Lessig Urges Judge to Get Into the Code

WASHINGTON (02/02/2000) - Harvard University law school professor Lawrence Lessig urged the federal judge presiding over the antitrust case against Microsoft Tuesday to delve into the intricacies of software design to determine whether the company illegally tied its Internet browser to the market-dominant Windows operating system, despite an appellate court ruling.

In a "friend of the court" brief filed Tuesday, Lessig declined to provide U.S.

District Court Judge Thomas Penfield Jackson, who requested the scholar's input, with his opinion about whether to apply a June 1998 Court of Appeals decision that rejected the government's tying claim in a related case.

Lessig, a well-known Internet law expert who writes a column for The Industry Standard, said clearly that if the appellate ruling applies to the case, then Microsoft should prevail on the tying question. But he also provided arguments for why the judge may want to find that ruling lacking and he spelled out a road map the court could use in determining when software constitutes one product or two, and whether there are benefits to integrating software products. Under Lessig's suggested test, the government should prevail.

The brief is one of several to be filed Tuesday in the landmark antitrust case against the software giant, which is winding toward a conclusion. Jackson gave each side the option of submitting "friend" briefs. The Software and Information Industry Association, or SIIA, is expected to file on behalf of the U.S. Department of Justice Tuesday afternoon. Scholar Robert Bork has submitted a brief on behalf of 19 states that brought suit against the company. And a trade association, the Association for Competitive Technology, Monday unveiled a brief written by an impressive panel of former government officials in support of Microsoft.

But none of the briefs has been as widely anticipated as Lessig's. Jackson, in a Dec. 20 order asking each side for briefs, said he was seeking the filing from Lessig because he is "uniquely qualified" on issues involved in the case.

In particular, Lessig was called upon to address the topic of "technological tying," which is one of the central issues in the government's case.

Lessig, in his brief, said the law in the area is "unsettled" and noted that the U.S. Supreme Court's most extensive examination of the subject involved two service products. The Supreme Court has not weighed in on the question of ties between two software products, and there has been "reluctance by courts to investigate the intricacies of software design."

"The apparent feeling among a number of courts and commentators is that code is different: that the task of evaluating design decisions involved in technology products is uniquely beyond the ken of federal courts," Lessig wrote. "As a matter of judicial policy, I believe it is a mistake to fetishize code in this way."

"I am not a skeptic of courts' ability to understand how software functions," he wrote.

The question he looks at is whether the 1998 Court of Appeals ruling should be applicable to the more sweeping case the U.S. Department of Justice and 19 states brought against Microsoft in May of that year. The ruling stemmed from Jackson's finding in December 1997 that Microsoft was in contempt of a consent decree that prevented the company from tying products to Windows 95. The company argued that it had the right under the agreement to integrate its Internet Explorer Web browser with the operating system. Jackson sided with the government and tried to fine the company $1 million per day.

But the appellate court agreed with Microsoft's argument that it wasn't properly notified that the government was seeking an injunction. The panel also found that the union of Windows 95 and Explorer was a "genuine integration" and not illegal tying because it was done for efficiency and had positive consequences. (In a related finding, the court also agreed that the lower court overstepped its authority by appointing Lessig as a "special master" to sort through evidence and report to the judge on the likely outcome of the case.) In his brief, Lessig wrote that Jackson could find that the appellate court was articulating a new standard for antitrust law but was mistaken in its interpretation or that the court was interpreting "integrated products" in the context of only the consent decree. However, Lessig continued, if the judge finds that the court was setting a new standard for antitrust tying in general then, in his view, the ruling is "dispositive" of the government's tying claims.

But if Jackson were to find that the appellate ruling does not apply to the more recent case, then Lessig spelled out a road map for how the court could determine whether Microsoft's combining of operating system and browser constituted illegal tying. The first test is to define what constitutes a software product. Microsoft has argued that there is no code in Windows 98 that could constitute a Web browser product, but the government contends that a product could be made up of a set of functions.

"If it is the purpose of tying doctrine to preserve consumer choice, it would make most sense to view a 'product' as the consumer would. It is for this reason that I believe the government is correct to identify 'software products' by their functionality," Lessig wrote. "On this view, a 'software product' should be viewed as 'functionality separately valued by consumers.'" Lessig then asked whether Windows 95/98 and the browser functionality of Internet Explorer should be considered two different products for the purpose of antitrust law. He agreed with Microsoft that the tests should be more rigid for software products, because the history of software evolution shows that new functionality is constantly being added to old products. He urged Jackson to define a new standard that takes into consideration "the sense of the values in antitrust law and of the peculiar facts about software."

In applying antitrust tying case law to software products, Lessig also outlined a test that the plaintiff would need to meet: that some customers want the items separated and that separating them is physically and economically possible. He argued that the government has met that burden. The "friend of the court" briefs come as the antitrust case is entering its final stages. While out-of-court talks between the sides have been ongoing since late last year, the sides have also been meeting Jackson's timetable for submitting briefs arguing their "findings of law." In November, Jackson ruled in a related "findings of fact" that the company had a monopoly over PC desktop operating system software and used that power to harm consumers, stifle innovation and thwart competition. He is expected to rule this spring on whether the company violated antitrust laws.

Department of Justice spokeswoman Gina Talamona said Tuesday, "We agree with Professor Lessig under the proper reading of the law that Microsoft engaged in illegal tying in violation of Section 1 of the Sherman Act."

She said Lessig's brief provided "insightful analysis of the precedent and offers useful guidance on how tying law should be applied to the software industry. While it doesn't address our monopolization claim directly, his brief agrees with our core contention that Microsoft's bundling of the browser illegally preserved its operating system monopoly."

Talamona also went on to say that "we're pleased that Professor Lessig agrees with the division that the Court of Appeals consent decree decision should not be construed as setting forth the standard to be applied under Section 1 of the Sherman Act," and added: "We are confident we established under any fair reading of the law that Microsoft engaged in illegal tying."

A Microsoft spokesman said today that the government needs to reread Lessig's brief. "We believe the net result is very positive for us," said Jim Cullinan, of Microsoft. "He acknowledges that if the Court of Appeals ruling in June 1998 is the controlling legal standard, Microsoft wins the tying question.

That's the centerpiece of the government's case."

Cullinan said that the company has been arguing all along and the judge has at times indicated his agreement that the appeals case involving Windows 95 does have application to the Windows 98 case now being tried. He said that Lessig's alternative scenario, creating a new legal standard, "is what the government must hope for" because "the legal precedent in this case clearly sides with Microsoft."

A representative of the SIIA, the organization writing on behalf of Justice, said that while there was dissension among its members - of which Microsoft is a prominent one - "the organization comes down firmly on the side of recognizing that Microsoft should not be given license to continue its anti-competitive practices in the operating system market or using those to enter other markets."

While Lessig's brief does urge Jackson to explore developing a new standard for tying in software cases, he does conclude that if the judge applies the standard outlined by the Court of Appeals in the consent decree case, then Microsoft should prevail. "I'm a little surprised that he ultimately concludes that the Court of Appeals standard would exculpate Microsoft," said George Washington University antitrust law professor William Kovacic. "If the case is to be won or lost on the basis of that opinion, he seems to be saying Microsoft wins."

But the argument about the application of that appellate case is also picked up by Bork, who is a scholar with the American Enterprise Institute think tank.

Bork writes in his brief, posted on the home page of the Project to Promote Competition and Innovation in the Digital Age, that the court's findings of fact demonstrate that Microsoft has violated sections 1 and 2 of the Sherman Antitrust Act. "Contrary to Microsoft's assertions and to much public commentary, this is not a revolutionary application of the antitrust laws," said Bork, whose brief was submitted on behalf of the states. "Rather, the law plaintiff invokes is long-standing and well-settled. Applying this law to the computer industry is neither novel nor particularly difficult." In adidition to reviewing monopolization theory and the consumer harm he says was caused by Microsoft's actions, Bork also goes on to argue that the Court of Appeals consent decree opinion is not binding on the tying issue involved in the case now under discussion.

"In the first place, the discussion of this subject by the Court of Appeals' majority was wholly unnecessary to its decision about the preliminary injunction," he writes. "Furthermore, the District Court had not held hearings on or decided the bundling issue. Thus, there were no findings of fact, no record, and no briefing of the question. The panel majority's observations are, in the strictest sense, dicta. As such, they are not binding on this Court, any future court, or even on the two judges who entertained the issue in the consent decree context."

In addition, Bork argues, the consent decree litigation did not bring before the court any of the evidence of exclusive contracts required by Microsoft "or the internal documents that make clear the predatory intent underlying both those contracts and the bundling of the browser and the operating system."

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