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WASHINGTON — “Middleware” and “OEMs.” These are the kinds of computer complexities that the six judges hearing the appeal filed by opponents of the Microsoft Corp. antitrust case settlement spent much of the Nov. 4 argument grappling with. But a decision by these judges of the D.C. Circuit U.S. Court of Appeals on whether to reject the settlement may very well hinge on a fundamental legal issue that arose early in the hearing: How much deference should they give to the trial judge’s decision to accept the 2001 deal between the Justice Department and Microsoft? Last year, U.S. District Judge Colleen Kollar-Kotelly endorsed the settlement under the Tunney Act, a law that requires judges to look carefully at such settlements. Kollar-Kotelly found the agreement to be in the public interest. Eventually, 18 states and the District of Columbia signed on as well, leaving Massachusetts and two trade groups, the Computer and Communications Industry Association and the Software and Information Industry Association, to challenge the deal in the appeals court. There, the government and Microsoft, once bitter enemies, worked side by side. The circuit decided to convene en banc to hear the appeal, but three of its nine active judges recused themselves: Judge Merrick Garland, because of his work at the Justice Department on the case in the 1990s; Judge Karen LeCraft Henderson, evidently because of her stock ownership; and Judge John Roberts Jr., because while in private practice he argued the case against Microsoft at an earlier go-round at the circuit. Former D.C. Circuit Judge Robert Bork, kicking off the argument on behalf of the trade associations, told the judges, “The third parties are entitled to the application of the Sherman Act as this court has understood it. “I don’t think any deference is owed to the Justice Department or to the district court in this case,” Bork continued. Judge David Tatel queried Bork: “We should look at this de novo? So how do you do that? Look at the public comments [filed with the district judge]?” Bork replied that very tough scrutiny of the settlement was needed because it “can’t be interpreted as removing the barriers to entry” in the computer industry. Earlier, Bork had called the agreement an example of “utter futility.” Another district judge found in 2000 that Microsoft had abused its monopoly power in the software market. The agreement relies on a variety of licensing and disclosure requirements to boost competition in the industry. Deputy Assistant Attorney General Deborah Majoras, arguing for the government, told the judges, “To say that the decree does nothing to remedy the conduct engaged in by Microsoft is simply wrong.” Tatel asked her, “What’s the standard of review? Do we just accept the idea that companies will write new middleware [to compete with Microsoft]? Do we take your word for that?” Majoras replied that the law requires an appeals court to give considerable deference to a district court when it accepts a settlement under the Tunney Act. “The standard is abuse of discretion,” Majoras said. “The district court is given considerable discretion.” Steven Holley, a partner at New York’s Sullivan & Cromwell representing Microsoft, also argued that the government and the computer giant should be given a wide berth to reach an agreement. The trade groups “haven’t shown that there is such a disparity between the antitrust violations and the remedy that the remedy amounts to a complete capitulation by the government,” Holley said. “The most extreme remedy that one can think of is not necessarily the one that is called for, and some of the things that Judge Bork called for are pretty extreme.” If the circuit decides to uphold Kollar-Kotelly’s decision, the long-running antitrust case would come to an end, barring a decision by the U.S. Supreme Court to take up the case. Jonathan Groner is editor at large at Legal Times , a Recorder affiliate based in Washington, D.C.

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