Microsoft Appeal: Winning the Battle, What About the War?

Undoubtedly,US Judge Thomas Penfield Jackson raised some eyebrows when he spoke before alaw luncheon last month and, according to reports in The Washington Post, saidjust about everything he did in the Microsoft Corp. antitrust trial wasvulnerable in the US Court of Appeals.

Regardlessof what happens at the federal appellate level, Ohio State University lawprofessor James Meeks, who specializes in antitrust cases, believes it would beastonishing if the US Supreme Court does not render a final judgment in theMicrosoft case.

"Atthat point, there's no way to predict what the Supreme Court will decide,"Meeks says. "But you can bet that the side that loses in the Court ofAppeals will file an appeal to the Supreme Court, and I can't imagine a case ofthis dimension being refused. Someone will want to have the remedy reviewed, thatyou can be sure of."

The currentremedy on the table is Jackson's ruling, which agreed with the JusticeDepartment's recommendation that Microsoft be divided into two entities.Jackson also advised that the case go directly to the US Supreme Court to expeditethe final outcome. Microsoft attorneys petitioned the high court to allow afederal appeals court to review it first. The Supreme Court agreed, and thecase is now in the hands of the US Court of Appeals for the District ofColumbia Circuit.

"We'reconfident the district court judgment will be reversed," says JimCullinan, Microsoft spokesman. "We feel there were a significant number oferrors -- legal, factual, and procedural -- in the trial."

Cullinansays the appeals court will review Microsoft's objections far morecomprehensively than would the Supreme Court. It could take up to a year forthe review, and then another year if it reaches the Supreme Court. In hisluncheon speech, Jackson suggested his decisions to have written testimony anda limit on discovery was his way of attempting to expedite justice, which has ahistory of being ponderous in antitrust matters of this magnitude. He alsosuggested that those decisions may make his ruling vulnerable to appeal.

Jackson wasquoted as saying he never wanted to rule for the split of the company, that hewould have much preferred a settlement, and that Microsoft's unwavering stanceforced his hand. Cullinan says Microsoft wanted to settle the case, but theJustice Department had no interest in doing so.

So wheredoes this leave the antitrust situation? Do recent rulings bode well forMicrosoft?

"I canunderstand Judge Jackson feeling the circuit court has already reversed him ina couple of issues on the Microsoft matter and other matters," Meeks says."I believe that's one of the reasons he asked for the case to go to theSupreme Court directly."

Meeks saysits no surprise the Supreme Court refused the case. It would have beenunprecedented for an antitrust case of this magnitude not to go back to federalappeals court.

"Icertainly can understand his reasoning," Meeks says. "We've had casesgo on and on interminably -- the AT&T antitrust case is a recent example --where parties are allowed to manipulate the system. By the time a resolutioncomes about, the industry has changed so much it's almost irrelevant."

Meeks saysthe general policy with the US Court of Appeals is to continue with the samethree-judge panel that ruled on previous issues in a given case. If that policyholds to form -- it may change given the magnitude of the Microsoft case -- hewouldn't be surprised to see Jackson's ruling overturned.

"Thishas been a very conservative panel," Meeks says. "My own sense of thecase is the Justice Department has a very strong case on substance, but isdefinitely vulnerable procedurally. Certainly a reversal is a strongpossibility."

But aftergoing to the Supreme Court level, Meeks believes the high court will side withJackson's ruling on critical antitrust issues.

"Ithink the Supreme Court would agree that Microsoft clearly has monopolypower," Meeks says. "I think they would even find against Microsofton exclusive dealing issues, something Jackson rejected. But again, coming downto a remedy, that's a different ballgame."

Meeks sayshe was surprised with Jackson's ruling that Microsoft should be divided intotwo. He thought the proper discipline would have been an injunction. But he canunderstand where Jackson was coming from.

"Considerthe background of the case over 10 years. I think Judge Jackson was concernedthat every time the Justice Department lodged a complaint against whatMicrosoft was doing, Microsoft changed practices enough to avoid aconfrontational issue and still impact competition," Meeks says."Justice was always facing a moving target. Microsoft was always findingways to circumvent an injunction. I'm guessing he thought breaking up thecompany was necessary to insure the recreation of a competitiveenvironment."

But even ifthe Supreme Court winds up ordering Microsoft to abide by Jackson's ruling,Meeks says that may not mean disaster in the software world.

"There'splenty of evidence where broken pieces of a large company have done very, verywell," Meeks says. "I'm not a technology expert by any means, but Ithink you could say the way technology is progressing in many areas may forcesuch a breakup anyway. Microsoft may be in the process of positioning itselfthat way on its own. It's certainly a factor to remember."