Does the appeals court Microsoft ruling end the fight?

Massachusetts may appeal a U.S. Court of Appeals decision that soundly rejected its fight to force Microsoft Corp. to change its operating system. But legal experts say the state's prospects for success are remote after Wednesday's unanimous decision, which backed the U.S. settlement of the long-running antitrust case.

Indeed, there was a strong sense from people on both sides of the case that this historic fight is about over. The issue now is how its apparent end will affect Microsoft. The court ruling affirmed a settlement reached in 2002 by the U.S. Department of Justice and nearly all of the states involved in the case at the time.

"I think we will see them (Microsoft) be a little more aggressive," said Mike Petit, president of ProComp, an anti-Microsoft industry group that has supported harsher remedies than those agreed to in the antitrust settlement. "They can still wreak havoc on the industry.

"For people who ask the question, 'What kinds of things can be commingled into Windows?' (the answer is) anything that they choose," said Petit. The settlement imposed "no restrictions at all on that."

The government case did have some impact on Microsoft's behavior, said Ashok Bakhshi, IT director at Schindler Elevator Corp. in Morristown, N.J.,

"They were not as arrogant, sometimes, in dealings (as) they were before," said Bakhshi. But once the government stops watching, "they might get back to the old ways -- that's the tendency of any big corporation," he said.

Massachusetts, the lone holdout state, as well as two industry groups -- the Computer and Communications Industry Association and the Software and Information Industry Association -- had argued that the U.S. antitrust settlement didn't go far enough and sought a range of tougher sanctions. Those harsher remedies included forcing the company to open-source its Internet Explorer Web browser and allow the porting of Office to other operating systems, such as Linux. It also sought to force Microsoft to unbundle some of its operating system functions, like Media Player.

Wednesday's decision likely spells the end of the legal line in that fight, said experts.

"A Supreme Court appeal is beyond a long shot for the plaintiffs," said Hillard Sterling, an antitrust attorney at Much Shelist PC in Chicago who has followed the case since its beginning in 1998. "It's virtually certain the court would have no interest in even taking this case."

In a teleconference Wednesday, Microsoft officials said Wednesday's ruling was its most important so far in resolving its antitrust battle. The company faces ongoing antitrust issues in Europe and some class-action suits in the states, which it has been settling one by one. In fact, it reached settlements just this week with officials in Massachusetts and Arizona. The Massachusetts settlement doesn't directly affect the state's pending decision on whether to pursue an appeal of Wednesday's decision.

That decision "has made clear that Microsoft and the rest of our industry can move forward with this decree and judgment in place," said Brad Smith, Microsoft's senior vice president and general counsel.

The ruling in effect supports Microsoft's operating system strategy, said Smith. "The court of appeals made clear ... that removing code from Windows would be a huge step backward."

Sarah Nathan, a spokeswoman for Massachusetts Attorney General Thomas Reilly, said the state is considering an appeal but won't make a decision until officials complete a review of the 83-page decision.

The ruling by the Court of Appeals was expected -- it would have been a bombshell had it gone the other way, said Bob Lande, an antitrust professor at the University of Baltimore School of Law. He said it was unlikely that the federal courts would impose something stronger than the settlement reached by the U.S. Department of Justice and backed by the District Court.

A decision imposing tougher remedies "would have been very, very unlikely," he said.

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