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Once again, the antitrust case against the Microsoft Corp. appears to be immune from closure. Last week, just before final arguments in the three-month trial pitting nine states and the District of Columbia against the software giant, U.S. District Judge Colleen Kollar-Kotelly prodded both sides to agree on a middle ground. But after Microsoft’s lawyers bluntly rejected the judge’s overture, it appeared likely that Kollar-Kotelly would be forced to spend the next few months crafting her own compromise in the form of a judicial opinion. If the judge decides to go beyond the provisions of the settlement that the U.S. Department of Justice and Microsoft agreed upon last November — a possibility she hinted at in her June 18 order — the matter will move quickly into uncharted waters. That’s because Kollar-Kotelly can’t focus on the states’ case alone. She also must address an unprecedented situation: The Justice Department, the lead plaintiff, has already entered into a consent decree with Microsoft while other government enforcers, the nine state attorneys general, simultaneously went to trial seeking a remedy for the same antitrust violations. If Kollar-Kotelly decides the states’ case in a way that doesn’t square with the decree, even in a relatively minor respect, the dispute would almost certainly land once more in the U.S. Court of Appeals for the D.C. Circuit. Currently, Kollar-Kotelly has before her both the case brought by the states that refused to settle with Microsoft and the proceeding under the federal Tunney Act that requires her to weigh the public interests in the Justice-Microsoft deal. Kollar-Kotelly can either endorse or reject the Justice Department settlement, not amend it. But in the states’ case she has broad power to fashion a remedy that she thinks effective. Antitrust experts say the judge would be best advised to deal with both cases at once. That type of action would itself break new ground in a dispute that has never followed form. Robert Lande, an antitrust professor at the University of Baltimore Law School, says that if Kollar-Kotelly decides to give the state plaintiffs any remedy that goes beyond Justice’s agreement, she should also use her prerogative under the Tunney Act to turn thumbs down on the Microsoft-Justice consent agreement. “If I were her and I wanted to add constraints on Microsoft,” says Lande, “I would reject the consent order. The safest thing is to say no in that situation. However careful she could be in drafting a remedy of her own, if she accepts the consent, Microsoft could say that there is a conflict between the Tunney Act remedy and the one that she has issued in the states’ proceeding.” Jonathan Baker, an antitrust professor at American University Washington College of Law, says that if Kollar-Kotelly decides to accept the existing consent decree as being in the public interest and then hands the states an even slightly broader remedy, Microsoft will be able to argue credibly on appeal that the judge unfairly imposed a more draconian solution to settle the same charge of monopolization that Justice already settled. Microsoft agreed with Justice on a relatively limited consent order that commits it to make portions of the code for its popular Windows system available to competitors and prohibits retaliation against computer makers that select software from other manufacturers. The states are seeking more severe remedies, most notably requiring Microsoft to market a version of Windows that allows computer manufacturers and users to remove Microsoft software for applications like instant messaging and substitute other companies’ products. Whether or not Kollar-Kotelly accepts the states’ contentions that tougher restrictions must be imposed on Microsoft, her conclusions are expected to receive great deference from the D.C. Circuit in any appeal. “The standard is quite deferential on appeal,” says Baker. “The issue is how to restore competition to the market by curing the violation, preventing a recurrence, and restoring competitive conditions in the software industry. The remedy simply has to be necessary and appropriate to do these things.” Furthermore, in handling the case, Kollar-Kotelly has stayed away from the questionable actions that tripped up the previous Microsoft judge, Thomas Penfield Jackson, at the appeals court. Jackson was reprimanded by the D.C. Circuit in 2001 for speaking to the press about a pending case, making fairly caustic remarks about a litigant in open court, and placing limits on the defendant’s ability to present its views in court concerning the remedy. Lande says that when Kollar-Kotelly asked both sides on June 18, the day before closing arguments, to identify which elements of their competing remedies could be jettisoned, she was trying to facilitate a settlement. But when John Warden of Sullivan & Cromwell, representing Microsoft, declined to take the judge up on her suggestion, he showed that Microsoft “was prepared to roll the dice and to go all the way,” says Lande. “It’s a tightly integrated whole,” Warden said about the Justice settlement, “and we can’t fix it.” If the case ends up at the D.C. Circuit, it would probably go directly to a full hearing of all the active appeals judges who are not recused, says appellate specialist Donald Falk of the Palo Alto, Calif., office of Chicago’s Mayer Brown Rowe & Maw, a former clerk for the D.C. Circuit’s chief judge, Douglas Ginsburg. Although court rules don’t require this, Falk says, he notes that the first Microsoft appeal went directly to an en banc panel of seven judges (three of the 10 then-active judges recused). Falk says the court would probably go the same way this time. But because one member of the original en banc panel, Stephen Williams, has since taken senior status, only six judges would sit should there be another appeal.

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