Microsoft: And Now, the Appeal
by Declan McCullagh
7:00 a.m. Apr. 4, 2000 PDT
The fate of the world's largest software company now rests in the hands
of appeals courts.

U.S. District Judge Thomas Penfield Jackson told the world on Monday
what he thought of Microsoft (MSFT), and his 102KB opinion was a
blistering denunciation of years of corporate wrongdoing and violations
of antitrust law.

But it is far from the final word on the case. Microsoft chairman Bill
Gates pledged to continue the company's fight -- and continued
protestations of innocence -- through the D.C. Court of Appeals, and
presumably the Supreme Court as well.



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Judge's Conclusion: MS Guilty
Europe Probes MS on Antitrust
Stock Price? Try Microsofter
Judge Jackson's Decision
Why MS Would Rather Fight
Read ongoing U.S. v. Microsoft coverage

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Gates' hope that Microsoft will fare better on appeal is an unusually
high-stakes gamble. By not agreeing to Justice Department demands during
the negotiations that collapsed over the weekend, Microsoft set the
stage for a future Jackson ruling that could break up the company.

So far, though, the appeals court has been uniformly hostile to Jackson,
who during the trial was generally deferential to the government and
opposed to Microsoft.

One key 1998 appeals court decision could prove to be as important to
Microsoft as, say, the success of Windows 2000.

That 2-1 ruling in a related case unceremoniously trashed a key
government argument: That Microsoft is unreasonably tying Internet
Explorer to Windows and thus wielding its monopoly unfairly. "Courts
have recognized the limits of their institutional competence and have on
that ground rejected theories of 'technological tying,'" the judges
said.

In his opinion, Jackson took the bold step of suggesting that the
appeals court got it wrong.

"Read literally, the D.C. Circuit's opinion appears to immunize any
product design (or, at least, software product design) from antitrust
scrutiny," he said. "This undemanding test appears to this Court to be
inconsistent with the pertinent Supreme Court precedents."

No trial judge likes to be overruled, and Jackson appears to be
carefully crafting his arguments to appeal to the full D.C. appeals
court or the Supreme Court, which may not take the same laissez-faire
view as the three-judge panel did.

This should come to no surprise for Microsoft, which -- after seeing
which way Jackson was leaning -- long ago began aiming at convincing
appeals courts.

During a brief filed in January, for instance, Microsoft claimed Justice
Department lawyers irresponsibly "denigrate" the 1998 appeals decision
that sided with the software giant and "devote only a single paragraph"
in their brief to discussing its effect on the present case. Microsoft
spent about 30 paragraphs on the topic.

And it's no coincidence that the law firm Microsoft picked to represent
it during its antitrust debacle, the venerable Sullivan and Cromwell
that was founded in 1879, is best known for its top-notch appellate
work.

Sullivan and Cromwell successfully defended Microsoft in a private
antitrust action that included a seven-week jury trial, and British
Airways against claims by USAir and Virgin Atlantic that it had a
monopoly.

Now those Sullivan and Cromwell lawyers, led by attorney John Warden,
have resigned themselves to spending the next three or four years
convincing appeals courts that while Microsoft may have acted wrongly,
corporate cut-off-air-supply rhetoric and trash talk do not amount to
Sherman Act violations.

To turbo-charge appeals, Jackson could turn to a little-known law that
allows trial judges to forward appeals directly to the Supreme Court in
important antitrust cases.

"The district judge who adjudicated the case [may enter] an order
stating that immediate consideration of the appeal by the Supreme Court
is of general public importance," the law, called the Expediting Act,
says.

But the justices have a habit of redirecting such appeals through the
usual channels. The Supreme Court has accepted such a case only once in
recent history, says George Washington University law professor William
Kovacic.

That happened in 1983, when the court signaled 6-3 that it approved the
AT&T consent decree. By affirming the district court's ruling, the court
let the landmark Bell System divestiture proceed.

Complicating the matter further is the question of whether or not the
same trio would be on a panel hearing an appeal of Jackson's next
decision. There is a list of 11 possible judges who could be picked, and
the same three-judge panel is appointed, Microsoft should be cheering.

Under the rules of the D.C. Circuit Court of Appeals, cases that are
linked will be heard by the same three-judge panel.

The previous case arose when the DOJ claimed Microsoft violated a 1995
consent decree. The panel ruled 2-1 the company did not, and generally
should have the right to design its products as it saw fit.



Related Wired Links:

Judge's Conclusion: MS Guilty
6:00 a.m. PDT

Redmond's Response: Appeal
Monday

Why MS Would Rather Fight
Monday

MS Restructuring 'No Big Deal'
Friday

Bust Microsoft? My Word!
Feb. 23, 2000






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