Microsoft, DOJ Battle over Appeal Venue

BOSTON (06/14/2000) - Microsoft Corp. Tuesday afternoon filed an official notice that it will appeal the order to break up the company, and the U.S.

Court of Appeals in Washington quickly said that it would hear the appeal. But the U.S. Department of Justice (DOJ) shot back that it would ask U.S. District Court Judge Thomas Penfield Jackson to certify the case for immediate review by the U.S. Supreme Court.

The late-afternoon events capped a wild day of legal maneuvering in the government's antitrust case against the software vendor, as Microsoft and the DOJ wrangle over the potentially critical issue of where the company's appeal will be heard. The DOJ is trying to avoid a hearing in front of the appeals court, which is seen by many legal observers as likely to be sympathetic to Microsoft.

Microsoft also filed a 39-page motion - 19 pages above the usual limit - asking the appeals court to stay the entire final judgment ordering the breakup of the company that was issued last week by Jackson. The software vendor is seeking to prevent restrictions that the judge imposed on its conduct from taking effect in 90 days.

Earlier in the day, Jackson announced that he wouldn't rule on a stay request filed in his court by Microsoft until the company submitted its promised notice of appeal. The DOJ and 17 states involved in the case had urged the judge to follow that course, on the premise that Jackson could then simultaneously act on the stay request and send his final judgment straight to the Supreme Court for review instead of to the D.C. appeals court.

But the appeals court's willingness to quickly hear Microsoft's promised appeal - and to thereby avoid being bypassed by Jackson and the DOJ - was seen by some legal observers as a positive development for the company. Appeals court panels already overturned two other antitrust-related rulings against Microsoft in 1995 and 1998, and the court is considered much more friendly to the company than Jackson is.

A Microsoft spokesman stopped short of calling the appeals court's move a victory for the company. But he said that executives at the software vendor "believe this is good news for Microsoft because we have confidence in our appeals case and believe we will have this unprecedented judgment overturned by the appeals court."

Steve Ballmer, Microsoft's president and CEO, said in a statement announcing the notice of appeal that the company is counting on the appellate courts "to recognize that Microsoft's product innovation is the heart and soul of competition in the high-tech industry."

But the DOJ said in a statement that it would ask the Supreme Court to hear Microsoft's appeal "promptly" if Jackson certifies its request under the Expediting Act. Immediate Supreme Court review of Jackson's final judgment "is in the public interest because of (the antitrust case's) importance to the American economy," the DOJ said. The federal agency claimed Microsoft's filing with the appeals court was "an ill-conceived attempt to end-run the Expediting Act."

The mere fact that Microsoft filed a notice of appeal doesn't automatically mean the restrictions imposed by Jackson will be stayed by the appeals court, said Douglas Ross, an attorney with Davids Wright Tremaine LLP in Seattle.

"They (still) need to see some positive action out of the court," he said.

In an unusual development that provides an indication of the stakes involved in the two-year-old antitrust case, the appeals court said it would hear Microsoft's appeal with a full panel of judges - minus several who are excusing themselves because of potential conflicts of interest - instead of the three judges that normally preside over such appeals.

That's being done "in view of the exceptional importance" of the antitrust case and the fact that the number of judges who have had to disqualify themselves from participating in the case precludes "as a practical possibility" a rehearing in front of a full panel, the appeals court noted in its order announcing that it would hear the appeal.

"It's the first time I've heard of something like this," Ross said. "This takes the guesswork out of who's going to be hearing the appeals." Typically, a full bench of judges is called to adjudicate an appeals process only after a panel of three randomly chosen judges has first considered it, he added.

Whether that's good or bad for either side remains to be seen, Ross said. But other legal analysts noted that Republicans outnumber Democrats by a 4-3 margin among the seven judges who will hear the appeal - a numbers game that some see as favoring Microsoft.

Microsoft said it will file a detailed appeal in the future, based on a schedule to be established by the appeals court. But the 39-page motion to have Jackson's June 7 ruling stayed cited what the company described as factual errors and the judge's failure to address evidence it submitted as some of the reasons for preventing the behavioral restrictions he orderd from taking effect until the appeals process is completed.

Among other things, the restrictions - which are due to become effective Sept.

5 unless stayed - would require Microsoft to disclose its application programming interfaces and other technical information to independent software developers, PC makers and other companies at the same time it starts using that information internally. Microsoft also would have to set uniform terms for licensing its Windows operating systems and refrain from taking any punitive actions against computer makers that support rival technologies such as Linux.

In the filing with the appeals court, Microsoft claimed that a failure to stay those and other limits on its business practices would force Microsoft to disclose intellectual property, interfere with its ability to release new products and require the company to redesign all of its operating systems within six months of the judgment date.

The Microsoft spokesman said the company's request to Jackson to stay the imposition of the restrictions remains open. If Jackson agrees to a stay, Microsoft would notify the appeals court that its motion for a stay there was no longer needed, the spokesman added.

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