacating) the district court's findings of fact and conclusions of law," according to the Microsoft filing.

Two documents made up the bulk of Jackson's decision: the findings of fact, issued in November 1999, and the conclusions of law, released in April 2000. Microsoft argued Jackson would never have issued the documents had he disqualified himself, so the case would not be overturned.

"But the seven judges of the Court of Appeals already decided to keep those documents, even though they chastised Judge Jackson"--and later removed him from further proceedings, said Emmett Stanton, an antitrust lawyer with Fenwick & West in Palo Alto, Calif.

But Rich Gray, a Silicon Valley-based lawyer closely watching the trial, said that if he were representing Microsoft, attacking Jackson would be the right strategy.

"As an observer and a practicing attorney, what Jackson did was outrageous," he said. "What Jackson did was so beyond the pale that even though what the Court of Appeals did may have been the correct legal ruling, it is something that is so uncalled for I would take as many whacks at it as I could."

Targeting XP
Getting the case back into court could be essential for the government if it decides to seek an injunction preventing Windows XP's scheduled Oct. 25 release. State attorneys general from Connecticut and Iowa have questioned whether the bundling of some technologies with XP--among them Windows Media Player and Windows Messenger--could have an anti-competitive effect.

Already, Charles Schumer, a Democratic senator from New York, has called on the Justice Department and 18 states to seek an injunction against Windows XP. More than 10 privacy organizations petitioned the Federal Trade Commission to take similar action, but for concerns about privacy and security.

For both sides, the stakes are high, particularly if the government does seek an injunction delaying Windows XP's launch. Microsoft is expected to release final--or gold--Windows XP code to PC makers Aug. 22, said sources within the companies. Computer manufacturers also have been given the go-ahead to start selling PCs with Windows XP on Sept. 24, about a month before the official release.

That means the government would have little time to obtain a temporary injunction against the operating system, making getting the case back into trial court a somewhat urgent matter.

But Bob Brammer, spokesman for Iowa Attorney General Tom Miller, made it clear that no decision has been reached about an injunction.

Some lawyers believe it is already too late for the government to obtain an injunction, and they question whether one would be warranted.

"In my view, it's not possible for the government to make the record it needs to block the launch of XP," Gray said. "The key reason is the key functionalities that people are complaining about being added into XP, in my view, are not platform technologies."

In its ruling the Court of Appeals faulted Microsoft for illegally maintaining its monopoly in Intel-based operating systems. But such action requires a competitive threat, meaning something like the Netscape browser or Sun Microsystems' Java programming language that could conceivably replace the monopoly product. That argument would not necessarily apply to other technologies, such as instant messaging and media playing, under fire for their integration into Windows XP.

"If they're not platform technologies, they don't come within the core of the Court of Appeals' reasoning," Gray said. "If they don't come in that core, there's not a slam-dunk, clear path to that kind of relief" by injunction.

But Bob Lande, an antitrust professor with the University of Baltimore School of Law, doesn't agree.

"There is an argument to be made here about platform technologies," he said. "I think you can bring XP into it, but it's hard."

Ultimately, the government would likely argue that while instant messaging and media playing aren?t competing with Windows XP, their inclusion in the operating system is "potentially disrupting competition in other markets," Gray said. "If the feds are serious about the case, during the trial on remedies they could broaden the scope of the potential remedies to include these functionalities that are being pulled into XP."