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States hire D.C. lawyer in Microsoft case

The 18 states that are working with the Justice Department to prosecute Microsoft retain veteran attorney Brendan Sullivan to lead their cause.

WASHINGTON--The 18 states working with the Justice Department to prosecute Microsoft retained on Thursday a veteran attorney to lead their cause.

Brendan Sullivan, with the law firm of Williams & Connolly here, agreed to lead the states as they work with federal trustbusters to conclude the landmark antitrust proceeding.

Rich Gray, a Silicon Valley-based attorney closely watching the trial, described the hiring of Sullivan as a smart move by the states.

"It reminds the Justice Department that they are still a player at the table," he said.

Williams & Connolly is no newcomer to notoriety. Past clients include former President Bill Clinton, Oliver North and John Hinkley.

"Brendan Sullivan is one of the upstanding trial lawyers in the nation," Tom Miller, Iowa state attorney general and one of the leaders of the state coalition, said Thursday. "He's proved time and again to be a forceful and effective advocate."

But the timing of Sullivan's retention as lead counsel struck some legal experts as odd, particularly with a Nov. 2 settlement deadline quickly approaching.

"If you were Brendan Sullivan, why would you take on the job if you thought they were going to get a settlement by Nov. 2?" asked Bob Lande, an antitrust professor at the University of Baltimore School of Law.

If the two sides don't settle, they return to court in March for a hearing before Judge Colleen Kollar-Kotelly. Boston University law professor Eric Green is mediating discussions.

"We're still going full-speed ahead on mediation, and this should not be taken as a sign at all with respect to mediation," Miller said. "This is something that we've been working on for many weeks."

But sources familiar with the states' plans said the 18 attorneys general looked for a new lawyer so they would have the option of pursuing the case independently. The sources described the desire to pursue a separate case as fairly unified, but contingent on what, if any, settlement is hammered out.

Already, some states have expressed concerns that the Justice Department might be willing to accept a settlement they consider too soft on Microsoft. In September, the state attorneys general for California and New York said they would be willing to go their own way.

The first sign of a potential rift

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between the two sides emerged after the Justice Department unexpectedly backed off from pursuing a breakup of Microsoft or a retrial of the tying claim, that is, whether Microsoft illegally integrated Internet Explorer with Windows 95 and 98.

Gray said that decision "did not appear to be cleared by the states in advance. That was a huge step for the feds to take without even consulting their supposed co-plaintiffs. That sent a message to the states they had to take serious note of."

In earlier settlement discussions mediated by esteemed Judge Richard Posner, the states took a much harder line on Microsoft than did the Justice Department. But the shifting political winds may signal a softer approach.

"The states are viewing the political environment as being far more favorable to a lenient settlement with Microsoft than it was when this administration took office," Gray said. "The states, like the European Union, have a different agenda than the Justice Department, and they want to make sure that agenda is fully explored."

Still, Sullivan's joining the states' cause doesn't necessarily mean the settlement talks are near collapse or the two sides are deeply divided, as they were during last year's round of failed discussions.

"We're working to get a fair and equitable settlement with the government and the states," Microsoft Chief Financial Officer John Connors said at the San Francisco Windows XP launch event on Thursday.

Should either plaintiff, or both, reach a settlement with Microsoft, final approval would still be subject to Kollar-Kotelly's review, under the Tunney Act.

"The Tunney Act requires a hearing on the proposed settlement," Lande said. "The judge closely looks to see if everything is cool. 99.9 percent of Tunney Act hearings are pro forma," or nothing more than a formality.

However, a split between federal and state trustbusters could jeopardize any settlement between the Justice Department and Microsoft.

"The states could come into the Tunney Act hearing and say this is not in the public interest," Lande said.

Sullivan would represent the states during that hearing or, if there is no settlement, argue for them during the remedy hearing tentatively scheduled for March 11. If there is no settlement by next Friday, the case proceeds to the next level, with the government filing a proposed remedy Dec. 7 and Microsoft responding by Dec. 12.

The Gatekeeper: Windows XP Sullivan's hiring came the same day Microsoft officially launched Windows XP, which emerged from the gate surrounded by controversy.

Analysts contend that XP-specific media-streaming and digital-music deals smack of tactics used in the browser wars. State and federal trustbusters originally brought their case against Microsoft because of the company's monopololistic tactics against Netscape, now owned by AOL Time Warner. State law enforcers had expressed concern about Windows XP, but so far none has pursued action against the new operating system.

In another Thursday controversy, Microsoft's revamped MSN Web site appeared to shut out some rival Web browsers. Many of XP's features link directly to MSN, including the MSN Explorer Web browser, the Windows Media Player and Windows Messenger.