February 26, 2001 4:10 PM PST

Appellate judges split over Jackson's Microsoft findings

WASHINGTON--The appellate judges overseeing the latest phase of the Microsoft antitrust case are divided over the findings of fact from U.S. District Judge Thomas Penfield Jackson, an indication that the court may revisit some issues in the case in a hearing Tuesday.

During an all-day hearing Monday before the U.S. Court of Appeals for the District of Columbia, three judges broadly hinted at their views on Jackson's famed findings of fact. The findings, a 200-plus-page document issued in November 1999, ultimately led to Jackson's ruling that the company violated several aspects of antitrust law and needed to be broken up.

Appeals court Chief Judge Harry Edwards said he saw no reason to "defer to the findings of fact." He described them as "merely conclusionary," adding, "I find no support for them."

Judge David Sentelle, a Reagan appointee, took a different approach regarding the findings of fact. He chastised Microsoft for its main brief to the appeals court that basically reargued some of the facts.

"It seems like it was written for the jury," he said.

The pointed comment expressed Sentelle's belief that the findings of fact is sacrosanct and that the facts should not be argued over again, said William Kovacic, an antitrust professor at George Washington University Law School.

"In essence, he was saying, 'You should have done a better job convincing Jackson on these points,'" Kovacic explained.

Judge David Tatel also piped in, noting that "the findings of fact are binding on us."

Such comments set the stage for a potentially explosive second day of arguments, which will focus, in part, on Jackson's handling of the case and post-trial comments.

Edwards in particular riveted the courtroom. The chief judge asserted that just because Jackson said something doesn't make it true without support in the court record.

"It has to be fact to be a fact," Edwards said.

"What (Edwards) is at least saying is that certain unspecified findings (in the overall findings of fact) are up for grabs," Kovacic said. "At least in certain areas, if Microsoft has well-focused arguments, he is going to listen."

Although Microsoft appears to have won some judges to its side, Monday's hearings were not one-sided. Both Microsoft and the government appeared to have won victories for parts of their cases.

Microsoft defends itself
In the morning, Microsoft seemed to have the upper hand in convincing the seven judges that a breakup of the company would be a drastic measure and might actually impair the balance of competitiveness in the software industry.

Microsoft attorney Richard Urowsky consistently scored hits against the government's claim that the software maker prevented Netscape Communications from distributing its browser, but he fumbled when addressing copyright issues.

In the afternoon, however, the government appeared to be scoring points with its argument that Windows and Internet Explorer are two separate products. The court seemed to be leaning slightly toward adopting a legal standard that would favor the government on this issue, said Bob Lande, an antitrust professor with the University of Baltimore School of Law.

The court can use two separate legal standards to determine whether tying Internet Explorer to Windows is a violation of antitrust law, Lande said. Under an earlier ruling issued by the same appeals court in a different Microsoft case, bundling would be permitted if a theoretical customer benefit existed.

But in another case, Jefferson Parish v. Hyde, the U.S. Supreme Court ruled that tying could only exist if customers demanded the bundle. As a result, under Jefferson Parish, the government can claim that customer demand for an integrated operating system doesn't exist universally because people are still downloading Netscape.

"If they go with Jefferson Parish, they are more likely to find that Windows and IE are two separate products," Lande said. On Monday, he added, the court was "talking in the Jefferson Parish world."

Still, the judges also struggled with some of the government's most basic assertions, one being that consumers must have a right to remove the browser from the operating system.

"It is a highly questionable proposition that there is support in the market for browserless operating systems," he said.

But government attorney John Roberts retorted: It's "the difference between bundling, combining and forcing."

Microsoft hotly contests that the two products are separate. "There are major benefits to Microsoft's integrated design," Urowsky said.

"It makes absolutely no sense" that customers would not want IE integrated into Windows, said Judge Stephen Williams, who added that government lawyers were taking antitrust doctrines on product tying "into new and interesting territory...You're a pioneer. Take credit for it."

Edwards also indicated he favors some of Microsoft's arguments.

Kovacic said it is too difficult from the questioning to say which way the judges might rule on the tying claim, but some judges seem to favor Microsoft. Williams, Douglas Ginsburg and Raymond Randolph appear to support Microsoft, he said. Judith Rogers and Tatel appear to be "slam dunks for the government," he added.

 

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