Court of Appeals to hear Microsoft case

Software giant wants appellate court to stay the company breakup ordered by Judge Jackson, along with the conduct remedies designed to rein-in its business practices

Microsoft finally won a small battle in the ongoing war.

Shortly after the software maker asked for a stay of a sweeping judicial breakup order, the US Court of Appeals agreed to hear Microsoft's appeal.

The court's decision late Tuesday puts Microsoft back into friendlier territory where it has received more favourable treatment than it has from Thomas Penfield Jackson, the presiding judge in its recently concluded antitrust trial in US District Court.

This does not stop the government from trying to expedite the case by moving it onto the so-called fast track to the Supreme Court. Indeed, late in the day, lawyers for the government said they intended to file a request to have the Supreme Court review the case.

Speaking for the appellate court, chief judge Harry Edwards said it was acting "in view of the exceptional importance of these cases." Three of the court's ten judges will be disqualified from hearing the case.

A review of the case by the full panel, or "en banc," is considered rare by antitrust experts.

"This certainly shows that the Court of Appeals believes this is an important case and will move expeditiously," said Microsoft spokesman Jim Cullinan. "We want this resolved in the quickest way possible."

The rush of activity rang down the curtain on a frenetic couple of days of court filings.

Earlier Tuesday, Microsoft formally asked the Court of Appeals to stay its breakup and other remedies ordered last week by Judge Jackson.

Microsoft's court filing followed two days of tit-for-tat responses between the government and Microsoft as their respective lawyers locked horns in a struggle about control.

The two sides had filed opposing motions with Judge Jackson about whether to put his breakup order on hold. On Monday, the government said Microsoft's request for a stay of restraints on its business practices would damage the public interest and asked the court to hold Microsoft's request in abeyance until the company filed a formal appeal with the court.

The trustbusters are keen on sending the case to the Supreme Court, but they were not able to proceed until Microsoft filed its appeal with the appellate court.

Microsoft fired back Tuesday, saying there was no justification for "plaintiff's extraordinary request" that the court force it to adhere to a schedule. But Jackson turned down that request, writing that "consideration of a stay pending appeal is premature in that no notice of appeal has yet been filed."

That set the table for Microsoft's official notice of appeal -- and it didn't mince words.

"Time is of the essence here," Microsoft declared in its brief. "Many extreme provisions of the judgment start to take effect 90 days after its entry, and Microsoft must begin preparing immediately if it is to be in compliance with the judgment in 84 days."

Microsoft reacted sharply to Judge Jackson's order to break up the company. In Tuesday's 39-page motion to stay, the company said the effect of his ruling would have a devastating impact "not only to Microsoft, but also to its employees, shareholders, business partners and customers, and could have a significant adverse impact on the nation's economy."

Describing last week's sweeping ruling as "profoundly flawed," Microsoft recounted a litany of complaints with the procedures Jackson employed during the trial as well as his decision-making.

The company also took aim at some of the judge's public remarks following his June 7 decree. The software company wants to convince the appellate court that Jackson is not qualified to order the deconstruction of a modern business enterprise.

Indeed, Microsoft quoted an interview the judge accorded to the Washington Post in which he said, "I am not an economist. I do not have the resources of economic research or any significant ability to be able to craft a remedy of my own devising."

The notice of appeal just starts the appellate process. Now the two sides need to get a copy of the trial record before the judge. Then there would presumably be time for written briefs from both sides as well as the the accompanying oral arguments.

Then again, as seems likely, the government might ask Judge Jackson to certify the case for direct appeal to the Supreme Court.

"Microsoft would probably come in and oppose that application, which would be made to Jackson," said George Cumming, an antitrust expert with Brobeck, Phleger and Harrison in San Francisco.

"If he says he thinks it should be considered by the Supreme Court, that would not necessarily be the end of it because the Supreme Court gets to vote on that determination."

"My gut reaction is that the odds of this case going to the Supreme Court are less than 50-50 because this is a usual procedure," he added. "Still, this is an unusual case, and the Supreme Court is made for unusual procedures."

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