Judge Notes Problem With Microsoft Case Settlement

The judge in the antitrust case against Microsoft Corp. acknowledged Friday that one important provision in the settlement she approved wasn’t working as well as expected, but she defended the agreement as otherwise effective.

The settlement, aimed broadly at restoring competition in the technology industry, compels the Redmond, Wash.-based company to offer its technology to rivals so they can build products that seamlessly communicate with computers running Microsoft’s Windows.

U.S. District Judge Colleen Kollar-Kotelly said during a brief court hearing that the provision Microsoft negotiated with the Bush administration has “not yielded the hoped-for results.” She gave lawyers from Microsoft and the Justice Department months more to continue investigating why it was unsuccessful.

“The plaintiffs appear not to have a full grasp yet as to the reasons for the situation,” she said.

The judge speculated that competitors might be awaiting the outcome of “some external proceedings.” That was a veiled reference to a U.S. appellate court ruling expected in the coming months to decide whether sanctions in the settlement she approved were adequate. One state, Massachusetts, is pressing for tougher penalties against Microsoft.

Kollar-Kotelly indicated that she was generally satisfied with other parts of the antitrust deal.

“The decree seems to be operating,” she said.

Lawyers for Microsoft and the Justice Department previously said that only 11 competitors have paid Microsoft for software licenses -- fewer than the judge and government antitrust officials had expected.

The Justice Department said earlier in court papers that Microsoft had agreed to change the licensing agreements to make them more attractive to competitors. But even after changes are made, government lawyers warned that they “cannot foresee with confidence that the improvements will be sufficient and remove the need for further changes.”

A Microsoft lawyer, Rick Rule, said the company had simplified the licensing agreements. The contracts were cut from 30 pages to 14, and the way some prices were calculated was changed to a flat fee from a percentage of revenues.

Microsoft shares rose 47 cents Friday to close at $28.48 in Nasdaq trading.