Microsoft Responds to DOJ Maneuver

WASHINGTON (06/13/2000) - In a clever strategy designed to force Microsoft Corp.'s legal hand, government lawyers have asked U.S. District Judge Thomas Penfield Jackson not to rule immediately on the company's motion that he stay last week's "final judgment." The government wants Jackson to wait until Microsoft formally files its appeal before he rules on its stay motion. That way, Jackson can simultaneously rule on the stay motion and send his ruling straight to the U.S. Supreme Court for review.

Tuesday, Microsoft filed a reply brief asking Jackson to grant a stay immediately, rather than handle the case in a manner "more to the (Justice Department's) liking than the one provided by law."

On June 7, Jackson brought the historic antitrust trial pitting Microsoft against the Justice Department, 19 states and the District of Columbia to a close by adopting the government's suggestion that for 10 years the company be split into two firms in order to remedy multiple violations of federal and state antitrust laws. One company would own the Windows operating systems, subject to a raft of temporary conduct restrictions, and one company would own everything else, including the Office suite of software applications and the Internet Explorer Web browser.

Jackson's final judgment stays the breakup order until Microsoft's appeal has run its course, but he has ordered that the list of conduct restrictions imposed on the software giant still must take effect within 90 days, and that Microsoft must draw up a detailed breakup plan within four months. Redmond immediately filed a motion asking Jackson to stay his entire order pending the outcome of appeals.

But the government says that, regardless of what Jackson decides to do, Microsoft failed to show that a stay is warranted. Monday's brief criticizes Microsoft for failing to even try to show that it is likely to win its appeal, and takes the software giant to task for failing to show that the public would not be harmed if Jackson granted a stay.

"Where the extent of the harm to competition has been, as the Court found here, so substantial and pervasive in a fast-moving sector of the economy, the irreparable injury to the public interest is particularly great," the government stated in Monday's filing. "Lengthy delays in implementation of the interim conduct remedies that will prevent recurrence and continuation of Microsoft's illegal behavior would greatly damage the public interest."

Tuesday, Microsoft fired back at the government's claim that its stay motion was insufficiently developed, saying that "the issues presented by the stay motion are clear from the existing record."

Microsoft has 60 days from June 7 to file a notice of appeal in the U.S. Court of Appeals for the District of Columbia Circuit. The government is required to wait until Microsoft formally files its appeal before it can ask Jackson to send the case to the Supreme Court, under the terms of the federal Expediting Act.

With Monday's filing, government lawyers made it clear that they want to avoid a scenario in which Jackson denies Microsoft's stay motion - leading to a new stay motion in the appeals court - before the company files an appeal and the judge thereby could send the case to the Supreme Court. That could result in a stay motion pending in the appeals court even as the Supreme Court considers whether to take the case. Microsoft would rather have the case follow the normal course from Jackson to the appeals court, where the company is confident that it will get a favorable ruling.

"This is an extremely bizarre tactic by the government," says Microsoft spokesman Jim Cullinan. "The 90-day clock is ticking, and we want to move the case ahead." In Tuesday's brief, Microsoft told Jackson that the government's latest gambit "should be rejected out of hand."

The government would rather have the two legal pieces - the stay motion and Microsoft's actual appeal - travel together to the Supreme Court for a decision. So, the government wants Microsoft to file its appeals notice, paving the way for Jackson to rule on the stay petition and the government's Expediting Act request simultaneously.

The government proposes that the two sides file a new series of legal briefs on the government's Expediting Act request. Jackson is expected to refuse to grant the stay and to "certify" the case for Supreme Court review. Should the Supreme Court kick the case back to the appeals court, as legal observers expect, it would send the stay motion back, as well.

"Microsoft has no legitimate reason to delay filing its notice of appeal," the government said Monday, adding that Microsoft's failure to file its notice "is simply an attempt to manipulate the Court and thwart the operation of the Expediting Act."

Government lawyers also revealed the reasoning behind their desire to see the Supreme Court take the case right away. The government argues that the Supreme Court should take the case immediately to forestall "prolonged uncertainty" about its outcome. The government also says that, because it is inevitable that one of the sides would end up appealing the case to the Supreme Court after an appeals court ruling, it's better to save time on a case that the high court is "likely" to want to take because of its impact on the national economy.

"In rapidly evolving technology markets, even a brief delay in effectuating remedies that will reduce Microsoft's ability and incentive to engage in anticompetitive conduct will have a serious adverse impact on competition and innovation," the government states in its filing, adding that a prompt resolution "would end uncertainty about the remedy facing Microsoft's employees, stockholders, and firms in the technology industry and throughout the economy that do business with it."

So the two sides are engaged in what amounts to a chronological game of chicken. Each side is stalling even as it accuses the other of delaying the proceedings for ulterior motives. Microsoft has the advantage until its 60-day window runs out in August, but if neither Jackson nor a higher court grants a stay before then, the company would have only a month before the conduct restrictions take effect, hobbling its "next generation" Internet strategy.

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