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  Microsoft to Appeal Court's Injunction

By Rajiv Chandrasekaran
Washington Post Staff Writer
Tuesday, December 16, 1997; Page D01

Microsoft Corp. said yesterday that it will appeal a federal court ruling that prevents the company from requiring makers of personal computers to distribute its Internet-browsing software as a condition of licensing its dominant Windows 95 operating system software. The software giant contended that the judge overstepped his legal authority.

The company also said it plans to comply with the judge's order during the appeal, offering PC manufacturers who don't want the browser two different, stripped-down versions of Windows 95. One version is inoperable and the other lacks functions offered in current editions of Windows, prompting the Justice Department to charge that Microsoft is flouting the order.

U.S. District Judge Thomas Penfield Jackson issued a preliminary injunction Thursday, temporarily preventing Microsoft from linking the two products.

The Justice Department had asked that Microsoft be held in contempt of court, arguing that requiring the joint distribution of Windows and Internet Explorer violated the terms of a 1995 consent decree with the government intended to curtail some of the company's business tactics.

Jackson decided not to hold Microsoft in contempt, saying that he could not, based on the material submitted to him by Justice, "conclude by `clear and convincing evidence' that Microsoft has violated a `clear and unambiguous' prohibition found in the consent decree." At the same time, Jackson said he needed additional evidence to reach a final decision, and he asked a Harvard professor to study the legal and technical issues in the case and report back by May.

Microsoft executives contend that the additional examination goes beyond answering the question of whether Microsoft violated the 1995 agreement. "The matter before the court was whether Microsoft could be held in contempt for violating a consent decree entered in 1995," William H. Neukom, Microsoft's senior vice president for law and corporate affairs, said in an interview yesterday. When Jackson decided not to hold Microsoft in contempt "the case should have ended there," Neukom said.

"It's gratuitous," he said. "It's beyond the scope of the controversy defined by the government's petition."

Neukom said Microsoft also will challenge Jackson's decision to issue a preliminary injunction without first giving the company a chance to describe how such a move could affect its business. "We did not have an opportunity to present a case about why [the preliminary injunction] should not be imposed," he said.

Justice Department officials declined to comment publicly on Microsoft's statements. "Once we've had a chance to review Microsoft's legal papers, we will respond accordingly," department spokesman Michael Gordon said.

Microsoft did not file its full appeal yesterday but submitted a short notice with the U.S. Court of Appeals for the D.C. Circuit indicating its intent to challenge Jackson's ruling. The company plans to file documents asking for a speedy review of its appeal later this week, Neukom said.

Several legal specialists, however, cast doubt on the company's chances of success, saying the judge was within his authority to order a fuller inquiry into the issues.

"What was done here is perfectly appropriate," said James F. Rill, who was the assistant attorney general in charge of the Justice Department's antitrust division during the Bush administration and is now a partner at the Washington law firm Collier, Shannon, Rill & Scott, which represents a Microsoft competitor. "What the judge was saying is that he wants to take a closer look at things. There's nothing wrong with that."

Mark C. Schechter, a former department official who now works at the law firm of Howrey & Simon, said that Jackson, in his ruling, "appeared to go out of his way to be careful and responsible." Schechter, however, said Microsoft's contention that it wasn't given a chance to speak against the preliminary injunction could be grounds for a successful appeal.

Microsoft yesterday also sent a letter to personal computer manufacturers saying that it will comply with the decision while it is being appealed. The company said it plans to offer manufacturers two versions of Windows 95 without the browser.

One is a version with no Internet Explorer files. Brad Chase, Microsoft's vice president for Internet marketing, in a conference call with reporters yesterday, said that version of Windows meets the letter of the judge's order – but it will not work. Microsoft has contended that Windows 95 cannot function without Explorer.

The company also will offer an older version of Windows 95 that was not built to rely on Internet Explorer. That software lacks some enhancements made in later versions of Windows, including some graphics functions and the ability to use a larger hard disk. "We're pretty confident this version will be reasonable for our customers," Chase said.

The company said none of the large PC makers have asked to ship Windows without Internet Explorer.

The Justice Department, however, criticized the company's plans, saying it did not fulfill Jackson's order. "The conduct announced today by Microsoft doesn't comply," a department official said. Some legal specialists suggested that Justice may ask the judge to force Microsoft to change its plans.

Although Justice officials would not publicly elaborate on why they disagree with Microsoft's response, one computer industry group said the company should allow PC makers to install files from Internet Explorer needed to make the latest version of Windows 95 work, but simply remove the "icon" on the computer desktop that allows a user to access the Microsoft browser.

Microsoft's plan "is designed for maximum inconvenience and cumbersome operation," said Edward Black, president of the Computer and Communications Industry Association, which filed a brief in support of the Justice Department in the case.

© Copyright 1998 The Washington Post Company

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