News analysis: Microsoft may still have reason to fear Jackson

Microsoft Corp.'s appeal of the breakup order issued last spring by U.S. District Judge Thomas Penfield Jackson seeks to assure that he has nothing more to do with the case. And potentially with good cause: Microsoft may still have reason to fear Jackson, who could oversee the company's breakup if the appeal fails.

In the 150-page brief that Microsoft submitted to the U.S. Court of Appeals in Washington earlier this week (see story), the software vendor charged that the antitrust trial run by Jackson "was infected with error." Microsoft also accused the judge of running "highly unusual and prejudicial" proceedings and said he had violated judicial codes of conduct by speaking publicly about the case after issuing his ruling.

Microsoft asked the appeals court to reverse Jackson's order that it be separated into two companies -- one for its operating systems, the other for its other software products. Failing that, the company requested that Jackson be disqualified from any further involvement in the case.

But according to legal analysts, Jackson may still shape the final chapter. If Microsoft doesn't win on appeal, they said, the judge could take on the role of supervising his plan to split Microsoft in two. Jackson also could be tapped to oversee the imposition of some lesser remedy if the appeals court decides that his ruling was too harsh, the analysts said.

If the breakup is imposed, the details will be worked out by the two parties. But Jackson "would become effectively the manager, while [the] parties develop a breakup proposal," said Herb Hovenkamp, an antitrust expert who works as a law professor at the University of Iowa in Iowa City.

Since the antitrust trial ended in June, Jackson has been outspoken about the case, defending his decision while also acknowledging his lack of expertise in deciding on a remedy and admitting that his rulings may be "vulnerable on appeal." At a symposium in Washington last month, for example, Jackson said he had no choice but to impose the breakup remedy sought by the government after settlement talks between Microsoft and the DOJ failed (see story).

William Kovacic, a visiting professor of antitrust law at The George Washington University in Washington, said Jackson's post-trial comments "create a lens through which the court of appeals will look at what he has done." And that could work to Microsoft's advantage, Kovacic added.

"You want a careful judicial craftsman, exercising cautious, sensible judgments," he said. "[Jackson's] comments bespeak a lack of good judgment and an inclination to use very crude rules of thumb in deciding key issues in the case."

But Hovenkamp said he doubts the appeals court will give much weight to Jackson's out-of-court statements about the case. "They are not materially different from the things that the judge said during the course of the trial," Hovenkamp said.

Jackson ruled that Microsoft had engaged in monopolistic business practices as charged by the U.S. Department of Justice (DOJ) and state governments that joined in the case against the company. But in this week's appeal, Microsoft faulted virtually every aspect of Jackson's decision and asserted that it broke no laws.

"Microsoft did not engage in anticompetitive conduct," the company wrote in its appeal. "To the contrary, Microsoft's conduct - improving its platform and broadly distributing those improvements - was procompetitive. It also made perfect business sense."

The DOJ has until Jan. 12 to file a response with the appeals court, which was handed the case after the U.S. Supreme Court declined a government request that it immediately hear Microsoft's appeal. A DOJ spokeswoman this week said Jackson's judgment "is well supported by the evidence offered during a 78-day trial, including thousands of pages of Microsoft's own documents."

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