Microsoft argues for trial delay

In a sharply worded, nine-page legal brief, Microsoft rebutted the government's argument that proceedings should begin at a lower court.

The Redmond, Wash.-based company last week had asked the Supreme Court to consider an appeal, arguing U.S. District Judge Thomas Penfield Jackson's comments to reporters before rendering his decision warranted throwing it out.

Microsoft also asked the seven appellate judges to stay the mandate that would return the case to the U.S. District Court for the District of Columbia for further proceeding. But on Friday, the government refuted the validity of the request, asking the court to deny Microsoft's request for stay.

"There is no sense in which resumption of proceedings before the district court would injure Microsoft in any way," the Justice Department and 18 states wrote in their brief. "By contrast, granting a stay would further delay the public's remedy and contribute to the uncertainty in the market."

But Microsoft sought to shoot down the government's argument in Tuesday's reply brief.

"The public interest will be served by granting a stay," Microsoft's lawyers wrote. "The district judge, while disqualified by virtue of deliberate and repeated violations of clear ethical rules, entered findings of fact and conclusions of law that have been and will be relied upon in subsequent proceedings in this case and perhaps in other cases."

Two documents made up the bulk of Jackson's decision: the findings of fact, issued in November 1999, and the conclusions of law, released in April 2000. Microsoft earlier argued Jackson would never have issued the documents had he disqualified himself, so the case should be overturned.

"As this Court observed, the extraordinary pattern of misconduct engaged in by the district judge--which began two months before entry of the findings of fact and six months before entry of the conclusions of law--created an appearance of partiality in violation of" the codes of conduct governing judges, Microsoft's latest brief states.

Many legal experts question whether the Supreme Court would accept Microsoft's appeal. "The seven appellate judges already decided this matter," said Emmett Stanton, an antitrust professor with Fenwick & West in Palo Alto, Calif. "Even given they removed Judge Jackson, they stood behind his findings of fact and conclusions of law."

Still, Microsoft made a compelling attack going after Jackson.

"The Supreme Court might take the appeal, but that's a separate question of whether they would halt proceedings in the District Court," said Jonathan Jacobson, an antitrust lawyer with Akin, Gump, Strauss, Hauer & Feld in New York.

But Jacobson and University of Baltimore School of Law professor Bob Lande believe the appeals court is unlikely to grant the stay.

"I just don't see it happening," said Lande. "The Court of Appeals probably won't issue the stay."

In its June 28 ruling, the U.S. Court of Appeals for the District of Columbia Circuit upheld eight separate antitrust violations, all stemming from means Microsoft used to maintain its monopoly in Intel-based operating systems.

The seven appellate judges also threw out Jackson's order breaking Microsoft in two, thus sending the remedy portion back to the District Court. A new judge, randomly chosen from a poll of 14 jurists, would also rehear the tying claim--whether Microsoft violated antitrust law by integrating Internet Explorer with Windows 95 and 98.

Whether or not the appeals panel issues the stay is important to both sides as they grapple over the fate of Windows XP, Microsoft's new operating system scheduled to go on sale Oct. 25.

In Friday's filing, federal and state trustbusters made it clear they would look at the new operating system's competitive impact during remedy hearings.

"Microsoft has announced that it will soon introduce Windows XP, the next generation of its monopoly operating system," the brief states. "The sooner remedial proceedings begin, the sooner a resolution can be crafted to assure competitive conditions...Until that remedy is in place, each day of delay contributes additional injury to the public interest in competition."

Of more immediate concern is whether the government would seek an injunction delaying Windows XP's scheduled launch date.

"There's nothing really preventing the government from seeking an injunction against XP," said Lande. "But I'm not confident they will do it."

Microsoft is expected to release final--or gold--Windows XP code as early as Wednesday, although some PC makers report the official date is Aug. 22. PC makers will use gold masters to install Windows XP on new computers expected to go on sale Sept. 24, or about a month before the new operating system goes on sale at retail.

Should the Court of Appeals issue the stay, the government would be in a tough bind stopping Windows XP from shipping, particularly since the Supreme Court would be unlikely to issue an injunction directly without a court record to support it, say legal experts.

The government's best option would be to ask the Supreme Court to return the case to the trial court while considering Microsoft's appeal request.

"They would first go to the circuit justice for the D.C. Circuit, which would be (William H.) Rehnquist, the chief justice" of the Supreme Court, Jacobson said. "He would either decide that or refer it to the whole court, if the whole court is in session. They would usually decide fairly quickly to allow the Court of Appeals mandate to be issued or not."

If the Court of Appeals does not issue the stay, therefore sending the case back to the trial court, Microsoft's options would be limited, say legal experts. While the company could petition the Supreme Court for a stay, the chances of getting it would be slim.

"It would be odd for the Supreme Court to stay proceedings that might be related to ongoing business in the market," Jacobson said.