Like a pair of boxing promoters, Microsoft and the U.S. Department of Justice (DoJ) are taking competing positions regarding the venue for their next fight. The DoJ wants to perform before the Supreme Court of the United States, where it believes it can score a quick knockout. Microsoft prefers a lower court of appeals, where it believes it has a good chance for a positive decision or, at minimum, a delay that could make a final decision less painful. Microsoft’s legal team has also been busy fending off dozens of class-action suits based on evidence presented at the antitrust trial.

Venue for Appeal

The DoJ has already taken advantage of a law that permits often-lengthy antitrust cases to skip lower appeals courts and go directly to the Supreme Court. After Judge Thomas Penfield Jackson ruled in June that Microsoft was guilty of antitrust violations and should be split up, the DoJ successfully petitioned Jackson to send Microsoft’s appeal directly to the Supreme Court, bypassing a federal court of appeals. The DoJ, at times quoting Microsoft’s own statements about what is at stake in the case, says the urgency created by Microsoft’s existing market dominance, and importance of the case for the booming U.S. technology sector, require rapid-and unappealable-resolution.

The U.S. Department of Justice (DoJ) and 19 states have filed a brief maintaining the DoJ’s stand on Microsoft’s antitrust guilt and defending Judge Thomas Penfield Jackson’s comments outside the courtroom. In addition, several Microsoft competitors have hired former Whitewater prosecutor Kenneth Starr to represent their interests in the case.

Filing Defends Jackson’s Comments

For the most part, the brief to the U.S. Court of Appeals reiterates the arguments that the DoJ made before Judge Jackson in the U.S. District Court, claiming that Microsoft violated the Sherman Act by engaging in anticompetitive conduct to maintain its operating system monopoly; by attempting to monopolize the browser market; and by “tying” its browser, Internet Explorer, to its operating system, Windows.

One new wrinkle was the brief’s defense of Judge Jackson’s procedure during the trial and conduct after it. Microsoft claimed, in a Dec. 2000 filing before the Appeals Court, that Jackson erred by handing down an extreme remedy-the breakup of the company-before hearing additional evidence; by admitting hearsay evidence in the form of news articles; and by making comments to media organizations immediately following the trial, among other things. The DoJ’s filing refutes these claims, and includes a five-page defense of Judge Jackson’s comments outside the courtroom, in which each of his remarks to the media is analyzed from a legal perspective. The DoJ claims that Jackson’s comments “demonstrate neither bias nor the appearance of bias” (Jackson even noted his admiration for Microsoft in one of the interviews cited), and therefore should not result in a reversal of Jackson’s order or in his recusal from the case.

The legal climate appears to be improving for Microsoft, which is seeking to overturn District Court Judge Thomas Penfield Jackson’s May 2000 judgment to split it in two. Members of the seven-judge U.S. Court of Appeals panel hearing the antitrust case have raised questions about Jackson’s findings of law, legal judgments, and bias; there are also signs that the Department of Justice (DoJ) and states are softening their stance against Microsoft. At the same time, a flurry of settlements in other cases may indicate a new willingness on Microsoft’s part to settle its legal disputes outside of the courtroom.

The Appeals Court judges posed skeptical questions to both sides during four-and-a-half hours of oral arguments on Feb. 26 and 27, but the more aggressive barbs were aimed at the government’s case.

• Chief Judge Harry Edwards questioned Jackson’s findings of fact several times, stating at one point, “there are some findings that are merely just conclusions, and I find no basis for them.”

Microsoft filed an aggressive brief to kick off its appeal of the unfavorable lower court decision in the Department of Justice (DoJ) antitrust case. The Nov. 27 document, filed in the U.S. Court of Appeals for the District of Columbia, not only disputed the legal judgment handed down by Judge Thomas Penfield Jackson in the U.S. District Court but also pointedly criticized his conduct during and immediately following the case.

As expected, the 150-page brief disputed the lower court’s application of the Sherman Act and other antitrust law to the case and pleaded that the court’s extreme verdict to split the company was unsustainable. Among the key points Microsoft made were the following:

• Microsoft cannot control prices or exclude competition in the operating system (OS) market, and therefore does not enjoy monopoly status as defined in antitrust law.
• Consumers benefited when Microsoft integrated Internet Explorer (IE) into its OS, and therefore this was a competitive move demanded

U.S. District Court Judge Colleen Kollar-Kotelly has appointed a mediator in the Microsoft antitrust case and has ordered the two sides to negotiate “seven days a week and around the clock” to reach a settlement. The U.S. Supreme Court has refused to hear Microsoft’s appeal in the case, putting the company’s fate in the hands of the district court.

In other legal news, Microsoft faces a challenge to Windows XP in South Korea, a lawsuit by Novell over misleading marketing materials, and a request for investigation of its licensing practices by a consortium of powerful British companies.

Settlement Talks Ordered

At a Sept. 28 hearing, Judge Kollar-Kotelly ordered the Department of Justice (DoJ) and Microsoft to enter intensive negotiations and report back to her every 10 days, warning that she has “broad discretion” to determine penalties against Microsoft if a settlement cannot be reached. On Oct. 12, with talks making no progress, Kollar-Kotelly appointed a mediator, Eric Green, a professor of law at Boston University with extensive experience in achieving out-of-court settlements but no deep antitrust or computer industry expertise. Any settlement will likely be modeled on interim remedies imposed in the original decision by Judge Thomas Penfield Jackson. (For a list of some of these remedies, see “Legal Update: No Breakup Sought; EC Turns Up Heat” on page 22 of the Oct. 2001 Update.)