Appeals Court Reopens Heart of Microsoft Case

Federal appeals court reviewing the government's anti-trust settlement with Microsoft heard cases today brought by Massachusetts and trade associations of rival technology companies.

WASHINGTON, D.C.—The federal appeals court reviewing the governments antitrust settlement with Microsoft Corp. today reopened questions that lie at the very core of the historic case: Should the software giant be allowed to co-mingle middleware with its operating system; to what extent must Microsoft disclose technical information; and what, exactly, did the company gain by the illegal steps it took to maintain its desktop OS monopoly?

A six-judge en banc panel of the U.S. Court of Appeals for the District of Columbia Circuit heard two cases today, brought by Massachusetts and by two trade associations of rival technology companies. Both are seeking to overturn the federal agreement entered one year ago to remedy the unlawful conduct Microsoft was found to have engaged in vis-à-vis Netscape Navigator and Java.

Microsofts challengers said they were heartened by the depth of the judges questions and comments today.

The judges "were encouraging in the sense that they went to the heart of the case," Robert Bork, who represented the Computer and Communications Industry Association and the Software and Information Industry Association, said following the court arguments. Bork formerly was a judge on the appeals court.

Bork and Steven Kuney, who represented Massachusetts, argued separately that there is no evidence indicating that the settlement will have a meaningful impact.

In presenting his case, Bork said that the settlement would not prevent the anticompetitive effect leading to the demise of Netscape Navigator. To restore competition, the settlement must go further than allowing OEMs to remove the Internet Explorer icon—it must require the separation of middleware code from the OS.

Deputy Assistant Attorney General Deborah Majoras argued that the trade groups are not entitled to intervene in the case, but several judges voiced skepticism about that position. They focused their questions to Bork primarily on the substance of the antitrust remedy.

Bork argued that the settlement is ambiguous in that it leaves it up to Microsoft to define key terms and that it lacks an effective enforcement mechanism, and the technical committee assigned to oversee compliance is merely "window dressing." CCIA and SIIA are seeking the appointment of a special master to oversee compliance.

The judges grilled attorneys for both sides on the appeals courts role and the proper degree of deference owed to the Department of Justice.

In response to a remark from Judge Douglas Ginsburg that the settlement requires API disclosures regarding servers, which were not part of the liability findings, Bork said the trade-off is less than adequate.

"Theres no reason to negotiate away what was negotiated away," Bork said, noting that the government won its case initially and won it again on appeal.

Michael Lacovara, who represented Microsoft, told the court that the settlement goes beyond remedying the acts found to be unlawful, and that the challengers request for greater API disclosure is not based in fact.


"The theory of the states is that more is better," Lacovara said.

The judges spent much of the morning questioning both parties on the actual benefits Microsoft achieved through its anti-competitive actions, because one goal of the remedy is to deny the company such "fruits" of illegal conduct.

Kuney said that Internet Explorer is a fruit, but Microsofts Lacovar said that there is no evidence to show that.

Following the arguments, Massachusetts Attorney General Tom Reilly said the outcome of the case will determine whether the countrys antitrust laws will be enforced and if they can be effective.

"Were seeing the consolidation of power in the hands of a few," Reilly said. "Theres a lot at stake here for ordinary people."

Microsoft attorney Brad Smith said that the settlement is "tough but fair," and that his company is committed to complying with it.

"If you look at the world today you see an abundance of choice," Smith said.

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