Getting Back In The Ring

It seems like a different era now, that distant time when the government's antitrust action against Microsoft was first filed in 1997. The dotcom era was dawning (now it's in a sullen cocktail hour), Bill Gates's riches were headed toward $100 billion (these days the poor guy scrapes by on less than $50 billion) and AOL wasn't yet in the business of making movies and selling Daffy Duck denim jackets. (It hadn't even bought Microsoft's browser rival Netscape.) Yet the case plods on, now headed toward its next milestone, the appeal of federal Judge Thomas Penfield Jackson's shocking order to chop the Redmond, Wash., software goliath into a pair of presumably less terrorizing mini-goliaths. For months now each side has been quietly filing petulant briefs. But this Monday and Tuesday, Gates & Co. climb back in the battle zone for public oral arguments before what they believe is a friendlier venue: the U.S. Court of Appeals for the D.C. circuit.

In some ways, the appeals process is indeed a reboot of a case that resulted in the legal equivalent of the Blue Screen of Death for Microsoft. Instead of a judge with obvious contempt for the Softies, there are seven jurists who won't be taking reporters into their chambers to hear fantasies of making Bill Gates write book reports about Napoleon. Instead of government hired-gun David Boies, whose adeptness at undressing witnesses makes Hugh Hefner look like a computer geek, there are two skilled but stolid career DOJ lawyers, Jeffrey Minear and David Frederick. And though the arguments and questioning will be unusually lengthy for this court (seven hours over two days, as compared with barely an hour for a recent antitrust case involving the Beech-Nut/Heinz baby-food merger), there are no scheduled screenings of the Clintonesque Bill Gates deposition, a credibility killer that dogged Microsoft for the entire original trial.

Still, context will prove crucial in this round of the case. After all, it's about reversing a standing decision, one that even Microsoft--which is racing along on its various next-generation Internet jihads--doesn't accept as a variable in its strategic plans. The burden is on Microsoft to prove that Judge Jackson erred in ruling that it was a bullying monopoly that violated several counts of antitrust law, including "tying" its Explorer Internet browser to its dominant Windows operating system. Failing that, it must prove that Jackson went overboard in adopting, with minimal discussion, the government's drastic remedy of a breakup.

That task might be a little easier because of conflict between Jackson and the appeals court itself. The D.C. circuit is known as a hot court, one with well-prepared judges who ask a lot of sharp questions. But one particularly hot moment in its recent history came in 1991, when it overturned the sentencing of former D.C. mayor Marion Barry because the trial judge recklessly criticized the jury in a public speech. The judge was Thomas Penfield Jackson--the same jurist who is copiously cited in Microsoft's briefs for remarks to the press allegedly showing his bias against Microsoft and its executives. Though neither Microsoft nor the government asked to discuss this matter in oral arguments, the court unilaterally ordered each side to address the issue for 30 minutes. "I wonder if they're meaning to admonish him," muses George Washington University law professor William Kovacic.

Microsoft would love to see the appeals court bounce the case back to another judge because of Jackson's remarks. But its highest hopes are pinned on overturning Judge Jackson's charge of illegal tying. That issue, too, involves a previous spat between Jackson and the appellate judges, who in 1998 overturned the judge's preliminary injunction to force Microsoft to split Explorer from the operating system. In the process, they delivered what amounted to a lecture about what's fair and not fair when a software giant improves its product. "They went out of their way to talk about... what tying meant, and they said some things that were very helpful to Microsoft," says Stephen Houck, formerly lead counsel for the 19 states that joined the federal government in the complaint. This enraged Judge Jackson, who not only ranted about a "supercilious" appeals court to author Ken Auletta, but specifically criticized its ruling in his own opinion, virtually daring it to overturn.

Which judge will carry the most clout on the panel? Legal handicappers cite Douglas Ginsburg, whose previous 15 minutes of fame came when his Supreme Court nomination ended in a cloud of smoke, generated from his pot-party days as a Harvard law prof. Head of the DOJ's antitrust division in the '80s, he knows his Sherman Act.

But perhaps the key newcomer in the case might be John Roberts, an attorney from the Washington firm of Hogan and Hartson. Like Boies, he's a hired gun--not for the Feds, but for the state attorneys general still in the case. Why is he important? One oft-cited scenario involves the appellate court's knocking down at least some of Judge Jackson's ruling, perhaps sending the case back to the lower court. At that point, dormant talks to settle the case might resume. Though George W. Bush's nominee for antitrust czar, Charles James, isn't talking about his job until confirmation, he did tell CNBC last spring that consumers have benefited from Microsoft's creating a "common platform" for software applications. "If Microsoft were broken up..." he continued, "it's clear that you wouldn't have as vigorous a market." This seems to indicate a willingness to settle on terms that Bill Gates could live with. But the state attorneys general have made noises that nothing short of a breakup would satisfy them, and if the Feds settle for something less, they'll keep it going.

Could John Roberts be the new David Boies, dogging Microsoft all the way to the Supreme Court, where he has won 20 of 31 cases? That's a question that may be answered in the months to come. Meanwhile, we can look forward to a couple of days of serious slugging in the court of appeals.