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Microsoft request denied
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August 17, 2001: 4:23 p.m. ET
Appeals court won't postpone proceedings on antitrust case
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NEW YORK (CNNfn) - A federal appeals court Friday denied Microsoft's request to delay further proceedings in the company's four-year antitrust case pending its request for a Supreme Court review.
The decision not to delay the proceedings, which Microsoft had asked the court to do last month when it petitioned the Supreme Court to hear the case, clears the way for it to be sent back to a new U.S. District Court judge to decide what penalty the software maker should face for antitrust violations.
The Supreme Court is not expected to decide whether to take up Microsoft's appeal until early October.
On June 28, the U.S. Court of Appeals for the District of Columbia overturned a lower court's order that Microsoft be broken into two companies as a remedy for anticompetitive practices. The appeals court remanded that, and other parts of the judge's order, to the U.S. District Court in Washington for consideration by a different judge.
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At the same time, the appeals court upheld the lower court's decision that Microsoft held a monopoly in the market for computer operating systems and had used that power to engage in anticompetitive business practices that violated U.S. antitrust laws.
In its decision, the appeals court provided a lengthy discussion on the matter of "judicial misconduct," saying that Judge Thomas Penfield Jackson, the U.S. District Court judge who ruled against Microsoft, violated ethical guidelines requiring judges to avoid public comments on pending cases and avoid the appearance of impropriety.
Highlighting the judicial misconduct issue, Microsoft last month asked the Supreme Court to take up the matter and asked that the case not be remanded to the district court until the High Court decides whether or not to consider it.
The appeals court said Friday that Microsoft had "misconstrued our opinion, particularly with respect to what would have been required to justify vacating the district court's findings of fact and conclusions of law as a remedy" for antitrust violations. It also said that Microsoft had "failed to demonstrate any substantial harm that would result" from allowing the district court proceeding to continue.
Some antitrust experts have said that if the case is returned to the District Court, which now is expected to occur as early as next week, they believe the Justice Department and some of the states that prosecuted Microsoft may be emboldened to seek a court order blocking the release of Windows XP, its newest operating system.
Windows XP, due for release Oct. 25, incorporates features such as instant messaging, streaming media and digital imaging capabilities into the operating system, and has been targeted by Microsoft's foes who say it demonstrates further anticompetitive practices.
Some trial watchers have characterized Microsoft's recent legal moves as part of a broader strategy to prolong the court proceedings and delay any antitrust actions, including a court-ordered block of the release of Windows XP, until after the product already is in the marketplace.
The Justice Department has pointed to the pending release of Windows XP as a reason the case should not be delayed, although it has not said whether it will seek to block the release of the new product, which many PC makers are hoping will be a catalyst for flagging sales.
"We are pleased with the court's decision and we look forward to proceedings in the district court," Justice Department spokeswoman Gina Talamona said Friday.
A spokesman for Microsoft, which has expressed a willingness to settle the case out of court, said the company is ready to move forward with the case and is still open to a settlement with the government.
"We believe the process was best served through a stay, but are prepared to move ahead," Microsoft spokesman Jim Desler said.
The software maker could ask the Supreme Court to order a delay in the proceedings while it considers whether it will hear the case, which many legal experts have said is unlikely because the appeals court has been unanimous in its decisions against the company.
If the High Court does decide to hear the case, actual briefs and oral arguments wouldn't be likely until early 2002.
In its order denying Microsoft's request to postpone the delivery of the case to the district court, the appeals court said a new judge will be assigned in seven days. The District Court has said the case will be randomly assigned to one of as many as 14 judges.
Click here to see which judges could take the case
Some of the District Court Judges are believed to have recused themselves from the case, either because they may have conflicts of interest or are trying to avoid a case that has become a briar patch.
It has been time consuming and brought negative attention to the judges who have handled the matter, including Judge Jackson and Judge Stanley Sporkin, who presided over a related antitrust matter in 1994.
Shares of Microsoft (MSFT: down $2.74 to $61.88, Research, Estimates) fell more than 4 percent in Nasdaq trade Friday amid a broad downturn in U.S. technology stocks. 
-- CNNfn.com's Richard Richtmyer and CNNfn's Steve Young contributed to this report
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