Judge refuses to dismiss Microsoft antitrust lawsuit

A US judge has ruled that the US government's antitrust case against Microsoft should proceed, tossing out nearly all of the software maker's motion for summary judgment. The judge did dismiss a claim that Microsoft has unlawfully leveraged its operating system monopoly to gain a competitive edge in the Internet browser market, but allowed the other allegations to stand.

US District Court Judge Thomas Penfield Jackson has ruled that the US government's antitrust case against Microsoft should proceed, tossing out nearly all of the software maker's motion for summary judgment.

The US Department of Justice (DOJ) and 20 state attorneys general filed the broad antitrust case against Microsoft last May and Jackson's 54-page ruling says that there remains enough dispute in all but one area for the case to proceed. A hearing on Microsoft's motion asking that all or part of the case be dismissed was held last Friday.

Jackson did dismiss a claim from the states that Microsoft has unlawfully leveraged its operating system monopoly to gain a competitive edge in the Internet browser market because the theory of monopoly leveraging is inconsistent with both US federal antitrust law and US Supreme Court rulings on that issue.

But Jackson let stand allegations that Microsoft has unreasonably restrained competition by "tying" its Internet Explorer (IE) browser software to the Windows 98 operating system, by entering into exclusive deals with various Internet service providers regarding promotion and use of IE and by imposing boot and startup restriction on OEMs, and also allowed the claim that Microsoft has tried to monopolise the browser market.

With regard to the question of "tying," Jackson wrote in his opinion that he cannot determine whether Windows and IE are separate products "until it becomes clear what are the synergistic benefits that are unique to the Windows/IE combination, i.e., benefits that could not be obtained by combining another browser with Windows."

The government will have to prove that "Windows is conditioned on the purchase of IE and that the conditioning affects a 'substantial volume of commerce' in the browser market," Jackson wrote, citing other antitrust case law.

The lawsuit also will hinge in part on the share that Microsoft and its archrival Netscape Communications each have in the browser market and those figures are so much in dispute that they should be heard in court, Jackson ruled. The government contends that Microsoft sought to illegally impinge Netscape's ability to maintain its market share and that in a meeting with Netscape officials, Microsoft sought to forge an illegal agreement to segment the market for each company.

Jackson's opinion refers to that meeting and similar alleged encounters between Microsoft and Intel, Apple Computer and Real Networks in which the software maker is accused of urging those companies to stop developing or marketing software that it viewed as competitive.

Regarding the issue of exclusive deals with Internet providers, Jackson wrote that those arrangements "threaten to eliminate opportunities for products unable to find ample other outlets to the marketplace. Second, they raise the barriers to entry in a market because, in order to enter, producers will have to be vertically integrated," operating at both manufacturing and retail levels.

The judge also ruled that "numerous issues remain genuinely in dispute on the boot and start-up screen claim. These include the extent of copyright protection in the specific portions of software plaintiffs seek to modify and whether Microsoft abused its copyright for anticompetitive purposes."

As expected, the DOJ hailed Jackson's ruling.

"We're very pleased with the court's decision and we look forward to the upcoming trial," said DOJ spokeswoman Gina Talamona.

Microsoft put a hopeful perspective on the ruling.

"While we're disappointed the court did not dismiss the case, we're pleased that the court narrowed the lawsuit somewhat by dismissing the government's monopoly leveraging claims," said Microsoft spokesman Jim Cullinan. "Today's ruling merely means that the judge wants to review all the facts at the trial rather than rule on a paper record. We believe the facts and the law are on our side and we look forward to presenting a very powerful case when we go to trial."

One ruling that did go Microsoft's way today is that Jackson agreed to postpone the start of the trial until Oct. 15. It had been set to begin Sept. 13. Today's decision to put off the start of the trial is the second delay in the case, but such postponements are common, particularly in cases that involve a lot of documents, witnesses and complex legal arguments.

Both the DOJ and Microsoft requested the delay, saying that given the amount of "discovery" remaining, more time is needed. Discovery is the process of gathering evidence, including depositions of witnesses.

Judge Jackson's ruling can be found at http://www.dcd.uscourts.gov/. Microsoft, in Redmond, Washington, can be reached at http://www.microsoft.com/. The U.S. DOJ, in Washington, D.C., can be reached at http://www.usdoj.gov/.

(Elinor Mills in San Francisco contributed to this report.)

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