Microsoft proposes schedule for antitrust appeal

The proposed schedule could mean the appeals court will reach a decision on Microsoft's case no sooner than six months.

If accepted, Microsoft's schedule would extend principal briefs to 56,000 words from 14,000 and replies to 28,000 words from 7,000. Microsoft also requested each side get 90 minutes for oral arguments, which typically would occur after the briefs are filed. The company asked for supplemental briefs to follow oral arguments.

The government has until Thursday afternoon to respond to Microsoft's proposed schedule, and Microsoft has the option of filing a reply before the afternoon of Oct. 10.

The U.S. Court of Appeals for the District of Columbia Circuit is now moving quickly on the antitrust appeal, which had been stalled while the Supreme Court decided jurisdiction in the case.

The Justice Department and 19 states had asked the Supreme Court to take the case on direct appeal, bypassing the normal appellate process. In what is largely viewed as a blow to the government's case, the high court last week denied the direct appeal.

With appeals process now in motion, the government faces a tough struggle to hold onto its victory over Microsoft four months ago. After earlier determining Microsoft violated U.S. antitrust law, U.S. District Judge Thomas Penfield Jackson in June ordered the software giant be broken into two companies, one handling operating systems and the other software applications.

Few legal experts now believe the government can sustain the momentum necessary to breakup Microsoft. In fact, many believe large portions of the case are destined to be sent back to Jackson for further review or will be thrown out altogether.

"I expect the government will emerge with a victory that is severely diminished," said Bill Kovacic, a professor specializing in antitrust cases at George Washington University School of Law. "The government may emerge with some finding of illegality, but a comparatively modest finding rather than the decisive triumph they won in front of Jackson."

Most vulnerable is the tying claim, where Microsoft integrated--or in government parlance "bolted"--the Internet Explorer Web browser to Windows 95 and 98. The government also faces challenges over how Jackson handled the remedy portion of the case.

"I think the court will remand the entire package on remedies and conclude the process and methodology for establishing remedies was so severely flawed it must be done again," Kovacic said. "I think the Supreme Court would have done that too."

Rather than giving Microsoft a protracted period to challenge the government's breakup remedy, Jackson halted the process after only 60 days.

"That was a potentially costly mistake," said University of Baltimore Law School professor Bob Lande.

Other areas of weakness include findings of collusion, that Microsoft invited Netscape Communications--now a part of America Online--to split up the browser market. Also likely to be challenged are findings that Microsoft gave away Internet Explorer solely to gain browser market share and pattern or practice, where Microsoft's business practices were viewed not just as single antitrust violations but as a pattern of illegal behavior violated the law.

In handicapping the appeals court panel, many legal experts favor Microsoft. "This really is a good panel of judges for them," Lande said.

Of the 10 active judges on the panel, seven will hear the appeal: Douglas Ginsburg, Stephen Williams, David Sentelle and Raymond Randolph, who are appointees of Ronald Reagan or George Bush; and Harry Edwards, David Tatel and Judith Rogers, who were appointed by Jimmy Carter or Bill Clinton.

Williams and Randolph potentially pose to be the toughest jurists for the government, as both served on the panel that overturned Jackson's preliminary injunction forcing Microsoft to separate Internet Explorer from Windows 95.

The judges' ruling really should only be viewed in the context of that case, where the government argued Microsoft violated a 1994 consent decree by integrating the browser with Windows, say legal experts.

"But I think they did reveal important perspectives and attitudes about the analysis of competition policies," Kovacic said. "To not view those in a larger significance would be very myopic."

Williams and Randolph, both academics and Reagan appointees, come from what is known as the "Chicago School," a conservative branch of antitrust law established in the late 1970s and 1980s that measures the sole goal of antitrust protection as consumer welfare.

Their counterparts include Richard Posner, who officiated settlement talks between the government and Microsoft, Frank Winter and Robert Bork, among six other former academics.

They were appointed at a time when the Reagan Administration wanted to influence how federal courts affected "economic regulatory controls," and who "viewed them skeptically," Kovacic said. "That strategy has been enormously influential. It's had the desired effect."

Ginsburg is another conservative antitrust heavyweight on the court expected to favor a less interventionist approach to dealing with Microsoft, say legal experts. With potentially three of seven judges more likely to favor Microsoft, the government will be hard pressed to keep its victory.

"Still, I don't think Microsoft is going to succeed in sweeping aside all the findings of illegality," Kovacic said. "This is because the government has done a good job at the rhetorical argument that says if you don't find any violation here, then Section 2 of the Sherman Act--the control on abusive dominance--will go into hibernation for a couple of decades. So anything goes."

His conclusion: "It would be difficult for a tribunal, even of regulation skeptics, to simply embrace all of Microsoft's arguments."

Ultimately, the government's strategy of moving the case quickly, building off the momentum of Jackson's breakup order, may be its undoing. Had the Supreme Court taken the case, the government could have hoped for a resolution by next summer. Now the case likely won't be decided until June of 2002.

Since Jackson initially stayed--or put on hold--the breakup order pending appeal and later extended that to business restrictions against Microsoft, there currently is no remedy in place affecting the company's business conduct.

Worse for the government is what the technology market will look like in two years, which could change any remedy imposed or upheld by the appeals court.

"There's no doubt the market is changing," Lande said. "Even if the Supreme Court ultimately sides with the government, at that point Microsoft can put forth the great argument the market has changed."

Unlike criminal law, where the guilty are punished for their misbehaviors, antitrust law generally seeks to restore competition. Two years could negate the validity of the government's remedy.

"You don't go back and retry the case," Lande said. "Whether or not they violated the law is a matter of history. The remedy is forward-looking. It's about restoring competition. That could need further evaluation two years from now."

Another factor affecting the process are potential changes to the Supreme Court following November's elections.

"No one knows who might be planning to retire," said Andy Gavil, an antitrust professor with Howard University Law School. "But who wins the election impacts the makeup of the court."

A conservative White House would likely chose Supreme Court judges eventually favoring Microsoft, Gavil said.