Feds ask court to reject Microsoft stay request

WASHINGTON -- The government today urged the U.S. Court of Appeals to reject Microsoft's request to put remedy hearings in its antitrust case on hold and asked it to act with urgency, arguing that "each day of delay contributes additional injury to the public interest in competition."

In court papers filed this afternoon, the U.S. Department of Justice and the 18 states involved in the case argued against Microsoft's motion, made Tuesday, to block transfer of this case to the lower court pending its Supreme Court appeal (see story).

Microsoft is asking the high court to throw out the U.S. District Court's ruling because of critical comments made by trial Judge Thomas Penfield Jackson, which Microsoft said in its legal brief point to bias. Microsoft has asked the appeals court to put the case on hold until the Supreme Court acts.

But the government said delay is unacceptable.

Citing the upcoming release of the Windows XP operating system, the government said "until that remedy is in place, each day of delay contributes additional injury to the public interest in competition."

The government hasn't said what remedy it would seek. In its June 28 decision (download .pdf), the appeals court rejected a plan to divide the company by separating its operating system unit from other lines of business. But that decision doesn't prevent the government from again asking for a breakup before a new judge.

The earliest the Supreme Court would consider Microsoft's appeal probably won't be until late September or October, said legal experts. In its brief, the government said that allowing the case to be transferred means a new judge can be assigned, become familiar with the record, meet with the parties and issue discovery and scheduling orders -- a process that could occur without "imposing irreparable injury on Microsoft before the Supreme Court can act."

The appeals court was due to transfer the case today, but until it issues a ruling on Microsoft's request for a stay, the case won't be transferred, a court official said. That ruling could be made at any time.

A Microsoft official said the company believes a delay is best but also said it's interested in a settlement.

"We asked the Supreme Court to review an important issue, and we believe the process is best served by waiting for the resolution of this matter before proceeding," said Jim Desler, a company spokesman. "We remain committed to resolving the remaining issues in this case as quickly as possible through settlement."

The parties haven't commented on any details regarding a possible settlement.

Although the government's brief mentions the soon-to-be released Windows XP operating system, it hasn't said whether it will attempt to block the release of XP. There are indications that it won't.

The trade groups backing the antitrust case aren't pushing for action and said the government will be in a better position to argue for remedies if XP's release is unimpeded.

"The truth is, it's a tremendous Exhibit A," said Ed Black, CEO of the Computer & Communications Industry Association (CCIA), referring to Windows XP. The CCIA's members include Oracle Corp. and Sun Microsystems Inc. Black has argued that a strong permanent remedy is the more important goal.

Moreover, time is short. XP is due to be released to PC makers this month and could appear on store shelves next month if PC makers disregard Microsoft's official Oct. 25 release date, which industry analysts said is possible.

On the issue of Jackson's conduct, the government argued, in part, that any "misconduct arose from the judge's reaction to the evidence presented in the case itself and did not implicate any pre-existing basis to doubt the judge's impartiality."

In comments to reporters and in public forums, Jackson was critical of Microsoft and its officials.

Microsoft has asked the Supreme Court to disqualify Jackson from the first instance in which he discussed the case with a reporter. The out-of-court interviews occurred prior to release of the first part of Jackson's two-part decision. If the high court agrees to disqualify Jackson from prior to the release of his decision from that point, it would essentially be throwing out the case.

The appeals court, in that June 28 decision, agreed with the District Court decision that Microsoft used anticompetitive practices to maintain its monopoly. But it rejected a finding that the company illegally attempted to monopolize the browser market.

Just last week, the U.S. Court of Appeals rejected Microsoft's request for a rehearing on part of the antitrust case ruling issued by the panel in late June (see story). That decision put the case on track to be handed back to a lower court for consideration of remedies against the software vendor.

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