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Government must reply to Microsoft request

A federal appeals court orders the government to respond to Microsoft's request for rehearing.

    WASHINGTON--A federal appeals court on Thursday ordered the government to respond to Microsoft's request for rehearing.

    The Justice Department and 18 states have until Aug. 3 to respond to Microsoft's request for rehearing on one section of the appeals court decision. Microsoft filed its petition Wednesday.

    "That's just the court being prudent," Silicon Valley lawyer Rich Gray said of the order. "It doesn't signal at all what their decision is going to be."

    The U.S. Court of Appeals for the District Columbia Circuit upheld eight separate antitrust violations against Microsoft, which is asking for rehearing on only one point: commingling.

    In its June 28 decision, seven appellate judges agreed with a lower-court ruling concluding Microsoft's commingling of Internet Explorer code with that of Windows 95 and Windows 98 was an illegal anticompetitive act.

    "The real significance of that part of the decision was the Court of Appeals showed itself very ready to second-guess Microsoft's technology designs and decisions," Gray said.

    Microsoft declined to comment on the court's order, which is considered to be fairly routine.

    The Redmond, Wash.-based company could have asked for rehearing on any or all of the appeals ruling. But because the court heard the case en banc--before a full panel of eligible judges--and delivered a unanimous decision, Microsoft's chances for rehearing are limited at best, say legal experts.

    By focusing on one issue, Microsoft has the best chance for rehearing, but "even that is unlikely," said Emmett Stanton, an antitrust attorney with Fenwick & West in Palo Alto, Calif. But of all the "findings against Microsoft, commingling is the worst because it addresses software design," Stanton said.

    The appeals court is not expected to take any other action in the case while waiting for the government's legal brief, although it is free to do so. The appellate division is expected to hand the case back to a lower court sometime next month. Once the case is sent back to the trial court, a new judge will be assigned to the case. His first order of business could be to impose temporary restrictions against Microsoft, should the government ask for them.

    Last week, the government asked the Court of Appeals to skip the normal waiting period--in this instance 52 days--from the ruling to returning the case to the trial court. The government said it planned no request for rehearing or, at this time, appeal to the Supreme Court.

    Microsoft's victory special coverage Andy Gavil, an antitrust professor at Howard University School of law, said that petition indicates the government "might seek some kind of injunction against Windows XP."

    XP, the next major upgrade to Microsoft's Windows operating system, is slated to ship on Oct. 25. "If the government waits until mid-August, the chances for taking action before XP ships are greatly diminished," Gavil said.

    In an effort to prevent any government action against Windows XP, Microsoft last week changed its operating system licenses with PC makers. Computer manufacturers will be given greater freedom to customize the Windows desktop and will be able to remove the Internet Explorer icon from the Start menu. Consumers also will be able to remove access to Internet Explorer in Windows XP.

    More than 100,000 people are testing the first of two expected Windows XP release candidates--near final versions before the software is released to manufacturing and PC makers. Internally, Microsoft has set July 25 for issuing Windows XP Release Candidate 2. But Greg Sullivan, Windows lead product manager, said Wednesday that changes announced last week would "not show up until RTM"--the release-to-manufacturing version slated for late August distribution.