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  Judge Sets Sept. Trial for Microsoft

By Rajiv Chandrasekaran
Washington Post Staff Writer
Saturday, May 23, 1998; Page D01

Microsoft Corp. will be allowed to sell an unaltered version of its controversial Windows 98 software for at least the next four months, but the company will face a trial much sooner than it had wanted on government charges that it is violating antitrust laws, a federal judge ruled yesterday.

Microsoft had asked U.S. District Judge Thomas Penfield Jackson to give it seven months to prepare for a preliminary hearing into two broad antitrust lawsuits filed on Monday by the Justice Department and a coalition of 20 state attorneys general. The company then wanted many more months to prepare for a full trial.

Handing a key procedural victory to the government, Jackson decided instead to consolidate both the preliminary hearing and the full trial, scheduling the proceedings to begin in early September.

While other equally broad antitrust lawsuits have taken years to litigate, the judge's timetable means the Microsoft cases could be resolved by October, though appeals would probably follow.

The Justice Department and the states are seeking to force Microsoft either to remove its Internet "browsing" technology from Windows 98 or include a browser made by rival Netscape Communications Corp. The government lawyers had wanted Jackson to issue a preliminary injunction forcing Microsoft to make the changes by June 25, the date when Windows 98-equipped computers first will be shipped to buyers.

Jackson's decision now means that Microsoft will sell an unaltered vision of the software through the summer. By the company's own projections, it will ship about 2 million copies a month. Many of those will be placed in computers built for the back-to-school and Christmas shopping seasons, the two biggest sales periods for the consumer PC industry.

Although the ability to sell its products without any restrictions for the next several months presents an immediate advantage to Microsoft, several legal experts said yesterday that the trial schedule is a significant disadvantage for the company.

"This is a terrible result for Microsoft," said Joe Sims, a former deputy assistant attorney general in the Justice Department's antitrust division and now a partner at the Washington law firm of Jones, Day, Reavis & Pogue. "Microsoft now has less than four months to get ready for one of the most complex antitrust cases in history. That's unheard of."

Sims called the timetable a "terrific advantage for the government."

William Baxter, the department's antitrust chief during the Reagan administration, said the judge had taken "an unusual step" that would present "a big challenge for Microsoft."

Some of the legal specialists suggested that Jackson decided to consolidate the preliminary hearing and the full trial not just to save time but to avoid having the proceedings delayed if one side appealed his preliminary injunction.

"He saw the trap out there if this case got tied up in appeals halfway through," said Garret G. Rasmussen, a former Federal Trade Commission lawyer who now is a partner at the Patton Boggs law firm in Washington. "It's a very aggressive move."

Rasmussen and others also speculated that Jackson decided on the consolidation because the action the government is seeking from Microsoft through a preliminary injunction is the same as what it wants in the full trial.

At yesterday's hearing, Microsoft's legal team placed a 15-inch stack of papers on their table, which they said was the government's evidence. They argued that poring through those documents and interviewing relevant witnesses would take more than a few months.

"That isn't enough time for us," Microsoft lawyer John L. Warden told Jackson after the judge set the Sept. 8 trial date.

"I tend to think it is," Jackson replied. The judge said he would consider at a later date any request by Microsoft for more time to prepare for the trial.

But the judge noted that Microsoft's proposed seven-month schedule would give it time to sell millions more copies of Windows 98 before he has a chance to rule on the lawsuits. "By the time you've suggested, there will be some 16 [million] to 18 million horses out of the barn," Jackson told Warden.

Jackson also was critical of the Justice Department's proposed timetable, saying that there was "no absolute magic" to ruling before the June 25 formal release date of Windows 98 because such a quick decision would still mean some Windows 98-equipped computers would be sold to consumers. That's because computer makers already have started putting the software on new machines and the department is not seeking to block those PCs or impose a recall.

Warden added that the June 25 date was irrelevant because Microsoft has decided to allow some computer stores to start to sell Windows 98 as early as June 15, although the formal marketing blitz for the product won't start until June 25.

David Boies, a lawyer representing the Justice Department, told Jackson that allowing Microsoft to sell Windows 98 for months without the department's requested changes would tip the market for Internet browsers "irrevocably in Microsoft's direction."

Justice Department lawyers estimate that Netscape has about 50 percent of the browser market, but they say Microsoft is gaining fast.

The suits allege that Microsoft has engaged in a pattern of illegal business practices designed to use the monopoly it holds through Windows to squelch competition elsewhere in the software industry, particularly in the browser market.

After the hearing, lawyers for the Justice Department and the states played down Microsoft's short-term freedom to ship Windows, saying they were happy with the fact that a full trial will take place in less than four months. "We're very pleased we're going to get an early resolution," Boies said outside the courtroom.

Boies, a high-powered trial lawyer with a long winning streak, made his public debut yesterday as the department's lead lawyer on the case. He is charging the government half his usual $550-an-hour rate to handle the litigation.

Jackson also said during the hearing that he would combine the Justice Department suit and the states' suit, but that they could be separated in the future.

© Copyright 1998 The Washington Post Company

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