Gates wins year's delay


WASHINGTON - In a major tactical victory for Microsoft Corp., the Supreme Court yesterday sent the government's antitrust case against the software giant to an appeals court that the company thinks is more sympathetic to it.

Over one justice's dissent, the court refused to decide the case on an expedited basis, instead shifting it to the U.S. Circuit Court of Appeals in Washington - a move that seems likely to delay for at least a year a final outcome as well as any possible breakup of Microsoft.

All aspects of a federal judge's order against Microsoft, including his mandate to split the company in two, have been put on hold while the company pursues its appeal.

The appeals court that now receives the case has indicated that it will move it along at a faster-than-usual pace.

To help the court begin promptly, the Supreme Court sent a deputy clerk to the lower court yesterday to hand-deliver the order and the files. By midafternoon, the appeals court told Microsoft to propose by Monday a schedule to move the case toward a decision.

Even with a speeded-up appeal schedule, a final ruling at that level appears to be months away. After that, the case could go back up to the Supreme Court, but that is not a certainty. If, for example, the appeals court returned the case to the trial court, a new appeal could follow.

Microsoft stock closed at $62.69 a share at the end of regular trading yesterday, up $1.44.

The company said in a statement that it "is confident in its case on appeal" and that it was in everyone's interest "to put this issue behind us." It said it expected the appeals court to overturn a ruling by U.S. District Judge Thomas Penfield Jackson that the company repeatedly violated antitrust law in making and marketing its Windows operating system for personal computers and its Internet Explorer browser.

Because of those violations, Jackson ordered the company broken into two: one to handle the Windows system and another to handle everything else Microsoft produces. Microsoft says it is also confident of overturning that order, calling it a drastic remedy that goes far beyond any evidence against it.

This appeals court has overturned Jackson once before, at an earlier stage in the long-running feud between Microsoft and federal antitrust regulators.

The Justice Department, which clearly preferred to have the case decided now by the Supreme Court because it would be faster, said in a statement that it looked forward to defending its case in the appeals court "as expeditiously as possible."

The Supreme Court gave no reasons for passing up the chance to resolve the case during the justices' term that is to open Monday.

But brief comments by the one dissenting justice, Stephen G. Breyer, hinted that some of the other justices had privately expressed worry about handling a case of such complexity before an appeals court has had the chance to filter it.

Breyer noted the argument, apparently made by colleagues, that an appeals court, if given the chance, would narrow the issues at stake. He argued that the Supreme Court would be able to "consider the issues fully now."

He dissented from the court's transfer of the case because, he said, "the case significantly affects an important sector of the economy - a sector characterized by rapid technological change." Speed in deciding it, he said, "may help create legal certainty."

Industry analysts have suggested that the longer the case takes to reach a final decision, the more likely it is that changes in operating system and browser technology would outrun this particular dispute and alter the nature of high-tech competition. Such a development could influence the courts' view of whether Microsoft remained such a risk to competition that it should be broken up or otherwise disciplined.

Only one other member of the court wrote anything yesterday. Chief Justice William H. Rehnquist explained why he was taking part in the action even though his son does some legal work for Microsoft.

The chief justice said he did not think the situation created a perception that he would favor the company if the court heard the case. He did not say how he had voted on sending the case back to the appeals court, but he did not join Breyer's solitary dissent.

Even before yesterday's order, it was clear that the Microsoft case would not conclude until after a new president has been elected and has entered office in January. Some have speculated that the next administration might be more willing to work toward a compromise and settle the case out of court.

One problem with speculation about a future settlement, however, has been that the antitrust challenge against Microsoft is not limited to the lawsuit by the Justice Department.

Nineteen states, including Maryland, have their own separate case against the company, and Jackson has ruled in their favor, too, finding that Microsoft violated state consumer protection and fair competition laws.

Maryland and 16 other states favor the breakup of the company; the two remaining states favor sharp restrictions on Microsoft's business conduct as a remedy for its violations.

After the judge issued his final order against Microsoft on June 7, he sent the case directly to the Supreme Court, saying it raised issues of "general public importance." He did so under a 1974 federal law that allows some antitrust cases to skip the appeals court level and go on to the highest court.

That law, however, gives the justices discretion on whether to review the case or send it to the appeals court for the initial review. The Supreme Court, in its one-paragraph order yesterday, chose the second option.

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