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Microsoft eyes Appellate Court
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June 19, 2000: 7:44 p.m. ET
But judge expected to reject Monday filing and forward case to Supreme Court
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NEW YORK (CNNfn) - Arguing that the case is too complex for the Supreme Court to hear first without the issues being narrowed, Microsoft on Monday asked the federal judge who ordered the company split in two to let a lower court hear its appeal first.
In an 11-page brief, Microsoft's attorneys asked U.S. District Judge Thomas Penfield Jackson to allow the case to first be heard by the U.S. Court of Appeals, rather than fast-tracking the case directly to the high court at the Justice Department's request.
After ruling that the company violated the nation's antitrust laws by using its monopoly power in the market for PC operating systems to stifle competition, Jackson earlier this month ordered that Microsoft be broken into two smaller companies to prevent it from violating state and federal antitrust laws in the future. Jackson also imposed a series of restrictions, effective in September, on the way Microsoft conducts business pending its appeal.
Since then, Microsoft and the Justice Department have begun a new battle, this time to determine which court will hear the company's case.
Microsoft is aiming to have the case heard by the Appeals Court, which has ruled in its favor on a similar issue in the past and is expected to take longer to render a decision. That's the typical course an appeal takes.
But the Justice Department has asked Jackson to send the case directly to the Supreme Court, invoking an obscure law called the Antitrust Penalties and Procedure Act, or more commonly, the Antitrust Expediting Act.
Most trial watchers expect Jackson to disregard Microsoft's request and fast-track the appeal to the Supreme Court, a procedure that has been used only twice before, both times in an antitrust case against AT&T.
In its brief, Microsoft told Jackson that he should allow the case to first go to the Appeals Court using arguments apparently aimed at the high court rather than at him.
For example, Microsoft said that he had made so many mistakes in his ruling that an appeals court needed to sort them out before the case could be passed on to a higher court.
"Microsoft intends to challenge many of the court's findings as clearly erroneous," Microsoft said in the brief, adding that "addressing those subjects alone would require review of the 13,466-page trial transcript and the 2,695 trial exhibits that comprise the record in these cases, a time-consuming exercise the Supreme Court would not likely be anxious to undertake."
Microsoft also argued that the Court of Appeals already has demonstrated a keen interest in hearing the appeal when it decided last week it would hear the case "en banc," which means by a full panel of 7 judges.
 Microsoft's latest filing came on the same day that the company won another small round in its ongoing battle with the government.
In a mixed decision, the Court of Appeals agreed Monday to consider Microsoft's request to delay Jackson's order pending the appeal and refused the Justice Department's request to "summarily dismiss" the company's request to postpone the court-ordered restrictions on the way it conducts business.
Under Jackson's final ruling, Microsoft wouldn't be divided into two companies until it had exhausted its appeals. But the restrictions on its business practices would go into effect on Sept. 5, 2000.
Microsoft has said that those restrictions would have a "devastating" effect on its business by requiring it to disclose software source code to competitors, redesign all of its operating systems, and comply with price controls.
States' case complicates process
Microsoft has a separate request for a stay of Judge Jackson's ruling pending before the Appeals Court. The Appeals Court is considered to be more likely to grant Microsoft's request. However, the Justice Department has argued that the Appeals Court would lose jurisdiction over the case as soon as Jackson authorizes it to proceed to the Supreme Court.
To complicate matters further, Microsoft said in a court filing last week that the federal law that allows antitrust cases of national importance to be appealed directly to the Supreme Court does not apply to the antitrust action filed by a group of 19 state attorneys general.
 In its filing, Microsoft says that the suits filed by the Justice Department and the states are separate actions, and that the Appeals Court should retain jurisdiction over the states' suit.
Richard Gray, an antitrust and intellectual property lawyer in Menlo Park, Calif., said it is not clear that the states' case qualifies to skip the Appeals Court.
"If it were only the federal government's lawsuit, it would be clear that the Appeals Court loses jurisdiction," Gray said. "The existence of the state suit makes it significantly less clear. But if the Supreme Court wants both suits, there is little doubt in my mind that it could take both of them."
"I think Microsoft will get a stay on at least some of Jackson's conduct remedies, but I don't think it will get a stay on all of them," Gray said. "If the company does get a stay on all of them, that is a positive signal for Microsoft on how the Appeals Court or the Supreme Court would rule on the merits of its appeal."
Microsoft shares ended Monday's session up 1-1/8, or 1.6 percent, at 73-11/16 amid a broad rally of Nasdaq-traded tech stocks. 
-- Reuters contributed to this report
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