Supreme Court deals ‘serious setback’ to government in Microsoft case

By LAURIE ASSEO

Associated Press

WASHINGTON — The Supreme Court today sent the Microsoft antitrust case to an appeals court, effectively delaying efforts by the government to break the software giant into two parts.

The decision amounted to a tactical victory for Microsoft in the drawn-out legal battle. It had asked the justices to take that course. The Justice Department wanted the nation’s highest court to bypass that step and hear arguments this winter over whether the company must be broken up.

The court acted on an 8-1 vote, with Justice Stephen G. Breyer dissenting. "Speed in reaching a final decision may help create legal certainty," Breyer wrote, contending the Supreme Court should hear the case now.

Microsoft is seeking to overturn U.S. District Judge Thomas Penfield Jackson’s ruling that it engaged in illegally anticompetitive conduct. The judge in June ordered the company split in two, but he postponed enforcement of the order during Microsoft’s appeal.

The court action came as it got a jump on next Monday’s start of the 2000-2001 term. The court granted review in a dozen other cases for the government to go back to the bargaining table with Microsoft.

Microsoft spokesman Jim Cullinan said after Tuesday’s court action, "We’ve always said we’re confident that this will be overturned on appeal, whether it was heard by the Supreme Court or the Court of Appeals.

"We look forward to presenting our arguments to the Court of Appeals, where we will outline a number of errors committed by the district court in this case," he said.

Justice Department spokeswoman Gina Talamona said, "We look forward to presenting our case to the Court of Appeals as expeditiously as possible."

"This is a serious setback for the government," said William Kovacic, a George Washington University law professor and antitrust expert. "Their strategy was to speed this case to resolution as quickly as possible … I think the government gambled and failed. At this point, I think the possibility of breakup is next to zero." He said it might be a good time for the government to go back to the bargaining table with Microsoft.

Microsoft shares were up $3 to $64.25 in trading on the Nasdaq Stock Market.

A federal law allows major antitrust cases to skip the appeals court step and move straight from a trial court to the Supreme Court if the justices grant direct review.

But Microsoft urged the justices not to do so, contending the case is too complicated and that the appeals court should "clear out the procedural and factual underbrush first."

The Justice Department said taking the case through the appeals court would delay a final ruling by at least a year. A long appeals process "could irreparably harm competition in a vital and rapidly evolving sector of the national economy," government lawyers contended.

The justices also declined to hear a case against Microsoft filed by 19 states that joined the Justice Department in suing the company in 1998.

The cases are Microsoft v. U.S., 00-139, and New York v. Microsoft, 00-261.