Microsoft judge questions scope of states' demands

By Peter Kaplan

WASHINGTON: The judge overseeing the Microsoft Corporation antitrust case on Friday expressed misgivings about the breadth of demands by states seeking harsher sanctions against the software giant as she gave the company an extra week to prepare for hearings.

U.S. District Judge Colleen Kollar-Kotelly said she had "concerns" about the states' argument that the sanctions should be designed to protect PC-related devices and services, such as computer servers, hand-held organizers, Web services and TV set-top boxes, from Microsoft's monopoly power.

"I have some concerns about your argument," Kollar-Kotelly told Steven Kuney, an attorney representing the states. "I think there is an argument that this is outside (the scope of the case)."

Kollar-Kotelly also granted Microsoft a week's delay in hearings originally due to start Monday on the non-settling states' proposals, agreeing the company needed time to study last-minute changes from the states.

The latest comments come about a week before the start of hearings to determine what sanctions the judge should impose on Microsoft to prevent future antitrust violations.

Meanwhile, Microsoft rival Sun Microsystems Inc. said on Friday that it had filed a private antitrust lawsuit against Microsoft in California, claiming that the company used unfair business practices to hurt its business.

The software giant reached a settlement deal with the U.S. Justice Department in November after an appeals court in June upheld a lower court conclusion that Microsoft had used illegal tactics to maintain its Windows monopoly.

While nine of the 18 states in the lawsuit agreed to sign on to the settlement, the remaining nine, including California, Massachusetts and Connecticut, are still pursuing the case, saying the settlement is too weak to prevent future violations.

The merits of the settlement were promoted to Kollar-Kotelly by lawyers for Microsoft and the Justice Department in a separate hearing held on Wednesday.

At Friday's hearing, Kollar-Kotelly was receptive to Microsoft's argument that testimony about computer-related devices should be excluded from the remedy hearings because they are not part of Microsoft's monopoly market -- Intel-compatible personal computers.

"That's the market within which the (courts') finding of monopoly was made--not some broader market," Microsoft's lead attorney, John Warden told the judge.

Microsoft has asked the judge to exclude all the witnesses that the states are planning to call to testify about computer-related devices and services.

Kuney told the judge that she should hear the testimony because they were potential threats to Microsoft's Windows monopoly.

The states have argued that the sanctions against Microsoft should be "forward-looking" and prevent the company from snuffing out would-be competitors, as it did with the Netscape Navigator browser.

The judge made no ruling on the issue on Friday. But she told the states' attorneys they need to bolster their argument in additional legal briefs. "This is an important issue," Kollar-Kotelly said.

Minutes later, Kollar-Kotelly also expressed skepticism about whether the states should be allowed to present testimony about alleged Microsoft misdeeds that date before June 1999, when the original trial testimony ended.

The states have scheduled three witnesses to testify that the remedy should be strict because of Microsoft's past history of wrongdoing. But Microsoft has argued that the states should have presented it during the original trial. Again, the judge was sympathetic to Microsoft's argument.

"I don't think you can go back and prove additional illegal behavior," Kollar-Kotelly told the states' attorneys. "I don't know whether that's what you're trying to do, but that's what it sounded like. One attorney who attended the proceedings said the judge's comments do not bode well for the states' case. "It looks like an uphill fight for the states," this attorney said outside the hearing.

(C) Reuters Ltd.