U.S. Could Seek Restrictions This Year on Microsoft

By David Lawsky

WASHINGTON (Reuters) - The government could seek restrictions on Microsoft Corp. (NasdaqNM:MSFT - news) that take effect this year, long before the landmark antitrust case works its way through higher courts, experts said Tuesday.

District Judge Thomas Penfield Jackson ruled Monday that Microsoft committed serious violations of the nation's antitrust laws, opening the way for consideration of penalties in the final phase of the trial that may end in October.

But because the appeals process could stretch the case until 2002 or beyond, some experts think the government should seek interim restrictions as a way to restrict Microsoft sooner.

A Justice Department spokeswoman had no comment.

``I do expect for the government to ask for some intermediate relief,'' said Herbert Hovenkamp, a professor at the University of Iowa college of law who has co-written an important treatise on antitrust law and consulted for the government on the case. Hovenkamp said he has not, however, talked to the government about the possibility.

Jackson has ruled Microsoft used its monopoly power in personal computer operating systems to illegally intimidate other firms and preserve that monopoly.

The Justice Department and 19 states which brought the case could ultimately ask for remedies ranging from restrictions on Microsoft's conduct to splitting it into several smaller firms.

But obtaining a tough remedy that would permanently alter Microsoft could take years, so the government would have to seek some lesser change if it wanted quick relief.

Intermediate relief ``is certainly something the Justice Department ought to think about proposing, but because the appeal will not have been heard, appellate courts may be hesitant to approve the granting of such relief,'' said Harvey Goldschmid, a professor of law at Columbia Law School.

At a minimum, Goldschmid said, the seeking of intermediate relief may have the salutary effect of resulting in an expedited appeal.

``I think that would be very healthy,'' Goldschmid said.

Soon after Judge Jackson announced his ruling Monday, Microsoft said it would seek an expedited appeal of the ruling at the conclusion of the trial's next phase.

Any appeal by the company or request for intermediate measures from the government would have to wait until the Judge issues remedies, expected by October.

Several lawyers who read Jackson's decision said it appeared to have been written carefully, with an eye on higher courts.

``The decision for the most part followed established (legal) precedent and so the issue on appeal is more likely to be factual issues,'' said Mark Schechter, an antitrust lawyer with Howrey & Simon.

Attacking Jackson's findings of fact, which were issued months before his conclusions of law, will be tough, Schechter said. Microsoft will have to show that Jackson was ``clearly erroneous.''

But Joseph Sims, an antitrust lawyer with Jones, Day said that there were relatively few cases under the portion of antitrust law used against Microsoft, so that the company would easily be able to find precedents that support its views.

``This is an area where there's something for everybody out there in the case law,'' he said.

Steven Newborn of Clifford Chance said that if Microsoft is able to win at the U.S. Court of Appeals level, and Texas Gov. George Bush, a Republican, is elected president, the firm might be able to reach a favorable settlement.

Otherwise, the Justice Department could appeal a losing appeals court decision to the Supreme Court.