Judge Undercuts Microsoft Defense

The judge overseeing closing arguments in the Microsoft antitrust trial on Tuesday compared the software developer to John D. Rockefeller's Standard Oil, suggesting that, like Standard, the company could be heading for a break up by the courts.

U.S. District Judge Thomas Penfield Jackson drew the parallel in response to Microsoft's claim that its copyright over the Windows operating system for personal computers gave it rights to control the way companies distributed it.

"Mr. Rockefeller had fee-simple control over his oil," the judge told Microsoft lawyer John Warden. "I don't see the distinction."

But Warden insisted that copyright laws enacted by Congress protect Microsoft's actions. "Mr. Rockefeller's fee-simple interest was not granted by an Act of Congress," he said.

Many legal observers consider the trial's outcome crucial for the future of the high-tech industry. In addition to affecting the future of the world's most valuable company, it could also shape the way high-tech companies do business for generations to come.

"The laws should not be rewritten so that Microsoft or any other company is reluctant to compete as hard as it can," Warden said.

Jackson's comments suggested little has changed in his thinking since he issued his Nov. 5 findings of fact. Those findings excoriated Microsoft as a "monopolist" that will "use its prodigious market power and immense profits to harm any firm that insists on pursuing initiatives that could intensify competition against one of Microsoft's core products."

Tough talk by both sides after gave scant evidence that they would be moving towards an out-of-court settlement any time soon.

"If you are truly building some measure of trust and good faith you don't put a stick in anybody's eye," says Bill Kovacic, professor of law and an antitrust specialist at George Washington University. "It's hard to read. Are the chances for settlement one in 10? Two in 10?"

Yet for all the verbal sparring, one thing seemed clear Tuesday: Jackson is approaching his conclusions of law with real caution, lest his enthusiasm for the government's case lead him to write a decision that would be overturned on appeal.

Jackson, often decisive and commanding in court, spent much of his time Tuesday asking both sides what they made of a May, 1998, appeals court ruling. Then, a three-judge panel that included two of the most libertarian members of the 12-person bench threw out an earlier Jackson order directing Microsoft to separate its Web browser from Windows 95.

That order dealt largely with technicalities in an earlier case. But it also suggested the panel would look favorably on any changes Microsoft made to Windows as long as the company had a "plausible claim" the change benefited consumers.

At the heart of the government's case is the assertion that it bundled its browser with the Windows operating system solely to kill off Netscape's Navigator browser and Sun Microsytems' Java programming language. Both sides agree the two technologies posed a threat to Microsoft's dominance of the PC operating-system market.

Government attorney David Boies told Jackson the appeals court's standard made sense only when consumer benefit came as a result of technical changes. Those changes could not come from simply combining two formerly separate products -- "bolting" the two, in the court's parlance.

Microsoft's Warden disagreed. In fact, he added, no court has ever ruled against a company that combined two separate products through technical means, even when the combined product consisted of a monopoly product plus another, less successful one.

Even the court's own expert, Professor Larry Lessig, disagreed with the Justice Department on that issue. When the court said "plausible claim," it meant what it said, Warden asserted.

The two sides stuck to their standard positions after arguments were over.

"As we said at the onset, throughout the trial and we say at the conclusion, the law strongly supports Microsoft's position," Warden said.

Assistant Attorney General Joel Klein countered: "There was nothing fancy about this. Antitrust is about a simple principle of the American economy, and that is we want competition on the merits."

A decision in the case is expected within the month. A separate phase to determine penalties will follow if Jackson finds Microsoft liable.

Reported by USA Today, http://www.usatoday.com.