Appellate Judges Question Justice Department Case Against Microsoft

Three federal appeals judges put a Justice Department lawyer on the defensive Tuesday, sharply questioning the timing and rationale of the government’s case against Microsoft Corp.

Microsoft had appealed a lower court’s preliminary injunction requiring that it sell computer makers a version of its Windows 95 operating system without its Internet Explorer browser.

The case before the appellate judges--which could take weeks or months to decide--would theoretically help determine the fate of Windows 95. Yet its successor, Windows 98, is set for release to computer manufacturers next month.

Judge Patricia Wald asked Justice Department lawyer Douglas Melamed whether “once Windows 98 hits the market, [the case] will . . . be relevant.” She observed that the case may wind up in a “time warp” and wondered if soon anyone will want Windows 95.

Melamed said PC makers may continue offering Windows 95, but conceded that the market would be “very small.”

In fact, the Justice Department is watching Microsoft closely as its senior officials ponder whether to file broad, new charges against the Redmond, Wash.-based software giant that would not depend on a 1995 consent decree.

Microsoft lawyer Richard Urowsky argued that the lower court judge made a fundamental error in issuing his injunction under the decree and said the case should have been dismissed.

The appellate judges were skeptical of the Justice Department’s interpretation of a key section of the 1995 agreement. That section bars Microsoft from tying the sale of one product to another but permits it to integrate products.

Melamed said Microsoft could integrate products only if they were not sold separately.

In trading on the Nasdaq market Tuesday, Microsoft’s shares inched up 25 cents to close at $94.88.