Court of Appeals takes Microsoft appeal

Posted: Tuesday, June 13, 2000

WASHINGTON (AP) -- Acting at its first opportunity, the U.S. Circuit Court of Appeals reached out Tuesday and agreed to hear Microsoft's appeal of a sweeping breakup order imposed on it for antitrust violations.

In a victory for the giant software manufacturer in legal maneuvering with the government, the court acted even before U.S. District Judge Thomas Penfield Jackson could hear the government's request to bypass the U.S. Circuit Court of Appeals for the District of Columbia and send the case directly to the Supreme Court.

The appeals court said it was acting ''in view of the exceptional importance of these cases.'' Noting that three of its 10 judges are disqualified from hearing the case, the court said all remaining seven judges would hear the appeal. With that many disqualifications, the court said, a hearing by three judges followed by a rehearing by the entire court would be impractical.

The government had no immediate comment on the company's success in maneuvering the appeal into the Court of Appeals, where Microsoft had won a decision in a similar antitrust case filed by the government.

Earlier Tuesday, the government won an initial skirmish on where the appeal would be heard when U.S. District Judge Thomas Penfield Jackson, just as the government asked, reserved judgment on Microsoft's motion to stay his antitrust penalties until the company filed a notice of appeal.

The government wanted that delay so it could file a request for direct appeal to the Supreme Court, but that motion could not be filed until Microsoft's notice of appeal was filed. The government wanted Jackson to consider both the stay and the direct appeal request together.

Within hours after Jackson ruled, Microsoft filed the notice of appeal with him, and another stay motion with the Court of Appeals. In its hurry to take the case, the Court of Appeals did not even address Microsoft's request for a stay, even though Microsoft had a stay motion still pending with Jackson.

The appellate court's decision came after regular trading ended on the Nasdaq Stock Market, where shares of Microsoft finished regular trading at $67.875, up $1.

In after-hours trading, shares of Microsoft jumped $2.563 to $70.438.

The company's stay motion in the Court of Appeals was 39 pages long and reviewed many of its reasons for arguing that Jackson's ruling against it should be overturned.

The Microsoft stay motion said Jackson made ''an array of serious substantive and procedural errors that infected virtually every aspect'' of the trial and sentencing in the District Court.

After finding that the company abused its monopoly over personal computer operating systems to harm consumers and thwart innovation, Jackson ordered the company split in two and imposed restrictions on Microsoft's business conduct while it appeals the dismemberment.

Jackson himself delayed the breakup until the appeals are finished, but his restrictions on Microsoft's business conduct will go into effect in 85 more days unless some court grants the company the stay it seeks.

On Monday, the government told Jackson any substantial delay in imposing his restrictions ''would greatly damage the public interest.''

But the department's antitrust division also asked Jackson to very briefly delay denying the stay in order to thwart what it called Microsoft's bid to manipulate the court. It urged Jackson not to rule on the stay until Microsoft files its promised notice of appeal and then to rule on both together.

After Jackson did just that on Tuesday, Microsoft spokesman Jim Cullinan expressed disappointment. ''We believe we have followed the normal and appropriate process here,'' he said.

Cullinan would not say exactly when Microsoft would file its official notice of appeal with Jackson, which would then clear the way for Jackson to send the appeal -- and the question of an emergency stay -- directly to the Supreme Court. Cullinan said the notice of appeal would be filed ''very soon.''

In its filings, the government said it wants Jackson to send the case directly to the Supreme Court, because ''consumers should not have to wait too long for the benefits of competition to be restored.''

Even if Microsoft were to win on appeal, the public interest would be served because a prompt Supreme Court decision ''would end uncertainty ... facing Microsoft's employees, stockholders and firms in the technology industry and throughout the economy that do business with it,'' the government said.


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