The Redmond, Wash.-based company asked the U.S. Court of Appeals for the District of Columbia Circuit to readdress the finding that combining the Internet Explorer Web browser with Microsoft's Windows operating system violated antitrust law.
"Through this petition we are making a good-faith attempt to seek clarification on the issue of commingling," the company said in a statement. "This issue is important not only to Microsoft, but the industry as a whole, so we are asking for the court's guidance on this matter."
The company said it "believes there is no basis for the District Court's finding on commingling" and is "requesting the appeals court to review the record once more."
Microsoft's 12-page petition comes just a few days after the government asked the Court of Appeals to move the case forward without waiting for any petition for rehearing. Microsoft had 10 days to respond to that request.
The issue that Microsoft is raising in its filing was litigated at the District Court and Court of Appeals, (with) both courts ruling in favor of the (Justice) Department," said DOJ spokeswoman Gina Talamona. "To the extent this relates to remedy, as Microsoft itself said in its filing, the department's position is that we should move to a remedy phase in the District Court as quickly as possible. That was the point of our filing last week."
Commingling ruling devastating
In its 125-page ruling, the appeals court upheld eight separate claims that Microsoft violated the 1890 Sherman Antitrust Act. The ruling on commingling of code was one of the most devastating aspects of the appeals court decision, say legal experts.
"The Court of Appeals found there were certain anticompetitive acts from Microsoft's combining Internet Explorer with Windows 95 and 98," said Rich Gray, a Silicon Valley attorney closely following the trial.
"We conclude that such commingling has an anticompetitive effect," the ruling states. "The commingling deters (PC makers) from pre-installing rival browsers, thereby reducing the rivals' usage share and, hence, developers' interest in rivals' APIs (application programming interfaces) as an alternative to the API set exposed by Microsoft's operating system."
While Microsoft had argued that combining Internet Explorer with Windows was a pro-competitive act offering benefits to users, the appeals court disagreed.
"When you write your code in such a way as to make it more difficult for competing technologies to compete with the operating system, and you're a monopolist, that's an act of monopoly maintenance," said Emmett Stanton, an antitrust attorney with Fenwick & West in Palo Alto, Calif.
Gray said Microsoft has good reason to oppose the commingling ruling because it affects potential product design and "opens a huge can of worms for Microsoft. What they are saying is Microsoft does not have unfettered discretion to do whatever they want with the design of their products. In their capacity as a monopolist, the court can second-guess them."
Microsoft could have asked for rehearing on any or all of the appeals court's decision. But the court's taking the appeal en banc--or before a full panel of available judges--makes any rehearing "pretty unlikely," said Bob Lande, an antitrust professor with the University of Baltimore School of Law.
Typically appeals are heard before three judges and reheard by a larger panel. "But here you had a full panel of seven judges delivering a unanimous decision," Lande said.
Rehearing a long shot
By focusing on a single issue, Microsoft has the best shot at rehearing, but Stanton believes it is a long shot at best.
Microsoft has made "a rather technical argument," he said. "The court of appeals isn't going to have any real interest in granting the rehearing."
In its brief, Microsoft said the Court of Appeals improperly defined commingling, which "in the District Court's parlance refers to placing software code specific to Web browsing together with software code used for other purposes in the same operating system files with no technical justification for doing so."
Microsoft's brief contends that under this definition the company did not "commingle software code specific to Web browsing with software code used for other purposes in the same files in Windows 98. Rather, in organizing software code into files, Microsoft placed related functions close to one another."
In its decision, the appeals court found that Microsoft had, in eight separate ways, used illegal means to uphold its monopoly in Intel-based operating systems. Commingling of code constituted one of those eight violations. The court also threw out a federal judge's order that the company be broken up into separate operating-systems and software-applications companies.
A future proceeding will address a new remedy, which is where Stanton believes Microsoft's argument laid out in the petition is most appropriate.
"I don't see any reason the argument Microsoft is making here isn't better directed to the trial court in framing a remedy--what should be done about commingling of code rather than whether this and other acts constituted monopoly maintenance," he said.
"We will respond in a court filing if necessary," said Iowa spokesman Bob Brammer. "Our initial understanding is that we do not respond unless the court asks us to do so."
Iowa, along with Connecticut and New York, leads the coalition of 18 states, which filed the antitrust suit with the Justice Department.
The issue of commingling code should not be confused with tying, a separate claim the appellate judges sent back to the trial court. That claim questioned whether it was legal for Microsoft to tie--or integrate--Internet Explorer with Windows 95 and Windows 98. Tying law typically, but not always, applies to compelling consumers to buy one product to get another.
In a related matter, Microsoft last week loosened its Windows licensing terms, allowing PC makers to remove the Internet Explorer icon from the Windows Start menu. Consumers also will be able to remove access to Internet Explorer 6 in Windows XP.