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Microsoft strikes back at government in final filing

The software giant unexpectedly responds to the government's harsh rebuttal brief, setting the stage for a possible ruling tomorrow in its antitrust case.

WASHINGTON--Microsoft this afternoon unexpectedly responded to the government's harsh rebuttal brief filed yesterday, setting the stage for a possible ruling tomorrow in its antitrust case.

The Redmond, Wash.-based software giant was not scheduled to file the legal brief until Wednesday morning, but it opted for a short filing today.

"Because the government's changes were only cosmetic, we were prepared to file our response today," said Microsoft spokesman Jim Cullinan. "It remains clear to us this proposed decree would dismantle one of the leaders of the high-tech industry, give away our valuable intellectual property and closely regulate the design of our software."

Cullinan looked beyond Jackson's final ruling to the future. "It's pretty clear that this case is moving closer to the next phase of this lawsuit, and we remain confident of our case as we approach the appellate level."

The brief is expected to be the last in the ongoing antitrust saga, which has pitted Microsoft against the Justice Department and 19 states. With the brief submitted early, U.S. District Judge Thomas Penfield Jackson could rule anytime, with some legal experts betting on tomorrow.

"I would be at my battle stations tomorrow and be ready for anything," said George Washington University School of Law professor Bill Kovacic. "I suspect the judge will wait until the market closes, but the ruling could happen tomorrow."

Jackson is expected to accept the government's revised proposal breaking Microsoft into separate operating system and software application companies and imposing additional restrictions on its business practices.

"My guess is the judge has all of the documents prepared, and none of these objections will affect him," Kovacic said. "I would imagine he is simply going to amend the original proposed order with the Justice Department's adjustments from yesterday, sign and date that order and maybe issue an opinion with it."

Jackson had been expected to rule as early as last week, but the government on Thursday asked the judge for a final round of briefs in response to changes Microsoft had asked be made to the breakup plan.

In response yesterday, the government's final brief attacked the bulk of the proposed changes, arguing they "would create loopholes and permit Microsoft to continue to engage in anti-competitive practices like those found by the court or otherwise to frustrate or undermine the purposes of the final judgment."

Microsoft's brief responded in kind, charging that the government "has agreed to only a few cosmetic changes" rather than addressing the "fundamental problems" Microsoft had outlined.

"The government's responses to Microsoft's comments merely confirm that its requested relief is punitive in concept and effect, and that entry of the revised proposed final judgment will inflict severe harm on Microsoft and third parties," the filing states. "Inflicting such harm is not necessary to remedy the antitrust violations found by the court."

Microsoft's final brief, only about four pages long, was more a surprise for its brevity than its substance, said University of Baltimore Law School professor Bob Lande.

"It's almost as if Microsoft is saying, 'You've said your stuff; we've said our stuff; let's get on with it,'" he said. "An antitrust decree doesn't have to be worked out in every last detail now. You don't have to work out every nuance now, and maybe Microsoft recognizes that."

"The filing rehashes Microsoft's old arguments, ignores the extensive violations found by the court, denies the need for serious relief and grossly distorts our proposed remedies," said Justice Department spokeswoman Gina Talamona.

Rich Gray, an intellectual property attorney with Outside General Counsel Silicon Valley in Menlo Park, Calif., described Microsoft's brief as "an advocacy piece" with only marginal legal substance.

Gray believes Jackson will rule this week, but not necessarily tomorrow.

"If I'm the judge, I would take an extra day before I signed on the dotted line and make sure I haven't missed something, and I and my law clerks have had time to absorb Microsoft's filing," he said.

Although Jackson is expected to order a breakup of Microsoft, he would likely stay such action while the case is appealed. Microsoft chief executive Steve Ballmer has made it clear the software giant will appeal the case.

In April, Jackson ruled Microsoft violated two sections of the 1890 Sherman Act, by illegally maintaining its operating systems monopoly and unlawfully extending that into the Web browser market.