DOJ asks judge to delay ruling on Microsoft's stay request

WASHINGTON -- In a clever strategy designed to force Microsoft Corp.'s legal hand, the software giant's U.S. government adversaries yesterday asked U.S. District Judge Thomas Penfield Jackson not to rule on Microsoft's motion that he stay last week's breakup order right away.

The government wants Jackson to wait until Microsoft formally files its appeal of Jackson's "final judgment," which the government wants to be sent immediately to the U.S. Supreme Court for review. Government lawyers also revealed the reasoning behind their desire to see the Supreme Court take the case right away.

On June 7, Jackson brought the two-year antitrust battle between Microsoft and the U.S. Department of Justice (DOJ), 17 U.S. states and the District of Columbia to a close by adopting the government's suggestion that Microsoft be split into two companies for a period of 10 years to remedy multiple violations of federal and state antitrust laws. One company would own the Windows operating systems, subject to a raft of temporary conduct restrictions, and the other firm would own everything else, including Microsoft's Office suite of software applications and its Internet Explorer Web browser.

Jackson stayed the breakup until Microsoft's appeal has run its course. But he ordered that the list of conduct restrictions must take effect within 90 days, and that Microsoft must draw up a detailed breakup plan within four months. The company immediately filed a short motion asking Jackson to stay his entire order pending the outcome of appeals.

The government says that regardless of what Jackson decides to do, Microsoft failed to show that a stay of the order was warranted. Yesterday's brief criticizes Microsoft for failing to even try to show that it's likely to win its appeal. The brief also takes the software giant to task for failing to show that the public wouldn't be harmed if Jackson granted a stay.

"Where the extent of the harm to competition has been, as the Court found here, so substantial and pervasive in a fast-moving sector of the economy, the irreparable injury to the public interest is particularly great," the U.S. government said in yesterday's filing. "Lengthy delays in implementation of the interim conduct remedies that will prevent recurrence and continuation of Microsoft's illegal behavior would greatly damage the public interest."

Microsoft has 60 days from June 7 to file a notice of appeal in the U.S. Court of Appeals for the District of Columbia Circuit. The government is required to wait until Microsoft formally files its appeal before it can ask Jackson to send the case to the Supreme Court, under the terms of the federal Expediting Act.

Government lawyers appear to be trying to avoid a scenario whereby Jackson refuses to grant Microsoft a stay -- leading to a new Microsoft stay motion in the appeals court -- before the judge has a chance to send the case up to the Supreme Court. That could result in a stay motion pending in the appeals court even as the Supreme Court considers whether to take the case.

"This is an extremely bizarre tactic by the government," says Microsoft spokesman Jim Cullinan. "The 90-day clock is ticking and we want to move the case ahead."

The government would rather have the two legal pieces -- the stay motion and Microsoft's actual appeal -- travel together to the Supreme Court for a decision. So, the government wants Microsoft to file its appeals notice, paving the way for Jackson to simultaneously rule on the stay petition and the government's Expediting Act request.

The government proposes that the two sides file a new series of legal briefs on the government's Expediting Act request. Jackson is expected to refuse to grant the stay and to certify the case for Supreme Court review. Should the Supreme Court kick the case back to the appeals court, as legal observers expect, it would send the stay motion back down as well.

"Microsoft has no legitimate reason to delay filing its notice of appeal," the government said yesterday, adding that Microsoft's failure to file its notice "is simply an attempt to manipulate the Court and thwart the operation of the Expediting Act."

The government argues that the Supreme Court should take the case immediately to forestall "prolonged uncertainty" about its outcome. The government also says that, since one of the sides would end up appealing the case to the Supreme Court after an appeals court ruling, it's better to save time on a case that the high court is likely to want to take because of its impact on the national economy.

"In rapidly evolving technology markets, even a brief delay in effectuating remedies that will reduce Microsoft's ability and incentive to engage in anticompetitive conduct will have a serious adverse impact on competition and innovation," the government said in its filing, adding that a prompt resolution "would end uncertainty about the remedy facing Microsoft's employees, stockholders and firms in the technology industry and throughout the economy that do business with it."

Now, the two sides are engaged in a chronological game of chicken. Each side is stalling even as it accuses the other of delaying the proceedings for ulterior motives. Microsoft has the advantage until its 60-day window runs out in August. If neither Jackson nor a higher court grants a stay before then, the company will only have a month before the conduct restrictions take effect, hobbling its "next generation" Internet strategy.

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