January 12, 2001 11:45 AM PST

Government urges court to uphold Microsoft split

WASHINGTON--The Justice Department and 19 states filed a legal brief Friday morning urging an appeals court to uphold an earlier decision to split software giant Microsoft.

In the document, the government defended U.S. District Judge Thomas Penfield Jackson, arguing he conducted a "fair and efficient trial."

The government spent a fair chunk of the brief shoring up Jackson's sagging credibility. About 40 pages of the 150-page brief are dedicated to Jackson, his handling of the case, his decision not to give extended time to review remedies and comments he made to the media following the trial's conclusion.

At issue is Jackson's June 2000 order that Microsoft be broken into separate operating systems and software applications companies following his earlier ruling that the company violated two sections of the 1890 Sherman Act.

The U.S. Court of Appeals for the District of Columbia Circuit is overseeing the appeal. Oral arguments are scheduled for Feb. 26 and 27.

As expected, the government rehashed arguments presented when it asked the U.S. Supreme Court to expedite the appeal. The process would have sidestepped the local appeals court, the U.S. Court of Appeals for the District of Columbia Circuit. The high court rejected the request.

The government addressed six major issues:

 Microsoft used anti-competitive means to maintain its operating system monopoly.

 The company attempted to extend that monopoly into the browser market.

 Microsoft violated antitrust law by "bolting" its Internet Explorer Web browser to Windows 95 and 98.

 Jackson's procedural and evidentiary rulings exceeded his authority.

 Jackson faltered in his handling of the remedial portion of the trial.

 Public statement made by Jackson showed bias against Microsoft.

"There is nothing here the government really hasn't said before," said Bob Lande, an antitrust professor with the University of Baltimore School of Law. "With one exception," he added--the government "spent quite a bit of time defending Jackson and his handling of the case."

In its main legal brief, Microsoft systematically attacked Jackson's credibility and his handling of the case, arguing that statements made by Jackson following the trial's conclusion show bias.

Those comments, some chastising the appeals court for overturning Jackson in an earlier Microsoft case, have undermined the judge's standing, said Emmett Stanton, an antitrust attorney with Fenwick & West in Palo Alto, Calif.

"Jackson has damaged his credibility and therefore his handing of the case," he said. Microsoft has used Jackson's comments to infer bias on the part of the judge. Stanton doesn't believe that argument holds water, but the comments hurt Jackson's credibility and also his findings of fact and application of antirust law.

In the brief, the government asked the appeals court to "not take the extraordinary step of vacating the judgment or ordering the judge to recuse himself from further proceedings in the case."

The government argued Jackson's statements "aren't really biased, because if a judge hears all the evidence and concludes one party is a liar and says one party is a liar, that's not bias," Lande explained.

George Washington University School of Law professor Bill Kovacic said it is unlikely the Court of Appeals would vacate the judgment based on Jackson's statements. "Yes, they will disqualify him from participating in any further proceedings," he added.

The government also laid out arguments defending what legal analysts regard as the two weakest areas of the case: Jackson's ruling that Microsoft illegally tied Internet Explorer to Windows 95 and 98 and his decision to cut the remedy proceeding to about 60 days.

Many legal experts predict the Court of Appeals will throw out the tying claim, greatly undermining the government's victory over Microsoft.

"The tying claim remains the most vulnerable point on appeal," said Hillard Sterling, an antitrust attorney with Gordon & Glickson in Chicago.

In its main appeal brief, the government argued that, "Microsoft's binding (Internet Explorer) to Windows, in short, was pure bolting, which caused the very harms targeted by tying law."

But the government faces a potentially resistant audience. The same appeals court hearing the antitrust appeal threw out the tying claim in 1998, making this "a tough point for the government to win," Kovacic said.

Microsoft, obviously, is confident it will prevail on this point and on the entire case.

"We continue to believe that Microsoft's decision to integrate the browser into the operating system will be found to be pro-competitive and good for consumers," Microsoft spokesman Jim Cullinan said.

"Today's announcement of the AOL-Time Warner deal is just the latest example over the last three years of the fierce competition Microsoft faces in the high-tech industry," he added.

The remedy issue is another stumbling block for the government and a point it is not likely to win, according to analysts.

Microsoft had argued Jackson denied the company due process during the remedy portion of the phase, which preceded Jackson's breakup order.

The government's brief argues that Jackson's remedy "was lawful and appropriate, and Microsoft's complaint that the court did not engage in sufficient process before ordering its remedy is without merit."

But Kovacic, Lande and Sterling believe Jackson's abrupt conclusion of the remedy process and given the context of Jackson's comments makes it almost certain the appeals court will vacate the breakup order.

"It is with near certainty the Court of Appeals will remand the remedial portion of the case back to the District Court," Kovacic said.

 

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