- The Washington Times - Tuesday, November 4, 2003

Microsoft Corp. returned to court yesterday to defend the settlement agreement negotiated with the Justice Department and approved by the 19 states that sued the software company more than five years ago.

In a hearing before the same appeals court that agreed in June 2001 that Microsoft abused its monopoly power, the software company’s critics called the settlement “utterly inadequate.”

A six-judge panel peppered the parade of attorneys with detailed questions about the settlement, but they questioned whether they should meddle.

“Don’t we owe some deference to the Justice Department’s judgment about that?” asked U.S. Circuit Judge David Tatel.

Robert Bork, a former member of the appeals court who represents the technology trade groups appealing the settlement, said no and argued that the settlement has done little to help Microsoft rivals.

The government “got something in return, but what they got is an utterly inadequate decree,” Mr. Bork said.

Judges on the U.S. Court of Appeals for the District of Columbia Circuit heard arguments in two separate appeals.

In one appeal, the Computer and Communications Industry Association and the Software and Information Industry Association are pushing for changes to the settlement negotiated by the Justice Department.

Mr. Bork argued Microsoft should separate software code for the Windows system and its Internet Explorer browser so computer manufacturers can install America Online’s Netscape Navigator browser. Under terms of the settlement, computer makers can hide the icon users see to start Microsoft’s Internet Explorer without removing its code.

In a second appeal, the state of Massachusetts argued that Microsoft should face tougher sanctions and be required to produce a version of Windows that doesn’t include software code for the Internet Explorer. Massachusetts is one of 20 states that sued Microsoft in May 1998. It is the only state that hasn’t agreed to a settlement approved last year by District Judge Colleen Kollar-Kotelly.

The judges seemed to agree that the federal government’s settlement hasn’t persuaded computer manufacturers to install software from Microsoft competitors.

U.S. Circuit Judge Judith Rogers pressed lawyers to explain just what “fruits” Microsoft gained through its unlawful conduct and whether the punishment was appropriate.

One Microsoft attorney appeared skeptical that the company gained any competitive advantage while it maintained its illegal monopoly.

There is no evidence that Microsoft’s share of the browser market — now at more than 90 percent — is a fruit of its anticompetitive behavior, Microsoft attorney Michael Lacovara said.

“Not even partly so?” Judge Rogers asked.

“I may have overspoken,” Mr. Lacovara said.

But there is no evidence to support the request from Massachusetts for stiffer penalties, he said.

Yesterday’s hearing could mark the end of antitrust suits against the Redmond, Wash., company and the world’s largest software developer.

After the three-hour-long hearing, Massachusetts Attorney General Tom Reilly said he was struck by Microsoft’s defense.

“I couldn’t help be struck that they still don’t get it,” he said.

The appeals court could take months to issue a ruling. Either side can appeal a ruling to the U.S. Supreme Court.

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