Supremes Reject Microsoft Request
The United States Supreme Court
today declined without comment a request from Microsoft Corp. that it
overturn a lower court’s order which found that the software giant had violated
sections of the Sherman Antitrust Act.
In late June, the United
States Court of Appeals for the District of Columbia upheld Judge Thomas
Penfield Jackson’s finding that the software giant had violated the Sherman
Antitrust Act by illegally “commingling” software code in its Windows 98
operating system and its Internet Explorer Web browser. The court determined
that Microsoft had done so for the purpose of maintaining its monopoly market
Legal observers have said
that a direct appeal to the Supreme Court constituted Microsoft’s last and best
opportunity to vacate this finding, which, they say, was the single most
damaging aspect of Judge Jackson’s original ruling. As a result of the Supreme
Court’s decision, then, Microsoft is more vulnerable than ever to the threat of
private litigation from competitors seeking damages.
“The most important issue in
whether or not a private action is brought is usually the finding of
liability,” explained Steven Newborn, co-head of the antitrust group for
Clifford, Chance, Rogers & Wells LLP (Wash., D.C.) and a former antitrust
litigator for the Federal Trade Commission, at the time of the Appeals Court’s
ruling in June. “If you’re looking for damages, [Thursday’s] finding of
liability is a blessing for private litigants.”
The Supreme Court’s decision
came as a surprise to almost no one, however. In the aftermath of the appeals
court’s decision in late June, most legal observers speculated that Microsoft
would face a difficult, if not impossible, task if it chose to press forward
with an appeal to the Supreme Court.
“There’s very little chance
that the Supreme Court will overturn the lower court’s decision,” said one
litigator with a prominent New York law firm at the time. “Most of the [lower
court’s] judges were conservative Republicans, but they nonetheless voted
unanimously [7-0] to uphold the finding [of liability]. I expect the Supreme
Court to follow suit.”
Clifford Chance’s Newborn
also concurred. “The Supreme Court … could do almost anything, but I think that
they’d find it very difficult to reverse this specific finding of illegality,”
As a result of today’s
ruling, the case is officially remanded back to a lower court -– albeit it one
with a new judge, Colleen Kollar-Kotelly -– for reconsideration of a new remedy.
In late September, Kollar-Ketelly
ordered Microsoft and the Justice Department to begin a new round of settlement
talks, which she indicated would continue until November 2nd.
If both sides don’t hammer out a settlement by then, Kollar-Ketelly directed
that she would convene a hearing to decide the matter in March, 2002.
In early September, the
Justice Department abandoned its push for a break-up of Microsoft, but
indicated, instead, that it would lobby for the imposition of some of the
interim conduct-related provisions that Judge Jackson issued at the time of his
original antitrust ruling. The Justice Department said that it also wouldn’t
pursue a re-hearing on the so-called “tying” claim that Microsoft illegally
commingled code between its Internet Explorer Web browser and Windows 98.
Justice indicated that it would take a closer look at Microsoft’s forthcoming
Windows XP operating system, however.
Microsoft responded in late
September with an undisclosed settlement offer. The two sides began negotiating
shortly thereafter as a result of Judge Kollar-Ketelly’s order.
Stephen Swoyer is a Nashville, TN-based freelance journalist who writes about technology.