Appellate Court Rejects Microsoft's Appeal, New Remedy Trial To Begin Next Week

Microsoft has been dealt a solid blow in its defense against its antitrust conviction. The company had asked the US Court of Appeals District of Columbia of Appeals to delay moving forward in setting a new remedy trial to deal with Microsoftis monopolistic behavior while the company awaited word on whether or not the Supreme Court would hear its appeal.

The action was largely seen as a delaying tactic designed to keep legal action from stopping the release of Windows XP. Microsoft is scheduled to release the next iteration of Windows in October, and has aggressively moved up the time period it will allow PC manufacturers to ship the OS into September. The new OS is being heavily criticized for containing many of the same elements that landed the company a conviction as predatory monopolist in the first place. Microsoft has consistently claimed it did nothing wrong and that the companyis actions were necessary to compete with fierce competition. So far, the company has been working hard to clear as many potential hurdles that might prevent the release of the Windows XP, including making some concessions on some XP features. The company has dropped SMART TAGS from IE 6, and removed some artificial barriers that kept competing digital camera software from being used by customers.

One significant hurdle the company faces is a possible injunction coming out of the lower court who will be picking up the new remedy trial, and thatis where todayis ruling comes in. The appellate court is now scheduled to send the remedy phase to a lower court next Friday, possibly giving time to the DoJ and the 18 remaining plaintiff states time to seek an injunction against the OSis release. In the ruling the appeals court rebuked Microsoft and criticized its reading of earlier rulings from the court.

From a CBS Marketwatch report:

"It looks like the Court of Appeals saw this (Microsoft request) as nothing more than a delaying tactic," said Robert Lande, a professor at University of Baltimore Law School. In Fridayis order, the appeals court said it appeared Microsoft had "misconstrued" its opinion regarding "what would have been required to justify vacating the district courtis findings of fact and conclusions of law ..." Lande said it appeared the court went out of its way to criticize Microsoftis assessment of the bias issue. The appeals court "didnit have to do that. They were trying to send a message to Microsoft not to do this stuff and that they werenit going to get away with it."

For its part, Microsoft has gone back to a more conciliatory posture. The company has issued a statement saying it is anxious to settle out of court, though reports have indicated that settlement talks have not progressed very well. From a Reuters report:

"While we believe the process was best served through a stay, we are prepared to move ahead with getting the remaining issues in the case resolved while we await word on Supreme Court review," Microsoft spokesman Jim Desler said. "We remain committed to resolving the remaining issues in this case through settlement."

If the Supreme Court should decide to hear an appeal, Microsoft can request a halt to any more lower court actions until the Supreme Court process has run its course. Legal experts have suggested it is unlikely the Supreme Court will hear the appeal.

Both the CBS Marketwatch article and the Reuters article contain additional information.