DOJ moves to block Microsoft rehearing

The legal chess game continues as the Justice Department asks a federal appeals court to deny Microsoft's request for a rehearing of its antitrust ruling on IE commingling.

WASHINGTON--US government prosecutors on Thursday asked a federal appeals court to deny Microsoft's request that the court re-examine part of its antitrust ruling.

In June, the US Court of Appeals for the District of Columbia Circuit upheld eight separate antitrust violations against Microsoft. The Redmond, Washington-based company asked for rehearing on one: commingling.

The appeals court found that Microsoft's commingling of Internet Explorer code with Windows 95 and 98 was an anti-competitive act. The government had until Aug 3 to file its legal brief on rehearing.

"Today's filing marks a continuation of the (Justice) Department's effort to move the Microsoft case back to the District Court for prompt resolution," said Justice Department spokeswoman Gina Talamona. "We believe that the issue Microsoft has identified for rehearing already has been fully litigated and properly decided by both the District Court and the Court of Appeals."

"We maintain that the trial court's ruling on this matter was erroneous and should be corrected on appeal," said Microsoft spokesman Vivek Varma. "We appreciate the court's careful review of the record on this matter. We are committed to moving forward promptly in the legal process and remain open to resolving any remaining issues in this case as quickly as possible."

The government's quick response could be a sign that it intends to move the trial forward and possibly seek an injunction against Windows XP. In a filing nearly two weeks ago, the Justice Department and 18 states asked the Court of Appeals to forgo the 52-day waiting period before sending the case back to a lower court.

"This would give the government more time to seek an injunction against Windows XP," said Andy Gavil, an antitrust professor with Howard University School of Law. "The longer they wait, the harder it will be to get that injunction before Windows XP ships in October."

Microsoft on Friday asked the court to reject the government's request for rushing the case and to wait seven days after issuing its decision before taking any action. In its filing, Microsoft said it was trying to decide whether to ask the Supreme Court to take the case.

The government's legal brief comes as Microsoft combats a groundswell of requests to delay the release of Windows XP. On Tuesday, Sen Charles Schumer, a Democrat from New York, called on the Justice Department and 18 states to consider taking action that would delay Windows XP's release.

The same day, software maker InterTrust filed an injunction asking a California court to stop Windows XP from shipping. The company alleges that Microsoft's controversial product-activation technology violates four InterTrust patents.

On Thursday, more than 10 privacy organizations filed a complaint with the Federal Trade Commission asking the agency to prevent Windows XP's scheduled release. The groups allege that Windows XP's poor implementation of security and privacy provisions constitutes unfair and deceptive trade practices.

The largest threat to Windows XP could come from federal and state trustbusters, who may want to make the new operating system part of new court proceedings. In its decision, the Court of Appeals threw out a federal judge's order to break Microsoft into two companies. A lower court will hold hearings on a new remedy after a new judge is randomly assigned.

"Since remedies are designed to restore competition, they can be forward-looking," said Bob Lande, an antitrust professor with University of Baltimore School of Law. "Windows XP may not have been part of the case, but it could be made part of remedy hearings."

For that reason, the government could try to stop Windows XP's shipment to examine potential anti-competitive effects on technologies such as instant messaging, Web services and digital music. But success isn't guaranteed and could backfire on the government, Gavil said.

"Microsoft has always played a high-stakes game," he said. "If an attempt to get an injunction against XP fails, Microsoft will be more emboldened than ever to say, as they have been saying, 'That Court of Appeals decision was about the browser wars. That's over. That's history.'"

While Microsoft had legitimate reasons to ask for a rehearing, some legal experts also see it as a stalling tactic.

"Microsoft's strategy for filing the petition for rehearing--although it's a significant issue in terms of what it can do for Windows XP--is stalling to make sure there is no order by a District (Court) judge that threatens the release of Windows XP," said Jonathan Jacobson, an antitrust attorney with Akin, Gump, Strauss, Hauer & Feld in New York.

In rebutting Microsoft's request, the government charged the company with using "its petition for rehearing as an occasion to expound upon a variety of topics, most of them irrelevant to the issue at hand."

Microsoft had pounced upon an ambiguity in "Finding of Fact 161" of the preliminary ruling issued by US District Judge Thomas Penfield Jackson. But the government countered that Microsoft's supporting argument does not justify the appeals court rehearing the commingling claim.

"Microsoft's argumentative reweighing of the evidence already considered by the Court does not establish that the Court erred when it concluded that, although the testimony is 'contradictory', the district court's findings were not clearly erroneous," the government's six-page brief states.

Government lawyers also faulted Microsoft for bringing up the effect of the commingling issue on the remedy, which has yet to be crafted by a new judge.

"The court left to the district court on remand the task of fashioning an appropriate decree to remedy the effects of Microsoft's unlawful conduct and restore competition, to the extent possible," the brief states. "It is time for that process to go forward."

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