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DOJ rejects MSFT plea
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July 26, 2001: 8:10 p.m. ET
Department asks that Microsoft's anti-competitive appeal be rejected
By Terry Frieden and Scott Spoerry
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WASHINGTON (CNN) - The U.S. government filed court documents Thursday rejecting Microsoft's arguments for an appeals court to re-consider its unanimous ruling that Microsoft engaged in anti-competitive practices.
"Microsoft's petition for rehearing should be denied," says the brief filed late Thursday by anti-trust lawyers for the Justice Department.
Responding to Microsoft's request for the court to re-visit the issue, the Justice Department issued a seven page legal brief saying Microsoft used its own filing "as an occasion to expound upon a variety of topics, most of them irrelevant to the issue at hand."
Microsoft (MSFT: Research, Estimates) asked an appeals court to reconsider its conclusion that the company had violated the Sherman Antitrust law by "commingling" software code for the Internet Explorer web browser into files containing code for the Windows operating system itself.
The U.S. Court of Appeals for the DC Circuit said "Microsoft failed....[in] showing...that its conduct serves a purpose other than maintaining its operating system monopoly."
The appeals court noted that other competitors were harmed by this conduct because it's much more difficult to convince Windows users to switch to other browsers like Netscape, even if other products have superior features.
At stake is the future shape of the software maker. Recently Senator Charles Schumer, (D) New York, said the new Windows XP Operating system should not be released because of these and other legal issues.
Others in the software industry are concerned that this issue will not be dealt with by a new district court judge in time to stop the fall release of Windows XP.
The longer the legal issues take to be resolved, the greater the likelihood that Windows XP will be released containing features and software code that could be declared illegal. Microsoft opponents claim the company's strategy is to delay action that could hurt Windows XP. Microsoft said "further review of this issue is in the best interest of the law, of the technology industry and of consumers."
A new judge could, under the clear wording of the appeals court ruling, declare that Microsoft cannot use "commingled code" in Windows XP and force Microsoft to delay the release until changes had been made. That would make a big impact on Microsoft's projected earnings for the 4th quarter.
Click here for CNNfn's coverage of the Microsoft trial
The appeals court, while finding Microsoft violated antitrust law, also blistered the lower court judge who proposed breaking up the firm into two separate companies.
The Justice Department asked for an expedited consideration of the proper remedy by a new trial court judge.
A Justice Department official Thursday acknowledged that a Microsoft attorney visited the new Assistant Attorney General for Antitrust, Charles James, in his Justice Department office Monday, but said it amounted to a get-acquainted meeting, and not the start of talks on a possible out of court settlement.
The Justice Department issued a brief written statement as it filed its document with the Court of Appeals for the District of Columbia.
"Today's filing marks a continuation of the Department's effort to move the Microsoft case back to the District Court for prompt resolution," the Justice statement said. "We believe that the issue Microsoft has identified for rehearing already has been fully litigated and properly decided by both the District Court and the Court of Appeals." 
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