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Microsoft Lawyers Confident Appellate Case Will Succeed

By James V. Grimaldi
THE WASHINGTON POST -- Now that a federal judge has ordered the breakup of Microsoft, it would seem to be the company’s darkest hour. To the contrary, Microsoft executives and their attorneys believe that at long last their fate is back in their own hands.

As the case goes to appeal, Microsoft officials believe they will have far more control over the process, whether the case finds a speedy track to the U.S. Supreme Court or takes a more routine route through the U.S. Court of Appeals for the D.C. Circuit.

If the Supreme Court takes the case right away, a final decision could be made as early as the end of the year. If it goes through the normal appeals process, it could take two years or more.

Microsoft attorneys have confidently told lawmakers and supporters in recent months that they expect the higher courts to overturn U.S. District Judge Thomas Penfield Jackson’s verdict.

But the U.S. Justice Department and 19 states remain equally confident that Jackson’s carefully crafted findings of fact and conclusions of law are sufficiently bulletproof to withstand even the harshest scrutiny of appeals courts.

The government camp is quietly baffled at Microsoft’s confidence and suggest it is as misplaced as the company’s bravado when the trial began two years ago, and as mistaken as its predictions that a breakup would never be ordered by a federal court.

Many antitrust scholars agree.

“It is a scrupulously careful opinion by a pretty smart judge who thinks he’s right,” said Lawrence Sullivan, a Los Angeles antitrust scholar and author of a newly released antitrust treatise. “I don’t think they are going to walk away from that unscathed. I think that is highly unlikely.”

After Microsoft appeals the judgment, the Justice Department will have 15 days to ask Jackson to send the case to the Supreme Court. Jackson has 15 days to decide but already has said he wants to see the case decided quickly.

Microsoft would rather go to the U.S. Court of Appeals, the one venue where it has had previous success in the case.

Recent interviews with lawyers for the company and the government and with legal experts, along with a review of court documents filed in the case, make it clear that Microsoft’s appeal will attack each element of Jackson’s opinion.

The first and toughest part of the appeal will be the challenge to the court’s most serious finding -- that Microsoft had maintained a monopoly for personal-computer operating systems. Microsoft will attack as an erroneous “monopoly broth” the judge’s finding that a series of its actions constituted an illegal “maintenance of monopoly.”

Company attorneys contend that each act in and of itself was legal and that the verdict bundles them together to say that collectively they are illegal. The “broth” theory has been rejected by the courts, Microsoft argues.

The government is likely to counter that this is no monopoly broth, but a judgment that a series of unlawful acts had been committed against companies such as Apple Computer Inc. and Netscape Communications Corp. These individually illegal acts under Section 2 of the Sherman Antitrust Act were designed to perpetuate Microsoft’s Windows monopoly, the argument goes.

In addition, Microsoft will look at the judge’s ruling regarding the company’s exclusionary contracts. Jackson separately ruled that Microsoft had not violated antitrust law with certain contracts designed to harm Netscape -- by offering crucial access to the Windows operating system to other companies. If those deals were not illegal, then they cannot be used to build a case that Microsoft attempted to monopolize the browser market, the attorneys will argue.

Government attorneys will respond by citing an opinion written by Supreme Court Justice Antonin Scalia noting that certain behavior by non-monopolists becomes illegal when done by a monopoly.

Second, Microsoft will argue that the court’s decision that Microsoft broke antitrust law by attempting to monopolize the market for Internet browsers is based on a single 1995 meeting between Netscape and Microsoft officials that the firm says was pro-competition. The judge said the offer was an attempt to divide the market for Web browsers; the company will cite a precedent that says such an offer is only illegal if there is a “dangerous probability of success.”

Government attorneys also will point to evidence cited by the judge that after the offer was rejected it was followed by a campaign of illegal acts.

Third, in what experts say is probably the strongest part of the company’s appeal, Microsoft is prepared to argue that the judge’s conclusion that Microsoft had illegally tied its Internet Explorer browser to the monopoly Windows operating system totally goes against the direction of an earlier ruling by the U.S. Court of Appeals.