Microsoft Files Appeal After Delay Tactic Fails

Just hours after being rebuffed in its motion to stay the harsh remedies ordered last week by a federal judge, Microsoft Corp. on Tuesday appealed the landmark decision to split the software giant into two competing companies.

The court’s final judgment, entered on June 7th, provided that the breakup of the company would be stayed pending appeal, but that the restrictions imposed on Microsoft’s business dealings were to take effect within 90 days.

U.S. District Judge Thomas Penfield Jackson, in an order filed earlier on Tuesday, ruled that he would not consider the motion for a stay until Microsoft filed its notice of appeal.

Chess Game

The case has turned into a heated battle over appellate jurisdiction, as each side vies for position with each procedural step.

Tuesday’s ruling was an initial post-judgment victory for the Department of Justice (DOJ). Government attorneys on Monday filed briefs asking the court to delay a decision on Microsoft’s motion to stay the restrictions until the giant software company actually filed its appeal of the judgment.

Forced Hand

The DOJ wants to see the case moved directly to the U.S. Supreme Court, but was unable to proceed until Microsoft formally filed its notice.

Microsoft called the government’s request that the court not rule on Microsoft’s motion for stay “bizarre,” and asked the court to rule immediately, arguing that delaying the motion for stay was a legal tactic without justification in law. The court apparently found no merit in Microsoft’s position, as it agreed with government attorneys that the motion to stay was premature absent a notice of appeal.

Microsoft has made no secret of the fact that it wants its appeal to be heard by the U.S. Court of Appeals for the District of Columbia Circuit, which has ruled in its favor in the past.

Immediate Threat

Having lost the skirmish, Microsoft filed its appeal well before the 60-day deadline. The breakup is now on hold, but the conduct remedies are still of concern because they are not stayed during the appeal. The conduct restrictions — if implemented — pose a threat to the company’s prospective business arrangements.

Microsoft, however, apparently has no intention of changing its business practices to comply with the court-ordered restrictions. Chairman and co-founder Bill Gates, when asked about the appeal, told Reuters that it would take about a year and added that “it doesn’t change anything we’re doing as a company.”

The conduct restrictions provide that Microsoft would be forced to make its source code, the blueprint for its Windows software, available to outside developers. The company has kept the source code a closely-guarded secret.

The restrictions also include a ban on exclusive contracts, possibly affecting deals such as Microsoft’s $5 billion (US$) investment in AT&T involving promoting its software for cable set-tops and interactive television.

The restrictions will go into effect in less than three months unless the judge or an appellate court agrees to stay them while the overall appeal is heard. Judge Jackson, who has expressed disdain for Microsoft’s arrogance on several occasions, is widely expected to deny such a motion.

‘Unfortunate Distraction’

Calling the antitrust suit “an unfortunate distraction,” Microsoft co-founder Bill Gates on Tuesday compared the suit to a previous lawsuit involving Apple Computer.

“We had a lawsuit against Apple that was a waste of resources. I’d put this one in the same category,” Gates said at a press conference in Taiwan after his presentation at the World Congress 2000 on Information Technology. “We, as a company, are moving full speed ahead on all advances. The lawsuit doesn’t change anything.”

The Apple case was settled out of court.