Judge appoints mediator in Microsoft antitrust case

U.S. District Court Judge Thomas Penfield Jackson today named Judge Richard Posner, head of the U.S. Court of Appeals in Chicago, to oversee negotiations toward settling the landmark case. Jackson called the move "voluntary mediation" and said Posner would be "acting in a private capacity."

"Unprecedented," said Georgetown University law professor Bill Kovacic. "Never in the history of the U.S. antitrust system has a federal district judge enlisted the help of a federal court of appeals judge to mediate settlement discussions. This is a mark of genius. This is truly a judge thinking 'outside the box.'

"The prospects for a settlement just soared today," Kovacic said. "I believe this mediator has the capability to move both sides to a consensus."

Both parties reacted favorably to the appointment.

"We look forward to working with Judge Posner to try to reach a fair and reasonable solution," said Microsoft spokesperson Jim Cullinan. "We think this is a very positive step toward resolving this case."

Justice Department spokeswoman Gina Talamona said, "Judge Posner is a highly respected jurist. We look forward to meeting with him to discuss ways to address the serious competitive problems identified findings of fact. The [Justice] Department has always been willing to seek a settlement that would promote competition, innovation, and consumer choice."

Earlier this month, Jackson's 207-page findings of fact determined that Microsoft used monopoly power to harm consumers and competitors. Jackson sharply rebuked the software company's business practices while accepting almost every argument made by the Justice Department and 19 states in alleging that Microsoft used its Windows operating system to crush Web browser rival Netscape Communications, now owned by America Online.

Many antitrust experts said Jackson's findings were so thorough and damaging that a government victory is essentially a foregone conclusion.

The appointment of a mediator will not stall the court proceedings. In another order issued today, Jackson outlined a schedule for briefings and set oral arguments for Feb. 22.

The news lifted Microsoft's stock more than three points in after-hours trading. The company was trading at 89.69, after closing the day at 86.

The appointment of a sitting judge surprised more than a few experts.

"It blows me away to have Judge Posner as a mediator," said University of Baltimore law professor Bob Lande. "Usually you get someone like me--a professor or antitrust lawyer--to mediate. To get a federal judge to do it is what blows me away."

But the choice is an excellent one, said Lande. "There are a few judges that know as much antitrust as he does, but none more."

Georgetown's Kovacic described Posner "as an antitrust conservative. He has relatively narrow antitrust preferences and he tends to be skeptical of divestiture remedies in monopoly cases. And he's skeptical about a number of theories the government has relied on in this case."

Despite this, Posner accepts the validity of antitrust law, "and he tends to approach problems with an open mind," Kovacic said. "He has the stature and ability to move both sides off their dug-in and extreme positions."

Echoing Kovacic, Lande said Posner is considered to be conservative and remarkably fair.

In addition to his seat on the Seventh Circuit, Posner is a senior lecturer at the University of Chicago Law School and the author of several books.

In "Overcoming Law," he discusses the nature of legal reasoning and the structure of the legal system, among other topics. According to a review found at the Harvard University Press Web site, "the book is unified by Posner's distinctive stance, which is pragmatist in philosophy, economic in methodology, and liberal?in politics."

Other Posner books include "The Economics of Justice," "Law and Literature," "The Problems of Jurisprudence" and "Sex and Reason."

In a review of "The Economics of Justice," Fortune magazine wrote: "Richard Posner is the leading pioneer in the relatively new field known loosely as 'law and economics'... [He] is in the thick of the intellectual battles about the kind of world we live in, and the kind we want to create."

Dana Hayter, an intellectual property and antitrust attorney with Fenwick & West in San Francisco, said that Posner founded a conservative branch of antitrust law called the Chicago School, "along with Judge [Robert] Bork and some others--a conservative counterattack in the late '70s and '80s to basing antitrust on social as well as economic goals."

The Chicago School measures the sole goal of antitrust protection as consumer welfare, "which most of the time translates into low prices," Hayter said. "Judge Posner is probably the most influential conservative antitrust scholar in the country, so his selection by Judge Jackson is pretty masterful," Hayter said.

Such is his stature that Microsoft would look unreasonable and "irrational" if it rejected any sensible settlement he proposed, Hayter suggested.

Kovacic said the choice of Posner also decreases the likelihood Microsoft would be dismantled, but does not rule it out.

News.com's Scott Ard contributed to this report.