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Microsoft scoffs at government findings

In proposed "conclusions of law," the software giant disagrees with a federal judge's findings that strongly suggest it violated U.S. antitrust law.

Microsoft fired back at federal prosecutors and the judge presiding over its historic antitrust case today, disputing court findings that strongly suggest the software maker violated U.S. law.

As reported earlier, Microsoft filed proposed "conclusions of law" in the landmark case brought by the Justice Department and 19 states. The voluminous document countered a filing by the government Dec. 6, which supported U.S. District Judge Thomas Penfield Jackson's findings of fact.

Microsoft took the offense early in its retort, relying on more than 20 years of precedents to show that, in legal terms, it did not violate two sections of the Sherman Act. As expected, Microsoft argued that even if Jackson's findings are accepted as fact, the government failed to satisfy the burden of proof necessary under antitrust law.

"Microsoft's argument would give a monopoly virtually unlimited power to use its position to crush competition, harm consumers and stifle innovation," said a Justice Department official. "Its brief ignores the court's findings of fact and distorts key legal precedents."

The Redmond, Wash.-based software maker used a June 1998 appeals court ruling to attack claims it illegally tied Internet Explorer to Windows 95 and 98 for the purpose of crushing browser rival Netscape Communications, now owned by America Online.

The appeals court established the standard of consumer benefit as the means for determining whether Windows 95 and Internet Explorer are one product rather than two. Microsoft introduced evidence of that benefit and cited a Microsoft's day in court 1973 case, Telex vs. IBM, to show that the tying claim is unwarranted.

The company attacked claims that it used exclusive contracts to "foreclose" Netscape from distributing its browser. The software maker used an October 1998 ruling issued by Jackson that established foreclosure of 40 percent to prevail.

The company also took issue with allegations it put first-screen restrictions on PC makers and attempted monopolization of the browser market.

The issue of foreclosure could hinge on whether Jackson--and later an appeals court--accepts the argument that Web downloads were an adequate means of distributing Netscape Communicator, said University of Baltimore School of Law professor Bob Lande.

In addition, Microsoft spent 25 pages of see Full text of Microsoft's proposed
conclusions of law the brief arguing that it does not hold a monopoly in PC operating systems, a move that surprised Lande and other legal analysts. "This greatly undermines Microsoft credibility," he said. "They should accept this and move on to more substantial areas of their case."

For first-screen restrictions, Microsoft leaned heavily on U.S. copyright law to strengthen its position. Microsoft used Intergraph's failed case against Intel to show "antitrust law does not negate the rights of copyright holders," according to the brief. The software maker also used a 1976 case, Gilliam vs. ABC, to show changes to a copyrighted work constitute infringement.

Microsoft leaned heavily on the findings of fact to show it did not seek to monopolize the browser market.

"The court instead found that Microsoft attempted to increase Internet Explorer's usage share to such a level as would prevent Netscape Navigator, which enjoyed an overwhelming usage share at the outset, from becoming the 'standard' Web browsing software," according to the brief.

"There is nothing surprising here," said George Washington University Law School professor Bill Kovacic. "The government was well aware of what to expect based on the settlement negotiations."