November 21, 2002 4:54 PM PST

Microsoft settlement watchers chosen

The Justice Department and Microsoft on Thursday picked two members of a three-person technical committee that will be responsible for enforcing the software giant's antitrust settlement.

In a motion filed with U.S. District Judge Colleen Kollar-Kotelly, the Justice Department and nine states--Illinois, Kentucky, Louisiana, Maryland, Michigan, New York, North Carolina, Ohio and Wisconsin--requested that industry veteran Harry Saal be appointed to the committee. Microsoft requested the appointment of Franklin Fite, a former employee.

Microsoft, the Justice Department and the nine states settled the long-running antitrust case in November 2001. At the beginning of this month, Kollar-Kotelly approved the deal, with minor modifications. The technical committee would enforce the settlement and be the first line of resolution for any disputes between the settling parties.

In a four-page memorandum accompanying the request, the Justice Department made its case for why Kollar-Kotelly should appoint both men to the technical committee.

Saal "was founder and chief executive officer of Network General--now Network Associates--which was the first company dedicated to network diagnostics," the Justice Department memorandum stated. Saal, who holds a doctorate in physics from Columbia University, also has taught computer science courses, and is chairman of the board for San Francisco-based Octago, an employment recruitment company.

Fite, who has a master?s degree in computer science from Stanford University, worked at Microsoft in recent years. He was director of the Windows CE operating system from 1992 to 2000, according to the memorandum. Most recently he was president of Seattle-based Nimble Technology.

If Kollar-Kotelly approves the appointments, Fite and Saal would pick the third member of the committee.

Legal experts saw no real problems with Microsoft choosing a former employee.

"It's not as unusual as you would think," said Rich Gray, a Menlo Park, Calif.-based attorney closely watching the Microsoft case. "If you take arbitration panels as an example, it's quite common for each party to choose a member."

In fact, Gray said, the arbitration model in some ways makes sense given that enforcement would be of a settlement agreed to by parties sitting on opposite sides of the table.

"It's not unusual for parties to pick arbitrators that are favorable to their position," Gray said. "What Microsoft has done is not in my view objectionable."

Nine other states and the District Columbia, which had rejected the settlement and pursued further litigation against the software giant, had argued that the enforcement mechanism proposed by the Justice Department and Microsoft would be inadequate for preserving competition.

On the same day that she approved the Justice Department settlement, now known as a consent decree, Kollar-Kotelly in a second ruling imposed a separate but nearly identical remedy in the litigating states' case. One difference is that the second ruling established a compliance committee, which serves a distinct enforcement role from that of the technical committee.

Already, some third parties have complained that Microsoft has violated the spirit of the settlement. In a 12-page letter sent to federal and state attorneys general in September, trade group ProComp accused Microsoft of "ongoing violations" with its release of Windows XP Service Pack 1, which included changes mandated by the settlement.

 

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