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Win 98 not subject to injunction

In a win for Microsoft, a federal appeals court rules Microsoft's Windows 98 is not covered by an injunction issued last December.

A federal appeals court has ruled that a lower court's order requiring Microsoft to offer its Internet Explorer browser separately from its Windows operating system does not apply to Windows 98, which will be shipped to computer vendors on Friday.

Although the lower court ruling, issued in December by U.S. District Judge Thomas Penfield Jackson, explicitly referred to "Windows 95 and successor versions thereof," the U.S. Court of Appeals for the District of Columbia said Windows 98 was not bound by the order.

"Whatever the United States's chances of winning permanent injunctive relief with respect to Windows 95 in the proceeding currently in the district court, they appear very weak with respect to Windows 98," the three-judge panel unanimously ruled.

The court went on to say that the government "presented no evidence suggesting that Windows 98 was not an 'integrated product' and thus exempt from the prohibitions" in a 1995 consent decree that expressly permits Microsoft to build new features into its operating systems.

CNET Radio talks to attorney Richard Stern
Microsoft immediately hailed the ruling as a victory. "We see this as a great first step in our effort to protect our freedom to innovate and integrate new functionality into our products, and [we] believe consumers will benefit from this great new software," said Microsoft spokesman Jim Cullinan.

The Justice Department brought the action last October, claiming that Microsoft licensing requirements that Windows 95 be shipped with the Internet Explorer browser violated terms of the consent decree, which the government and the Redmond, Washington, software maker entered to avoid the threat of an earlier antitrust lawsuit.

Justice Department spokesman Michael Gordon downplayed the significance of the ruling. "This is a narrow decision on the consent decree case," he said. "Our investigation into Microsoft continues."

As widely reported, the DOJ and more than a dozen states are considering filing two separate lawsuits that target allegedly anticompetitive behavior by Microsoft. Unlike the Justice Department's current action, which is based on the consent decree, any new lawsuits would be based on federal statutes, such as the Sherman Act and the Clayton Act, and would not be affected by today's ruling.

Sources for several agencies said the suit likely will be filed this week. They stressed, however, that no final decision has been made yet. In addition, Texas attorney general Dan Morales, widely considered one of the lead antitrust prosecutors investigating Microsoft, said earlier today, in a statement that he was reconsidering whether to take action against the software giant. (See related story)

Jackson ruled in December that it was not immediately clear if Microsoft's licensing terms were in violation of the consent decree. He appointed a computer law specialist as a "special master" in the case, charged with gathering evidence and proposing a legal outcome. He ordered Microsoft to separate Internet Explorer from Windows 95 in the meantime.

Although the Court of Appeals has ruled that Jackson's preliminary injunction does not apply to Windows 98, it has not yet weighed in on whether Windows 95 is bound by the injunction. Also pending are Microsoft's objections to Jackson's appointment of the special master. The appeals court has given no indication as to when it might rule on those issues.