MS Could Face Multiple Legal Entanglements

SAN MATEO (04/04/2000) - Now that it officially has been branded an illegal monopoly, Microsoft Corp. could soon find itself in a tangle of private litigation amid an appeals process that likely will take months or years.

Although Microsoft may immediately appeal U.S. District Judge Thomas Penfield Jackson's conclusion of law -- in which he found that the software giant violated antitrust laws -- the company will not be able to vigilantly pursue the appeal until the judge prescribes penalties during the "remedies" phase of the trial.

But there may be little pause between Jackson's verdict and a potential onslaught of civil litigation that builds on Jackson's findings.

"Even in interim period, other plaintiffs can refer to this ruling and use it as ammunition," said Dwight Davis, a Kirkland, Washington-based analyst at Summit Strategies. "That is going to be a real challenge for Microsoft. It could be a total deluge of lawsuits, some legitimate suits and some of them nuisance suits."

Emmett Stanton, an antitrust attorney at Fenwick & West, a law firm in Palo Alto, California, agreed. "They are now terribly vulnerable," he said.

"Private plaintiffs have to prove three things: that Microsoft has a monopoly, that it has exercised monopolistic acts, and that those acts have caused damages to the defendants, " Stanton said. "The recent judgement takes care of (Nos.) 1 and 2."

The easiest lawsuits to lodge against Microsoft are those class-action suits, which involve consumers who believe Microsoft's monopoly led them to pay too much for products such as Windows, Stanton continued.

Business customers too could hook up to collect damages, although corporate customers may be less inclined to enter class-action suits.

Still, some corporations may find that they owe it to shareholders to at least look into the issue of collecting damages. And if one business files a lawsuit, others may latch onto that litigation in an effort to retrieve funds those companies feel they overspent on Microsoft products, Stanton said.

But Microsoft President and Chief Executive Officer Steve Ballmer said the private litigation would not get in the way of a Microsoft appeal.

"The class-action lawsuits will not distract at all from our appeal. We think they're misguided," Ballmer said.

In appealing Jackson's decision, Microsoft has a couple of choices.

The company could try to push the case directly to the Supreme Court, and justices there would decide whether or not to take it up. More likely, the company will wade through the appeals process at the U.S. District Court of Appeals for the District of Columbia. Even there, if Microsoft loses, the company retains the right to request an en banc decision, where all six appellate judges would weigh in on the case.

Most appeals courts are now incredibly backed up and shorthanded, according to Stanton. In his California district, Stanton counts on one to two years for a case to make it through the appeals process.

But the longer Microsoft's case stays tied up in appeals, the better chances it may have, Stanton argued.

"It will not really benefit Microsoft to have the case accelerated. The technology industry changes so rapidly that whatever conduct the judge has found (objectionable) will be less and less relative," Stanton said.

Microsoft Corp., in Redmond, Washington, is at http://www.microsoft.com/. The U.S. Department of Justice is at http://www.usdoj.gov/. Judge Jackson's ruling can be viewed at http://www.dcd.uscourts.gov/microsoft-conclusions.html.

(Bob Trott contributed to this report.)

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