Microsoft Appeals Breakup Ruling

Feb. 27, 2001 -- A panel of appeals court judges ripped into the judge who ordered that Microsoft be split apart today, saying his anti-Microsoft comments to journalists were "beyond the pale."

"The system would be a sham if all judges went around doing this," Judge Harry Edwards told government lawyer John Roberts in the final phase of the two-day appeal of Judge Thomas Penfield Jackson's June 2000 ruling that Microsoft is an abusive monopoly.

Jackson made out-of-court statements disparaging Microsoft to a journalist, Ken Auletta, who published them in a book, World War 3.0.

"What the statements suggest is actual bias" against Microsoft, company lawyer Richard Urowsky said.

The judges of the U.S. Circuit Court for the District of Columbia are unlikely to throw the case out entirely because of Jackson's out-of-court statements, ABCNEWS legal adviser Jeffrey Toobin said. But if and when they send it back to a lower court for reconsideration, Jackson probably won't be the judge to reexamine it.

"The court will remove him" from the case, said Donald Falk, an antitrust lawyer with Meyer, Brown & Platt in Washington D.C. who was watching the appeals proceedings.

"Given the magnitude of this case, it's hard to imagine overturning the entire complex judgment just because a trial judge was shooting his mouth off," Toobin said. "But I wouldn't be surprised if an opinion from the court said, 'We don't think it was a good idea for him to be talking this way.'"

Actual Bias?

Over and over again, the judges attacked Jackson for giving interviews to outside journalists during the course of the trial, actions which they said violated the canons of judicial ethics.

"I don't discuss cases with my best friends. That's the way we operate. We're not supposed to do that," Edwards said.

But the judges took a harsh view of Microsoft's position that the whole case should be thrown out based on Jackson's statements. Their questions to Microsoft lawyer Richard Urowsky focused on when Jackson would have come up with his anti-Microsoft opinions, and whether it could be proved that he was actually biased against the company.

There is no evidence "other than your own speculation that he had these views before the trial started," Judge David Tatel told Urowsky.

The appeals court could take until June to decide the case, lawyers said. They have three choices: to uphold Jackson's ruling, to strike down parts of it and send it back to a lower court judge for re-examination, or to cancel it entirely. It's most likely to go back to a lower court for further review, Falk said.

Questioning the Breakup

Earlier today, the judges attacked the government's illegal monopoly claims and deeply probed the potential breakup of the software firm.

In the second of two days of arguments, the seven-judge panel of the U.S. Circuit Court for the District of Columbia ripped into government lawyer David Frederick today, saying that a lower court judge didn't properly define the market for Internet browsers, and so they couldn't tell whether Microsoft tried to monopolize that market.

Later, they turned to the potential breakup of the company proposed by Jackson. Microsoft lawyer Steven Holley said the breakup was punishment for Microsoft, an option not permitted under antitrust law.

"It is difficult to conclude that the breakup is anything other than punitive. The breakup was intended to punish Microsoft because it refused to concede that it had broken the law," he said.

Government lawyer David Frederick said splitting the company in two would increase competition in the software industry.

"Our point is we're trying to restore competitive conditions," he said.

But the judges were skeptical of Frederick's argument. Judge David Tatel asked whether Jackson had taken into account the difficulty of a split-off Microsoft applications company writing software for other operating systems. And chief judge Harry Edwards suggested that if even one of the pillars of the government's complex case is knocked down, the breakup may have to be sent back for reconsideration.

"If we are to uphold the judge on fewer than all the arms that he found, does it necessarily follow that we have to send the remedy back?" he asked.

Finding Facts

Earlier, the justices criticized Jackson's "findings of fact," specifically suggesting the judge may not have properly defined a market for Internet browsers.

"If there isn't a proper finding [of what the browser market is], … we would have to at least send this back for some trial judge to weigh the facts and the evidence," Judge David Sintelle said.

Jackson and government lawyers were confusing the browser market with the operating system market, the appeals court judges said, and that's not permissible. Microsoft lawyer Richard Urowsky also drilled that point, saying browsers were just a free part of an operating system, and so Microsoft can't be thought to have dominated a market which doesn't exist.

"It's hard to say in this sort of situation that you can define a distinct market for Web browsing software," Urowsky said.

But Frederick said the point of his argument was that Microsoft stopped Netscape from turning its browser into a full-scale platform that might be able to compete with Windows — and that Microsoft's actions of integrating Explorer into Windows may have stopped a further browser market from developing.

"[In 1995] Netscape had approximately 80 percent market share. They were selling this product, they were licensing it as a product, there was a market for this product," he said.