Microsoft Goes the Extra Mile

Even as a platoon of Microsoft (MSFT) lawyers and public-relations staffers converge on the capital to defend the software giant against the possibility of a court-ordered breakup, the company filed an unexpected reply Monday to the government's latest legal salvo in the 2-year-old antitrust case.

Microsoft attorneys, apparently champing at the bit before Wednesday's scheduled courtroom hearing before U.S. District Judge Thomas Penfield Jackson, filed an unsolicited brief that previews Wednesday's round of oral arguments in the case.

On April 3, Jackson found Microsoft guilty of multiple violations of federal and state antitrust law. On April 28, the government asked Jackson to "remedy" the situation by splitting Microsoft into two companies: one for its Windows operating systems, subject to a list of conduct restrictions; and one for everything else, including its Office software applications and Internet Explorer Web browser.

Microsoft responded on May 10 by attacking the legal foundations of the case and arguing that a breakup was a drastic and unwarranted remedy. Redmond recommended that Jackson impose a set of tepid conduct restrictions instead, and asked for up to several more months of evidence discovery, depositions and witness testimony in order to defend itself against the possibility of a breakup.

On May 17, the government blasted Microsoft's arguments as legally shoddy and riddled with loopholes, contradictions and out-of-context fragments from both Jackson's ruling and antitrust treatises. Justice Department lawyers derided Microsoft's request to prolong the trial's remedy phase, saying the company merely wanted to "delay the day when the law will hold it accountable for its illegal acts."

Monday's filing reached back to a 1994 battle between Microsoft and the government that resulted in a controversial "consent decree" in which the company promised to adhere to certain restrictions on its Windows licensing practices. As that case neared its end, the two sides ironically joined together to defend the consent decree against U.S. District Judge Stanley Sporkin, who found it too lenient. Sporkin was joined in that opinion by several anonymous "amici curiae," or "friends of the court," who argued for a breakup instead.

According to Microsoft, the Justice Department told Sporkin that "remedies such as dismembering Microsoft … would act against the public interest."

The consent decree was eventually imposed, but proved to be flimsy enough to allow Microsoft to engage in what the government says - and Jackson agrees - is a broad pattern of illegally anti-competitive conduct.

While the Justice Department had no official comment on Monday's filing, government lawyers are expected to dismiss it as gratuitous, out-of-context and ignorant of the mountain of factual evidence against Microsoft.

The company's lawyers took another swipe at those facts Monday, saying that Jackson did not find a "significant causal connection" between Microsoft's actions and the state of software industry competition. Microsoft also reiterated arguments that a court-ordered breakup of a "unitary company" is unprecedented - and therefore wrong - and disproportionate to the facts of the case.

Microsoft's filing joins two others that Jackson didn't request. The first, filed May 16 by a pro-Microsoft group, asked Jackson to hear testimony from software-industry representatives before deciding whether to break up the company. The brief warned Jackson that software consumers are already fleeing from Microsoft's products.

The second, filed May 19 by two pro-government groups, supported the government's call for a breakup. Last week, Jackson issued an order officially accepting the May 16 brief, but the judge so far has been silent on whether he'll accept either the May 19 briefing or the one offered Monday by Microsoft.

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