Microsoft seeks rehearing in antitrust ruling

Peter Kaplan

WASHINGTON: Microsoft Corp. asked a US appeals court on Wednesday to

re-examine its ruling that the company illegally "commingled" computer

code of its Internet Explorer browser and the Windows operating system.

The company said it filed the re-hearing request with the appeals court

because it believes the ruling was based on "clearly erroneous"

findings of a lower court judge.

"Microsoft respectfully submits that critical evidence was overlooked -

or misinterpreted - on the technical question of whether Microsoft 'commingled'

software code specific to Web browsing with software code used for other

purposes in certain files in Windows 98," the company said in its filing.

The filing does not address a motion filed by government prosecutors last

week asking the appeals court to expedite the case back to the US District Court

ahead of schedule.

But while government prosecutors are trying to speed the case through the

courts, some antitrust attorneys said Microsoft's motion may be a legal tactic

designed to slow it down.

Microsoft said in a statement that company executives "remain committed

to moving forward promptly." But antitrust attorneys said their underlying

strategy may be to delay the case so any sanctions won't be imposed by the

courts until after Microsoft rolls out its new Windows XP operating system,

which is scheduled for release in October.

"It's hard to know exactly what their motivation is, but it's a

reasonably good guess that what they're hoping to do is prolong the process so

that relief needn't be dealt with until they have launched their new operating

system product," said Mark Schechter, a former Justice Department antitrust

official now with the firm Howrey Simon Arnold & White.

Schechter said the motion may also reflect Microsoft's fears about the

prospect of judges making decisions about software design.

"Seemingly the overwhelming motive would be for delay," Schechter

said. "But they may have some concern about courts reviewing decisions that

they have made concerning how they allocate their code." A spokeswoman for

the Justice Department said the case should move to a lower court "as

quickly as possible" for hearings on possible remedies to be imposed on

Microsoft.

"The issue that Microsoft is raising in its filing was litigated at the

district court and court of appeals, both courts ruling in favor of the

Department," department spokeswoman Gina Talamona said. Microsoft has until

Monday to respond to prosecutors' earlier motion to expedite the case.

At issue in Microsoft's latest motion is a part of the June 28 ruling by the

US Court of Appeals for the District of Columbia that concluded that Microsoft

engaged in "exclusionary conduct" by weaving together computer code of

the browser and operating system and taking the browser out of Windows'

Add/Remove folder.

The court said government prosecutors made a strong case "of harm to

competition in the operating system market by demonstrating that Microsoft's

actions increased its browser usage share and thus protected its operating

system monopoly from a middleware threat."

Microsoft, on the other hand, "failed to meet its burden of showing that

its conduct serves a purpose other than protecting its operating system

monopoly," the court said. The June 28 ruling overturned a lower court's

order that Microsoft be broken into two companies but upheld findings that the

company abused its monopoly in the market for personal computer operating

systems.

While the appeals court rejected findings that Microsoft attempted to

monopolize the Internet browser market, it ordered a new lower court judge to

consider remedies against the company and determine whether it illegally tied

its Internet browser to Windows.

Microsoft responded to the June 28 ruling last week with several concessions,

including one that would allow computer makers and Windows users to remove

Internet Explorer from the desktop. In the motion it filed on Wednesday,

Microsoft said the "commingling" ruling was based on erroneous

fact-findings handed down by the lower-court judge in the case, Thomas Penfield

Jackson.

The issue is important to the computer industry, Microsoft said, because it

"might be read to suggest that (computer manufacturers) should be given the

option of removing the software code in Windows 98 (if any) that is specific to

Web browsing."

Microsoft said that would be unnecessary because the concessions it made last

week already provide a way to remove the browser from the operating system.

Under the June 28 ruling, the appeals court was scheduled to send the case

back to the district court after a 45-day waiting period, giving both sides a

chance to ask it to re-hear the case.

That would have meant the district court would take up the case in mid-August

at the earliest, about two months before Microsoft releases its new operating

system Windows XP.

But government attorneys have argued that there is "no good reason to

delay issuance of the mandate until mid-August or later. Microsoft stock closed

down $1.25 at $70.57 in trading on the Nasdaq.

(C) Reuters Limited 2001.