Microsoft in Strong Position as It Prepares for Court Battle

After being blitzed by the government during a 78-day antitrust trial, Microsoft Corp. has quietly regained significant tactical advantage as it heads into court today to argue its appeal.

Now that President Bush’s antitrust team has taken over the prosecution of the case from the Clinton administration, the final outcome is harder to predict than ever.

But with a mixture of luck and skill, Microsoft has laid the groundwork to overturn U.S. District Judge Thomas Penfield Jackson’s devastating order last June to break the company into two. Experts say the software giant has, in effect, won the coin toss as well as the home field advantage on the eve of its appeal.

“It’s too early to start counting anything,” but “Microsoft has done a pretty good job preparing,” said Ernest Gellhorn, an antitrust expert on the George Mason University law faculty.

The turnaround began last fall when Jackson agreed to delay his punishing antitrust sanctions pending the appeal. Soon afterward the Supreme Court refused a request by the U.S. Justice Department and its 19 state partners to immediately hear the appeal of Jackson’s ruling.

The dispute went instead to the U.S. Court of Appeals in Washington, a conservative court widely seen as more sympathetic to Microsoft than either Jackson or the Supreme Court. Nearly three years ago, for instance, the appeals court reversed Jackson after he ruled that Microsoft had violated a 1995 consent decree by tying its Internet Explorer browser with its Windows computer operating system.

The government’s position was further weakened this winter by controversial comments made by Jackson. In an interview with author Ken Auletta, the 64-year-old Jackson blasted the appeals court as roundly as he had earlier criticized Microsoft and its billionaire chairman, Bill Gates, in newspaper interviews. In Auletta’s book, Jackson compares Microsoft executives to unremorseful gang members and likens Gates to Napoleon.

“Going into this, things looked good for the government,” said Robert Lande, a University of Baltimore law professor who supports the government’s prosecution of Microsoft. “Then, Jackson went and shot his mouth off.”

Microsoft and the government had agreed not to bring up Microsoft’s complaints about Jackson’s handling of the trial in oral arguments. But, in a stunning decision handed down earlier this month, the appellate justices decided to give each side 30 minutes during oral arguments to address the issue of whether Jackson had acted improperly.

That’s twice the 15 minutes the court will give each side to discuss the government’s charge of “attempted monopolization” by Microsoft of the PC operating systems software market.

“The Justice Department cannot come out ahead on the judicial misconduct issue; Microsoft has gained some advantage here,” said Andrew Gavil, a Howard University law professor.

To be sure, not everything has gone Microsoft’s way. The company, for example, wanted to address first what it believes is its strongest argument: that the government erred in claiming that Microsoft illegally tied its Web browser to Windows to extend its software monopoly.

However, the court sided with the government and decided to hear arguments about the government’s claim that Microsoft has bullied adversaries and strong-armed computer makers in an illegal effort to maintain its Windows software monopoly.

Still, Microsoft might benefit from the generous time the appellate court is allotting to oral arguments--seven hours over two days instead of the hour or two usually allotted to an appeal. Lawyers for the software giant are expected to use the extra time to raise more detailed questions about Jackson’s factual and legal findings.

“I don’t think there is any question that [more argument time] benefits Microsoft because one of the fears any appellant has is that the court isn’t going to pay any attention to their appeal,” said Daniel Wall, a former Justice Department trial lawyer who opposes the government prosecution of Microsoft. “This appeal is going to get as much attention as any appeal can get.”

Some participants in the antitrust case even think Microsoft has gained an advantage in failing to agree with the government over the selection of a technical expert to brief the court.

The seven appeals court judges had sought help in getting a better grasp of the complex technical issues underlying the Microsoft case. But lawyers for Microsoft and the government say they couldn’t reach an accord.

“We found we couldn’t really come to an agreement that was not going to bias the court,” said Wayne Klein, Utah’s assistant attorney general. Klein said he thought both sides were hurt by the impasse. But he acknowledged the government might have been a greater victim.

“From our point of view, the more the court understands [technically], the more the court would agree with Judge Jackson, who during the course of the trial became very educated about the software business,” Klein said. “My guess is that [the appeals court] found this knowledge elsewhere--maybe by sitting down with their law clerks or grandchildren.”

The jousting for legal advantage in the landmark antitrust dispute comes in the wake of a shuffling in each side’s legal team.

Gone are David Boies, the government’s star litigator, and Joel I. Klein, head of the Justice Department’s antitrust division during the Clinton administration. Through their numerous courthouse news conferences, the two lawyers had come to personify the case.

Now the Justice Department’s case is being managed by John Nannes, the acting antitrust division chief, and will be argued by Assistant Solicitors General Jeff Minear and David Frederick.

The federal government’s 19 state partners, meanwhile, have retained Washington appellate advocate John Roberts to replace former trial court advocate, Steven D. Houck.

Microsoft has added appellate expert Carter Philips, who has argued 19 cases before the Supreme Court, but its legal team from the New York law firm of Sullivan & Cromwell remains largely intact. Lawyers Richard J. Urowsky and Steven L. Holley will make oral arguments.

Some legal experts believe that Microsoft will benefit from the relative lack of turnover in its legal team.

“I don’t think that, taken as a group, [these advantages] ensure that Microsoft necessarily runs the table on the government, but they do seem to suggest a reduction in the scope of the decision the government won from Judge Jackson,” said William E. Kovacic, a George Washington University law professor.

“The government would have never been in this box if Judge Jackson had not behaved as he did,” Kovacic said. “And the government would be better off” if Boies, Klein or former acting Assistant Atty. General A. Douglas Melamed argued the case. “They knew the case backwards and forwards.”