Microsoft to detail legal case

Microsoft is expected to outline a defense tomorrow in its high-stakes legal battle with the Justice Department and 20 states, the first visible development in the case in months.

The filing will be made in U.S. District Court in Washington. Both sides are working long hours in gathering and analyzing evidence that will support them in trial, set to begin September 8. Litigators say the pace in the case is likely to be feverish, given the fast-track schedule and consequences.

"There is a hotbed of activity going on right now," said Hillard Sterling, an antitrust attorney at Gordon & Glickson, who recently took on the Federal Trade Commission in a high-profile merger case of two office supply stores. "Microsoft needs to unleash a comprehensive, strong attack on the government's case."

Most of the two parties' activity focuses on gathering evidence, including taking depositions from witnesses who will testify in the case.

The software giant already has revealed how it intends to counter allegations that it has illegally tied its Internet Explorer browser to its Windows operating system to stifle the competitive threat posed by Netscape Communications.

"To defend against that claim, Microsoft intends to show that every other major developer of operating system software has incorporated support for Internet standards, including Web functionality, into products," Microsoft stated in a recent court filing.

The Redmond company added that it would refute claims that it illegally controls how computer makers display the opening screen of Windows by showing "that other developers of operating system software also prohibit OEMs from modifying their copyrighted works."

Microsoft tipped its hand in a brief filed last week asking a federal judge in Salt Lake City, Utah, to compel rival Novell to turn over evidence in the case. It accused the networking software firm of "deliberately trying to stymie Microsoft's efforts to secure evidence."

The filing added Microsoft had sent a subpoena to Novell and six other makers of operating systems--including Sun Microsystems, IBM, Apple Computer, Caldera, Network Computer, and Santa Cruz Operation, requesting "seven narrowly focused requests."

These requests seek information regarding bundling Internet technologies into the companies' products.

Microsoft is likely to lay out a broad outline of its defense tomorrow, but the company is expected to provide more specific details in a separate court filing due by August 10.

Some other clues about Microsoft's legal strategy recently have emerged outside the courtroom. At the company's financial analysts conference last week, Microsoft associate general counsel Brad Smith said a recent decision by a federal appeals court in an earlier antitrust case, also focusing on browser integration, is likely to erode the government's more recent case.

The decision, issued last month by the U.S. Court of Appeals for the District of Columbia, said the integration of products is legal as long as there is a genuine benefit to consumers.

But Rich Gray, an antitrust attorney at Bergeson, Eliopoulos, Grady, & Gray, disagreed with Smith's view, saying the earlier decision did not deal with specific allegations at the heart of the newer case, which is based broadly on federal antitrust statutes.

"If the government can prove that Microsoft was out to destroy or coopt an emerging technology that could be a competitive threat to Microsoft's core monopoly," Gray added, "that's a Sherman Act [antitrust] violation."