Legal path unclear for Windows 98

With the release of Windows 98 only months away, it remains to be seen if Microsoft and the Justice Department are headed for another showdown. But if the government does decide to go after the new operating system, it would appear to face daunting obstacles.

Attorneys for both sides clashed late last year over the interpretation of a court order issued by U.S. District Judge Thomas Penfield Jackson, who is handling the government's case against the software giant. In January, Microsoft averted potential contempt-of-court sanctions by agreeing to ship a version of Windows 95 that did not carry the Internet Explorer browser on the desktop.

However, Microsoft is making no promises to remove the icon from the desktop of Windows 98.

"We have not made any decision on this point with regard to Windows 98, and frankly there's been no request from the Justice Department on this point," Microsoft spokesman Mark Murray said. "Any speculation abut Microsoft allowing computer makers to ship a version of Windows 98 with the Internet Explorer icon hidden is just premature."

For its part, the Justice Department is playing its cards close to its vest. "We are still looking at Windows 98, but no decision has been made," spokesman Michael Gordon said.

The silence on the issue on both sides means that original equipment manufacturers still have no idea whether they will be required to ship personal computers with the Internet Explorer browser preinstalled.

It also means that consumers may find Microsoft and the Justice Department battling out the issue in court all over again. Conflicting language in a number of documents that are central to the case is only adding to the ambiguity.

On its face, Jackson's December 11 preliminary injunction clearly applies to Windows 98. That order requires Microsoft to "cease and desist" from licensing Windows 95 "or any successor version thereof" on the condition that Internet software be included.

But no sooner was the injunction issued than questions of interpretation arose.

Microsoft said disabling Internet features would render Windows 95 inoperable, and to prove its point announced that it would comply with the ruling by making available versions that were commercially inferior to those that left Internet Explorer intact.

Attorneys for the software giant said Jackson had exceeded his authority by issuing an injunction that the government had not specifically requested. They also argued that Jackson's order clearly violated the disputed 1995 consent decree at the heart of the case. The settlement forbids Microsoft from licensing any product on the condition that another product also is licensed, but it expressly permits Microsoft to develop "integrated products."

According to statements by Microsoft, Windows 98 will more tightly integrate browser features into the operating system. A number of legal observers with no stake in the case support Microsoft's contention that the consent decree bars Jackson from extending his preliminary injunction to cover the upgraded operating system.

For that reason, said Joe Sims, an antitrust attorney at Jones, Day, Reavis, & Pogue, "it's not clear to me that [Jackson] has the authority" to extend his order to Windows 98. He added that the judge might further be blocked from ruling on Windows 98 because the government has yet to specifically address the product in any legal briefs.

Microsoft has argued both these points in its challenge to the preliminary injunction, now pending in a federal appeals court in Washington.

Rich Gray, an antitrust attorney at Bergeson, Eliopoulos, Grady, & Gray, agreed that the government will have a hard time adding Windows 98 onto its current case, despite the language in Jackson's order.

"He can't issue an injunction that effectively amends the consent decree, and if he does, the Court of Appeals will slap him down," Gray said. "If Justice thought that the preliminary injunction prevented Microsoft from proceeding with its publicly announced plans with Windows 98, it should have been in court by now."

This point does not seem to have been lost on the Justice Department, which is continuing its broad investigation of the software giant. Much of the probe is focusing on Windows 98 and could be used to bring a separate lawsuit based on the Sherman Antitrust Act.

An article in the Wall Street Journal today reported that the department was not likely to force any separation of Internet features from Windows 98. Assistant attorney general Joel Klein, who heads the agency's antitrust division, responded in a statement that no decision had been made concerning the matter.

Sims speculated that one reason neither the Justice Department nor Microsoft is announcing its intentions is that they are waiting for the company's appeal to play out. "I assume [the] ambiguity will be alleviated, if not eliminated, when the Court of Appeals acts, but that's a couple of months away," he said.