Jackson: Decision based on credibility

A pro-business, conservative Republican who was one of the first judges appointed by President Reagan, Judge Jackson seemed a good bet for Microsoft Corp. He had slammed federal safety regulators in a big General Motors Corp. case in the 1980s, and signaled early in the Microsoft antitrust trial that he wasn't inclined to order a harsh remedy, even if he found that the company had violated the law.

What happened? Why did the judge so thoroughly reject Microsoft's defense? And why is he ordering what the company calls its "death sentence," the breakup of one of history's most profitable and successful enterprises?

The judge himself explains:

"Falsus in uno, falsus in omnibus," he says, citing a Latin aphorism meaning, "Untrue in one thing, untrue in everything."

"I don't subscribe to that as absolutely true," the judge says. "But it does lead one to suspicion. It's a universal human experience. If someone lies to you once, how much else can you credit as the truth?"

In an extraordinary interview for a sitting federal judge, Judge Jackson made it clear that Microsoft's credibility problems in the courtroom compromised its defense and contributed significantly to the judge's decision Wednesday to break the company in two and impose stiff restrictions on Microsoft's business practices.

"I had to make judgments about the credibility of witnesses, and I found some of them more credible than others," he said. Judge Jackson declined to cite specific instances during the trial, and he gingerly stepped around legal issues that might arise on appeal. But he did add, "Things did not start well for them."

'There is considerable danger that they are continuing to do business the way they have been, and it is time to get some restraint in place'|Judge JacksonDuring the trial, which began on Oct. 19, 1998, and included 78 days of testimony over the course of about 18 months, Microsoft seemed often to nettle the judge or raise doubts. On the bench, he signaled his skepticism with a mix of lecture and body language, rolling his eyes, shaking his head in amazement and, once, laughing out loud. While it isn't made explicit in his earlier rulings-the judge decided most of the case in the government's favor on April 3 -- Wednesday's interview in his chambers suggests that Judge Jackson simply didn't believe Microsoft's defense.

Microsoft's lawyers say they're confident of winning on appeal, and they plan to attack Judge Jackson directly, seeking to overturn his rulings in part on procedural errors. Microsoft won an appellate reversal in an earlier part of the case in June 1998, partly on procedural grounds.

Judge Jackson, 63 years old, is a bear of a man, with a shock of white hair, a deep tan and an old black pipe he often stoked during the interview. Reclining in a leather swivel chair in his book-lined chambers in U.S. District Court here, he presented a countenance far less imposing than the stern visage that glowered from the bench in the courtroom, often down on Microsoft's lawyers.

Judge Jackson professed great respect for Microsoft, calling it "a phenomenally successful and in many ways beneficial economic enterprise."

But he said he's convinced that the software giant continues even now to engage in the actions that brought it to trial. He cited as an example new evidence -- an e-mail from last year by Microsoft Chairman Bill Gates that was introduced by the government late last month. In the e-mail, Gates suggested altering some of his dominant software in a way that would disadvantage users of the Palm line of handheld devices, which are made by a competitor.

"Microsoft insists that it is innocent of any wrongdoing at all and will continue to do business as they have been doing it," the judge said. "There is considerable danger that they are continuing to do business the way they have been, and it is time to get some restraint in place."

Judge Jackson said part of the reason he was adopting much of the government's breakup plan was the concern that Microsoft might not comply with less-stringent remedies that simply sought to modify its business practices.

He called restructuring the company "less regulatory" because it would ultimately require less continuing oversight by the court. "The less supervision by this court, the better," he said. "The more that market forces are allowed to work, the greater the likelihood of success" in restoring competition.

He expressed skepticism that Microsoft would willingly comply with behavioral restrictions. "Even the very mild conduct remedies they proposed, they said they might appeal those, too," he said. "And quite frankly, they had every opportunity to settle -- and I would in all likelihood have taken a conduct remedy to end this case" if it had been offered as part of a settlement and could have been adequately enforced. Last fall, he ordered Microsoft and the government into mediation to try to reach a settlement. The effort ended in failure on April 1. Microsoft and the judge got off to a bad start. In December 1997, before the trial was even under way, Microsoft infuriated the judge by carrying out one of his early orders -- to remove Internet Explorer, the browser that was a core issue in the case -- in such a way that it disabled Windows, the source of Microsoft's monopoly power.

After that, Microsoft switched its lead counsel, bringing in gentlemanly John Warden of Sullivan & Cromwell, who brought a booming Southern baritone and an improved rapport with the judge. He replaced the cerebral Richard Urowsky, whose evident impatience with some of the judge's questions drew admonishments from Judge Jackson more than once.

But Microsoft's credibility with the judge increasingly came into question as Justice Department trial counsel David Boies confronted numerous company witnesses with their own past words in e-mail obtained by the government and displayed starkly on courtroom video screens. One witness was nearly in tears.

During the trial, the judge also seemed peeved that Gates never found his way into the courtroom. Earlier in the trial, the judge remarked outside the courtroom that Gates had found time to testify on Capitol Hill three blocks from the courthouse, but no time to take the stand. In the interview, Judge Jackson said Gates's absence had no bearing on his decisions in the case, but added, "I was mildly surprised he didn't come."

Instead, Gates's videotaped testimony set the tone for the trial. Over and over, Gates would make statements, only to be confronted with e-mail he had written that seemed to contradict what he said in sworn testimony.

On one occasion, after Warden complained about the playing of videotape of Gates's testimony, the judge said, "If anything, I think your problem is with your witness, not with the way in which his testimony is being presented. I think it's evident to every spectator that, for whatever reasons, in many respects Gates has not been particularly responsive to his deposition interrogation."

One of the key issues in the case involved Microsoft's decision to embed the Internet browser in its Windows software. The government said the company did that to hurt rival browser makers, while Microsoft insisted it was done to improve the product.

In the interview, Judge Jackson said, "I have to make judgments about motives and credibility all the time... . And it was quite clear to me that the motive of Microsoft in bundling the Internet browser was not one of consumer convenience. The evidence that this was done for the consumer was not credible... . The evidence was so compelling that there was an ulterior motive."

Judge Jackson raised questions about Microsoft's truthfulness in his ruling Wednesday as well, eliciting a sharp reaction from the company's general counsel, William Neukom: "We ... have sought to defend our legal rights in a fully professional and honorable vein."

Neukom also suggested that the judge's comments in the ruling Wednesday, which also questioned whether Microsoft had been truthful in an earlier case in 1995, "suggests that the district court may have reached this conclusion even before the current lawsuit was filed based on events in a separate case, outside the record of this litigation entirely."

Judge Jackson said he is eager to have the case reviewed by an appeals panel. "I am one judge, and everything that's taken place has been at my instance," he said. "I want others to take a hard look at my work."

But the judge rejected the appellate court's admonition in the June 1998 ruling that courts shouldn't get involved in how software works. "I may not be equipped to make judgments about software design, but I am equipped to judge what a particular design is, in terms of its economic effect."

Judge Jackson also dismissed Microsoft's complaints that it wasn't given time to argue against a breakup and that his decision not to allow that time violated proper procedure. He said, "it's procedurally unusual to do what Microsoft is proposing-are you aware of very many cases in which the defendant can argue with the jury about what an appropriate sanction should be? Were the Japanese allowed to propose the terms of their surrender? The government won the case."

As a result, he said, he was inclined to accept much of the government's proposed remedy. He said he also wanted the case to be finished as quickly as possible to eliminate uncertainty for consumers, customers and the markets, and to avoid the fate of the International Business Machines Corp. antitrust case, which dragged on for more than 10 years.

In that case, he said, legal wrangling took so long that the "market moved on" and made the case virtually irrelevant. Judge Jackson said he hopes that won't happen with Microsoft, but added, "The jury is still out on this case."