Appeals court agrees to hear Microsoft case; Government moves quickly to shift it to the Supreme Court; Foes seek friendly court

WASHINGTON — WASHINGTON - With deft legal footwork, Microsoft Corp. maneuvered the antitrust case against it into an appeals court it considers friendly. But the case might not stay there because government lawyers moved immediately yesterday to shift it to the Supreme Court.

In a day of rapid-fire actions by both sides in the historic case, Microsoft hurriedly filed its appeal with a motion in the U.S. Circuit Court of Appeals. That court then laid down initial procedures for dealing with the case.


The question of which court would be first to handle Microsoft's appeal of a judge's order to break up the company has been at the center of a flurry of motions and counter-motions between the sides over the past week.

Both sides are trying to use their options to force an outcome they prefer - for Microsoft, the appeals court, and for its government challengers, the Supreme Court.


The company prefers the appeals court because that tribunal twice has overturned orders against Microsoft by U.S. District Judge Thomas Penfield Jackson in earlier lawsuits. The Justice Department and the states prefer the Supreme Court because the justices would be directly reviewing Jackson's new rulings against Microsoft, without them being filtered first through the appeals court.

Microsoft told the appeals court that Jackson's ruling last week, which ordered a breakup of the company and other changes, is "profoundly flawed" and should be overturned quickly.

The company asked the appeals court to postpone all parts of Jackson's remedy order until the appeal is completed - a delay that would extend for at least several months.

After Microsoft's filing, the appeals court promptly issued a procedural order describing the case as being of "exceptional importance." It said the full court, not just a three-judge panel, would hear all motions.

Shortly afterward, however, the Justice Department and a group of states that had sued Microsoft denounced the company's move as "an ill-conceived attempt to end-run" the federal law that permits a case as signif- icant as this one to move immediately to the Supreme Court.

Microsoft's challengers formally asked Judge Jackson to order that the case be sent to the highest court - a move that would bypass the Court of Appeals. Such a bypass is allowed for the most important antitrust cases.

If, as expected, Jackson issues such an order, a Justice Department statement said, "we will ask the Supreme Court to hear Microsoft's appeal promptly."

The Supreme Court does not have to hear the appeal. It could send the case back for a first look by the appeals court. In two to three weeks, the court will be in summer recess, though it still could act then.


If Jackson orders the case on to the Supreme Court, it apparently would end the appeals court's authority to take any action on it despite Microsoft's maneuver yesterday.

"Two courts can't have jurisdiction simultaneously," said Kenneth S. Geller, a Washington lawyer and co-author of a standard manual on Supreme Court procedure. "Once the judge issues the certification [sending the case to the Supreme Court], any appeals have to go to the Supreme Court."

The day's developments were complex and at times contradictory, creating a procedural puzzle over which court will hear the case first - a puzzle that probably will be sorted out quickly over the next day or two.

Microsoft went to the appeals court in midafternoon, after Jackson had refused to act on its request that he postpone all of his remedy order during an appeal. Jackson said he would rule on that matter only after Microsoft had formally filed an appeal notice.

The company then filed that notice with Jackson but did not wait for him to take further action. Instead, it asked the appeals court to issue an order postponing the judge's remedies while the appeal proceeds.

Microsoft has been hoping that its appeal would go before the three-judge appeals court panel that had ruled in its favor before. However, the appeals court deflected that hope yesterday by agreeing to put the case before the full seven-judge tribunal.


In taking its case to the appeals court, Microsoft recited a litany of objections to the trial in Jackson's court and to his rulings against the company.

It asked for a stay of the entire remedy order because, the company noted, the restrictions Jackson ordered on its corporate behavior would go into effect Sept. 5. The judge's order to break the company in two would not take effect until the appeals have concluded, but Microsoft asked that the breakup order be put off, too.

The parts of the order that would take effect in September, the company said, would force Microsoft to "disclose its valuable intellectual property to competitors, interfere with its release of new products, require the company to redesign all of its operating systems within six months, impose price controls on the company, and make it difficult for Microsoft to deliver on its vision for the next generation of Web-based software services."

A postponement during appeal, it said, "is necessary to prevent these far-reaching and irreversible consequences of a profoundly flawed ruling."

William H. Neukom, Microsoft's chief lawyer, said in a statement: "We believe we have a winning legal case, regardless of where the case goes."

The company's filing spelled out the arguments it will make in an effort to overturn Jackson's ruling that it violated antitrust law and to overturn his remedy order.