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Now is when United States v. Microsoft starts getting really interesting. With last week’s handoff by the Supreme Court, the fate of the government’s antitrust case against the Microsoft Corp. is now in the hands of an unusual seven-member appellate panel that will be only loosely constrained by legal precedent. The U.S. Court of Appeals for the D.C. Circuit had already announced it would hear the case as a whole — minus three judges who have recused themselves from the matter. That leaves Chief Judge Harry Edwards and Judges Stephen Williams, Douglas Ginsburg, David Sentelle, A. Raymond Randolph, David Tatel, and Judith Rogers. Antitrust experts say the judges will have a surprising amount of leeway in making their decision after they hear the appeal, probably early next year. Although there are a few important Supreme Court cases about the monopolization of commerce, none comes close to dictating the result in the Microsoft case. The D.C. Circuit itself hasn’t handed down any direct precedents. In fact, antitrust lawyers say, the key statutes were written broadly and vaguely so that they could accommodate changing times and business practices. “Antitrust courts have greater freedom than courts in many areas of law because the principle underlying the Sherman Act is that courts are supposed to develop a common law of competition,” says Jonathan Jacobson, a partner in the New York office of Akin, Gump, Strauss, Hauer & Feld. “Antitrust has survived for 110 years because of its adaptability and flexibility.” Willard Tom, a former official at both the Federal Trade Commission and the Justice Department’s Antitrust Division, says, “What you’ve got are broad and still widely accepted principles from the Supreme Court. The difficulties always lie in attempting to apply them to specific facts.” ANTITRUST SCHOLAR ON THE COURT In the absence of clear precedent, many say the circuit may seek guidance from one of its own: Judge Ginsburg, who has taught antitrust law at Harvard Law School and headed the Antitrust Division during a portion of the Reagan administration. Ginsburg is aligned with the free-market wing of antitrust. “Doug Ginsburg is a distinguished antitrust scholar. The court might look to his lead,” says William Kolasky, who heads the antitrust practice at Washington, D.C.’s Wilmer, Cutler & Pickering. Jacobson agrees that Ginsburg’s views will be taken very seriously by the other six judges, but he considers Ginsburg more of a swing vote than a sure thing for Microsoft. “I wouldn’t count him automatically in the Microsoft camp,” Jacobson says. “He’s very conservative, but the government has a very strong case. Judge [Thomas Penfield] Jackson didn’t nail Microsoft just because he felt like it.” Another hint about the way the court’s deliberations may go comes from a 1998 ruling of a three-judge panel of the circuit in favor of Microsoft in a related case. The panel decided 2-1 that Microsoft had provided plenty of pro-competitive reasons for its decision to package its Internet browser with its operating system. It overturned an injunction that Judge Jackson had issued, dealing a blow to the Justice Department. Microsoft’s supporters note that the two judges in the majority then, Williams and Randolph, are among the seven who will hear the upcoming appeal. Microsoft opponents like Mark Popofsky, who was senior counsel to then-Assistant Attorney General Joel Klein until late last year, say that the 1998 ruling dealt with the limited question of whether the company violated an earlier consent decree and is thus irrelevant to the issues at this stage. In addition to precedent, the appeals court will look at the factual record compiled in the 78-day trial before Jackson. Tom, a partner at the Washington, D.C. office of Morgan, Lewis & Bockius, and other specialists say the circuit has to treat the facts and the law in quite different ways. The factual findings made by the trial judge, most of which were unfavorable to Microsoft, can’t be overturned on appeal unless the appeals court finds them to be clearly erroneous, a very tough standard. On strictly legal issues, however, the court doesn’t have to give any deference to Jackson. It can adopt Jackson’s reasoning — including his key finding that Microsoft enjoyed a monopoly in the computer operating systems market and then acted to exclude competitors such as Netscape Navigator from the Web browser market — or it can reject it. In addition to the categories of fact and law, major antitrust cases like Microsoft are also full of “mixed questions of law and fact,” says Kolasky. Kolasky, who spearheaded the writing of an amicus brief earlier this year for a coalition of technology companies supporting Microsoft, says the circuit can decide “mixed questions” as it pleases, without deferring to Jackson. Kolasky says the appeals court could hand Microsoft a win by concluding that even if all of Jackson’s findings were correct, the company didn’t violate any laws. Another possible scenario, he says, is that the court will “scrutinize the findings carefully” and find them unsupportable even under the high standard of “clearly erroneous.” As far as precedent goes, old monopolization cases, including a famous 1945 Learned Hand decision involving Alcoa Aluminum, remain relevant even in the age of the Internet. In the Alcoa case, the court noted that Alcoa had entered into “many transactions, neutral on their face,” that “were not in fact necessary to the development of Alcoa’s business, and had no motive except to exclude others” and perpetuate the company’s dominant market position. “Antitrust is judge-made law, like constitutional law,” says Popofsky, a partner in the Washington, D.C. office of New York’s Kaye, Scholer, Fierman, Hays & Handler. “You don’t say Marbury v. Madison lacks force today because it’s from the 19th century, for example.” A relatively recent Supreme Court case frequently invoked on the government’s side is Aspen Ski Co. v. Aspen Highlands Skiing Corp., a 1985 ruling that a ski-lift company violated antitrust laws when it withdrew from a joint lift-ticket agreement that it had with a smaller competitor, thus making it difficult for the competitor to remain in the market. Microsoft can rely on pro-defendant cases such as Brooke Group Ltd. v. Brown and Williamson Tobacco Corp., in which the Court held in 1993 that evidence that a tobacco company had slashed its prices, even if it went below cost, did not lead to any inference that it had damaged competition. In addition to Jackson’s ruling and court precedents, some specialists say the circuit judges might well rely on economic analyses that the parties provide. “There are economic concepts that underlie rules of law, and these are not drawn solely from the record,” says Morgan, Lewis’ Tom. “It would be perfectly appropriate for a judge to rely on such concepts, and for the parties to include citations to learned treatises.” Akin Gump’s Jacobson points to one unusually authoritative work — the treatise on antitrust law by the late Harvard Professor Phillip Areeda and Herbert Hovenkamp, a professor at the University of Iowa College of Law. Hovenkamp continues to update this volume, which has practically the force of law in some antitrust circles, especially on questions of monopolization and predatory pricing.

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