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Settlement talks likely to continue

Microsoft attorneys and antitrust prosecutors, so far unable to reach a settlement, plan to continue talking, according to reports.

WASHINGTON--Microsoft attorneys and antitrust prosecutors, so far unable to reach a settlement, signaled today that they will continue to talk during a recess in the landmark antitrust trial that will last until at least through May 10.

Both sides met in court this morning, a day after they discussed a possible settlement behind closed doors. The government and Microsoft declined to discuss the talks, but in a rare joint appearance after today's court hearing, both sides indicated a willingness to continue talking.

"None of us will have any comment whatsoever about settlement discussions," said David Boies, lead prosecutor for the Justice Department (DOJ), who was flanked by Microsoft general counsel Bill Neukom and attorneys representing 19 states. The parties stood outside the federal courthouse.

The parties plan to hold more hearings, Bloomberg and the Washington Post reported, citing an unnamed source.

Earlier this month, U.S. District Judge Thomas Penfield Jackson urged both sides to work out a settlement during the trial's lengthy recess. Microsoft and the government waited until the eve of their status talks with Jackson to act on the suggestion. Yesterday, the software giant met with antitrust prosecutors for a little more than two hours to see if they could settle charges that the software company has acted illegally to protect its dominance in the industry.

At this morning's hearing, a routine procedural meeting, Jackson set the date for the resumption of the trial for May 10 or a later Monday in May depending on when another case he is presiding over is completed. Microsoft's trial was scheduled to resume on April 12.

Jackson also said that both parties must disclose their rebuttal witnesses by Friday, April 23. The judge expanded to three the number of rebuttal witnesses each side may call and spelled out other procedures for the remainder of the trial. Based on Jackson's comments, a decision may not be likely until the fall at the earliest.

There are no signs that the parties made any significant breakthroughs at yesterday's meeting, which took place at the Justice Department headquarters here. The attorneys are believed to have discussed settling the antitrust case filed against Microsoft last May.

At the settlement talks, Microsoft offered to discuss the way it handles access to a key part of its Windows operating system, according to reports in the Seattle Times and Washington Post. The newspapers reported that Microsoft was willing to discuss its process for developing and providing access to the Application Programming Interfaces (APIs) that are needed by developers to build software to run on Windows.

Microsoft closely guards access to its APIs. The company has been accused by competitors, including Netscape Communications, in the past of restricting access to APIs and of providing its own developers with unpublished APIs that could be used to give Microsoft a competitive advantage. Microsoft has denied both the existence of hidden APIs, and that it has abused the way it provides access to Windows APIs.

Microsoft spokesman Mark Murray this morning declined to discuss the settlement issues. But Murray did deny the existence of hidden, or nondocumented APIs. "Microsoft has said in the past it publishes all of its APIs and makes extensive technical information on its products available freely to every developer. We have a staff of 2,000 people to work with developers to provide them information they need to write Windows applications."

Last night, Microsoft general counsel Bill Neukom, accompanied by Richard Urowsky, an outside attorney representing the company, and Rick Rule, a Microsoft advisor, arrived about 15 minutes before the scheduled 2 p.m. PT meeting started yesterday. A little more than two hours later, they were whisked away from the meeting in a large sedan.

Within minutes, Iowa Attorney General Tom Miller, Stephen Houck, an assistant attorney general for New York state, and Connecticut Attorney General Richard Blumenthal departed. They were followed by David Boies, the lead prosecutor for the Justice Department.

Before the meeting took place, representatives from several states prosecuting Microsoft said privately they doubted that a settlement could be reached. Microsoft has said it will not negotiate its prerogative to add new features to its products, a key issue in the case, and the reason that talks failed last May, just days before the suit was filed.

Government Microsoft's day in courtattorneys allege that Microsoft is a monopolist that has acted illegally to maintain market dominance with its Windows operating system and to create a new monopoly in Internet software. A key government complaint is that Microsoft folded its Internet Explorer browser into Windows as a way of eliminating competition from Netscape Communications.

Microsoft denies that it is a monopoly or that it has violated any laws. Windows runs on an estimated 90 percent of the world's personal computers.

Last week, Microsoft submitted a settlement proposal to the government, but California Attorney General Bill Lockyer called the offer inadequate.

In recent days, Microsoft chairman and cofounder Bill Gates has repeatedly expressed his desire to settle the lawsuit but has stressed that any deal must allow the company to integrate new technologies freely in the ubiquitous Windows operating system.

Joel Klein, the Justice Department's chief antitrust official, said he would agree only to a settlement that assures that antitrust violations are not repeated.

Antitrust experts have previously noted that a settlement would bring a quick end to a case that would otherwise drag on for years as it made its way through the appeals process. A settlement would also rein in some of Microsoft's alleged anticompetitive behavior almost immediately

Executives at Microsoft headquarters in Redmond, Washington, on Monday unveiled a reorganization dividing the company along customer service lines but stressed that the timing of the announcement had nothing to do with the antitrust trial or the negotiations to reach a settlement.

Sandeep Junnarkar reported from Washington, and Dan Goodin reported from San Francisco.