Microsoft Files Appeals Notice

WASHINGTON (06/08/2000) - Now, the real fun begins. Microsoft Corp. has already filed a petition asking U.S. District Judge Thomas Penfield Jackson to stay his order pending legal appeals. Legal observers, however, don't expect Jackson to change his own order, which stays the breakup but imposes conduct restrictions on the company after 90 days.

Microsoft will then file a stay petition in the U.S. Court of Appeals for the District of Columbia Circuit, several floors above Jackson's courtroom in the E. Barrett Prettyman United States Courthouse. Antitrust experts predict that the appeals court will stay Jackson's order pending the final outcome of the case. As soon as Microsoft files its appeals notice, the federal government has 15 days to ask Jackson to send his ruling straight to the U.S. Supreme Court for review.

Justice Department antitrust chief Joel Klein says the government will make the request, and Jackson is expected to grant it. But antitrust experts predict that the Supreme Court will kick the case back to the U.S. Court of Appeals for the District of Columbia Circuit. Regardless of which court eventually hears its appeal, Microsoft's chances are widely seen as better than they were before Jackson's bench -- especially because the appeal involves a breakup.

"The appeals court and the Supreme Court are very conservative," says University of Baltimore law Professor Bob Lande. "The government will be very lucky to eke out a win on the merits, let alone structural relief." The appeals court could decide to overturn Jackson's order for a breakup but keep some of the less onerous conduct restrictions in place. For example, Microsoft could be ordered to allow computer makers to modify the Windows boot-up sequence but not to share Windows source code with computer makers. The appellate court might then tell Jackson to revisit the case in two or three years to determine at that time whether a breakup is really warranted.

"Jackson has lived with these people for two years and doesn't trust them at all," Lande says. "But a review court doesn't have that history with Microsoft." Assuming that Jackson sends the case to the Supreme Court and that the high court kicks it back down to the appellate court, Microsoft would then file an opening brief, followed by a government response, followed by a Microsoft reply. After that, the appeals court would schedule oral arguments before a three-judge panel.

Arguments would unlikely be longer than one hour per side. Microsoft would argue that a 1998 appeals court decision entitles it to combine its Internet Explorer Web browser with its Windows operating systems, an issue at the heart of the current case. The company would point to Jackson's favorable finding on "exclusive dealing" to show that its actions didn't foreclose competitors such as Netscape Communications from the market. Microsoft also would dispute Jackson's interpretation of many of its actions, as well as argue that no "causal connection" exists between its actions and the state of competition in the software industry.

Microsoft also would appeal on procedural grounds, arguing that Jackson's refusal to hold further evidentiary hearings before deciding on a "remedy" in the case robbed the company of its right to due process. Microsoft is also expected to tell the appeals court that Jackson's aggressive scheduling of the entire case hampered its ability to mount an adequate defense.

The software giant is heartened by the 1998 appeals-court decision that in a 2-1 vote, overturned Jackson's order in a previous case that required Microsoft to offer a version of its Windows operating system without its Internet Explorer Web browser. The dissenting judge in that case has since left the court, so Microsoft could end up with the two judges who are left, plus a new one - or three new judges, for that matter. The company is expected to stick with the high-powered New York law firm of Sullivan and Cromwell for its appeal. Although there's a chance that other outside lawyers could be brought in to help write appellate briefs, Sullivan and Cromwell's Richard Urowsky, who argued the 1998 appeals case and two others for Microsoft, is expected to carry Microsoft's water during oral arguments.

After the appeals court's final ruling, the losing side can petition for a review by the entire 11-judge court, which is unlikely to be granted. The next step for the loser is a petition to the Supreme Court to review the case. Four of the high court's nine justices would have to vote in favor of a review.

Opinions differ as to whether the high court would eventually take the case.

Some legal observers say that the high court could be eager to give its imprimatur to antitrust doctrine for the new economy. Others say the Supreme Court could decide that either the issues involved aren't weighty enough for them, or that the appeals court did a satisfactory job of disposing the case.

If the Supreme Court takes the case, it would also schedule a series of briefs, followed by oral arguments, before issuing a decision. In any event, Jackson's order is just the end of one phase - and the beginning of another, which is likely to last at least two more years.

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