Microsoft Corp. Appeals Judge’s Browser Ruling

Microsoft Corp. on Monday appealed a federal judge’s ruling barring it from compelling personal computer makers to use Microsoft’s Web browser if they also use the company’s Windows 95 operating system.

“This is a very dangerous precedent and would lead to a situation where high-technology companies are limited by government judgment,” William Neukom, Microsoft’s chief lawyer, said in a conference call from company headquarters in Redmond, Wash.

In the meantime, the software giant said it will comply with the judge’s order by giving computer manufacturers two new options for installing Windows 95--both of which would hamstring a PC’s performance.

One of those choices involves the use of a 2-year-old version of Windows 95 and will result in computers that don’t perform some basic functions as well as do PCs that use newer versions of Windows 95 with the company’s Internet Explorer browser installed. The second option will keep a PC from running at all.

As a result, Brad Chase, Microsoft’s vice president for Internet marketing, said the world’s dominant PC software company expects most computer manufacturers to continue using the latest version of Windows with Internet Explorer. “That’s the best choice for consumers,” Chase said.

While the appeal is under way, Chase said, Microsoft is “moving full speed ahead with Windows 98,” a new operating system that more completely combines the functions of a PC operating system and an Internet browser. If a court order is in effect when Windows 98 is expected to be released next spring, Microsoft said, it could offer similar options to take the browser’s software out of that product.

In response, officials at the Justice Department said that actions proposed by Microsoft on Monday violate orders issued last week by U.S. District Judge Penfield Jackson.

“We don’t think they’ve announced a course of conduct that complies with the court’s order,” said a Justice Department official who asked not to be identified. The department did not say what action the government would announce next.

Gary Reback, a lawyer for browser rival Netscape Communications Corp., said Microsoft doesn’t seem to be doing all it could to give computer makers a choice of browsers. He said his desktop computer had Windows 95 and a Netscape browser and “works just fine.”

Microsoft will “make everything as difficult as humanly possible,” Reback said.

Microsoft filed a notice of appeal Monday in a Washington federal appeals court, saying the federal judge overstepped his authority last week when he issued a preliminary injunction against the company.

In late October, the Justice Department filed suit, seeking to hold Microsoft in contempt of court for alleged violations of a 1995 antitrust settlement. While rejecting the request for a contempt citation, Jackson issued a temporary order that requires Microsoft to stop making the use of Internet Explorer a condition for permission to use Windows 95. He appointed a special court official to review the case and make recommendations to the judge by May 31.

The judge said a temporary order was needed to keep Microsoft from boosting its market share during that time.

Neukom said the judge had authority only to grant or deny the government’s specific request for a contempt citation. Once he decided Microsoft was not in contempt, Neukom said, Jackson had no power to issue a preliminary injunction.

After a “careful reading” of the judge’s order, Neukom said, Microsoft determined that the injunction required it to take out of Windows 95 all the software code for Internet Explorer. Because the browser includes programming for features other than surfing the Web, Neukom said, Microsoft discovered that when it took that step, it created “an operating system that doesn’t seem to work.”

“In the short term, we expect that computers manufacturers will continue to ship Windows 95 in its full version because that is what their customers want on their machines,” Neukom said.