Government seeks to speed Microsoft case

If honored, the request would mean that the government could go forward with the case immediately rather than waiting until mid-August. The government would otherwise have to wait 52 days from the Court of Appeals' June 28 decision before the case would return to the U.S. District Court for the District of Columbia.

The action could be a sign that the government will seek some kind of injunction against Microsoft before the new Windows XP operating system ships in October.

"Probably what is behind (it) is they want to get back to the District Court to talk about interim remedies," said Andy Gavil, an antitrust professor with Howard University Law School. "Otherwise, nothing happens before August. If nothing happens before August, the chances to get something to happen before XP ships in October will be diminished.

"Why lose the five or six weeks between now and then when it could already be under consideration of the District Court?"

A Justice Department representative would not comment about whether the government plans to seek an injunction against Microsoft.

A delay in the release of Windows XP would prove costly not only for Microsoft but for many other segments of the technology industry. PC makers have identified XP as a key factor for breathing new life into stalled PC sales.

"We are hoping for and preparing for a jump in the (PC sales) category with the launch of XP," Hewlett-Packard CEO Carly Fiorina told financial analysts last month.

Microsoft is also counting on Windows XP to help it maintain solid cash flow in the latter part of this year, much as it relied on the Office XP applications package earlier this year.

With its June decision, the U.S. Court of Appeals for the District of Columbia Circuit threw out an order breaking Microsoft into separate operating system and software application companies. U.S. District Judge Thomas Penfield Jackson had delayed that order and another restricting Microsoft's business practices, pending the appeal's outcome.

With the remedy out and returning to the District Court for rehearing, the government is free to ask the new judge assigned to the case for temporary action against Microsoft.

"The appeals court did, after all, uphold the core of the government's case, or monopoly maintenance," said Bob Lande, an antitrust professor with the University of Baltimore School of Law.

The request, filed by the Justice Department and the 18 states suing Microsoft, asks for "immediate issuance of mandate?In light of the exceptional importance of this case, and the strong public interest in prompt entry of a decree providing an effective remedy for Microsoft's illegal conduct."

Microsoft has 10 days to respond to the request.

"We share the goal of trying to get the remaining issues in this case resolved as quickly as possible, said Microsoft spokesman Jim Desler. "We're reviewing this motion; we continue to review the Court of Appeals' long and complex ruling, and we intend to move forward promptly."

Normally, both sides would have 52 days from the appeals court decision to request a rehearing. But because the court earlier made the decision to hear the case en banc--before a full panel of eligible judges--such a request would likely be rejected, say legal experts. Most cases are heard before three judges; the court convened a panel of seven jurists for Microsoft's appeal.

"What the government is asking for is to expedite the normal time schedule since there's no likelihood of an en banc re-hearing, since they've already heard it altogether," Gavil said.

In the five-page brief, the government urged the appeals court to act quickly.

"Delay in imposing an effective remedy inflicts substantial and widespread consumer injury and needlessly prolongs uncertainty in the computer industry," the document states. "In a dynamic marketplace, speed is of the essence in remedying the effects of unlawful exclusionary conduct designed to crush nascent competitive technologies. In these circumstances, the public interest is plainly served by allowing the proceedings on remand to go forward as quickly as possible."

In the legal brief, the government said that it would not make a request for re-hearing or "seek Supreme Court review of the case at this stage." Government lawyers could ask for either, but Glenn Manishin, an antitrust lawyer with Patton Boggs in McLean, Va., said it would be futile for Microsoft to make a bid for a Supreme Court appeal.

"With a unanimous decision from a fairly conservative court of seven judges, the Supreme Court would not likely take the appeal," he said.

The government urged the Court of Appeals not to wait for Microsoft to make a request for re-hearing.

"Whether or not Microsoft decides to seek re-hearing, the Court has already devoted unusually extensive resources to this matter, including two days of oral argument," the brief states. "There is no reason to believe that a petition for re-hearing of this per curiam en banc decision would be granted and, therefore, no reason to await any such filing before issuing the mandate."

Sources close to Microsoft said the company is weighing its options and that no decision has been made about making a request for rehearing before the Court of Appeals.

Whenever the Court of Appeals issues the mandate, the next step will be to randomly choose a new judge from the pool of 14 eligible jurists. Technically, the case would then move on to retrying the tying claim--that Microsoft illegally integrated Internet Explorer into Windows 95 and 98. The case would then proceed to new hearings on the remedy.

But the government would be free to ask for preliminary action against Microsoft while the rest of the case moves forward, Gavil said.

The government's request comes one day after the defection of New Mexico, which independently settled with Microsoft. Originally, 20 states filed the lawsuit with the Justice Department in May 1998. But South Carolina dropped out early in the process.

New Mexico's departure means 18 states remain committed to the case, although terms of the settlement might give some of them reason to bow out, said Emmett Stanton, an antitrust attorney with Fenwick & West in Palo Alto, Calif.

As part of its settlement, New Mexico--incidentally the state where Microsoft was born--will be compensated for its legal and related fees and receive the same eventual remedy as other states imposed against the software maker.

"They're going to get the benefit of any remedy that's imposed against Microsoft, the reimbursement of their expenses, and they don't have to spend any more money," Stanton said. "That sounds like a good deal."

But Stanton also noted that many of the state attorneys general might have other reasons for not looking for independent settlement with Microsoft. Their trade group, the National Association of Attorneys General, "is also known as the national association of aspiring governors," he said. "What aspiring governor wants to give up this hobby horse he can ride for another year or two into a governor's mansion?"

On Wednesday, Microsoft made its first major concession in an attempt to comply with part of the appeals court ruling, which upheld eight separate violations of the Sherman Antitrust Act. In what could be viewed as an overture to settlement discussions, Microsoft loosened licensing agreements with PC makers, giving them the option to remove the Internet Explorer icon from the Windows Start menu.

Microsoft also plans to let consumers and businesses delete access to Internet Explorer 6 using the Windows XP Add/Remove feature.