Microsoft, States Face Last Chance Before Kollar-Kotelly

Parties in the Microsoft Corp. anti- trust remedies case square off before a federal District Court judge for the last time this week to present closing arguments in the landmark suit.

Parties in the Microsoft Corp. antitrust remedies case square off before a federal District Court judge for the last time this week to present closing arguments in the landmark suit. And as signaled by District Judge Colleen Kollar-Kotelly last week, both sides will be prohibited from stretching closing arguments.

Last month, Microsoft requested that the case be dismissed, arguing that the nine states and the District of Columbia had no legal standing to pursue remedies beyond the federal settlement agreed to in November by the U.S. Department of Justice. But last week, in a 35-page response—lengthy, according to legal experts—Kollar-Kotelly signaled that she sees a clear role for her court to fashion a remedy.

The stern tone and several blunt criticisms of Microsofts argument also suggest that she was not pleased with the software companys interpretation of the courts directive, experts said.

"Theres the sense that Microsoft has still not accepted the Court of Appeals decision," said Andrew Gavil, a law professor at Howard University, in Washington. "She says that they mischaracterized the law, and she calls that a tactic."

"While we had hoped for a different outcome, we did raise some important constitutional and policy issues with the court," said Jim Desler, spokesman for Microsoft, in Redmond, Wash.

In presenting final arguments Wednesday, Microsoft will have to focus on the substance of the states proposal, recognizing that they have the right to pursue it. "[The judge has] put them on notice. She doesnt appreciate having them pushing the envelope," said Jonathan Baker, a law professor at American University, in Washington. "At one point [in the June 12 order], she got a little testy with Microsoft and indicated that one argument bordered on frivolous."

Kollar-Kotellys long analysis last week also indicates that she will continue to touch on every legal facet in the litigation to try to remain above the reproach that ensnared previous judges in the case, legal scholars said.

The court could approve a modified version of the states remedy proposal and then separately approve a modified version of the federal settlement in such a way that the two proposals supplement each other, according to legal scholars. Because approval of any of the states tough remedies is almost certain to be appealed, the only way to effect near-term changes in the marketplace is to approve some version of the federal settlement.

However, court watchers also see the potential for Kollar-Kotelly to resolve the case by strengthening the federal settlement—with broader definitions, for example—and then persuading the nonsettling states to accept it. "This would require a more hands-on approach than shes shown," Gavil said. "Its a slim possibility."

In its findings of fact filed with the court last week, Microsoft reiterated the themes it presented during the witness hearings—that the states proposal is unnecessary to restore competition to the operating system market and that it is unworkable. The company also argued in its findings that many of the states witnesses were biased and were trying to use the litigation to promote their competitive self-interests.

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