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Microsoft gains court win
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May 12, 1998: 6:46 p.m. ET
U.S. Appeals Court says 1997 injunction doesn't apply to Windows 98
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NEW YORK (CNNfn) - A U.S. Court of Appeals handed Microsoft Corp. a victory Tuesday by ruling a lower court decision does not apply to its forthcoming Windows 98 operating system.
The decision means that, barring further action by the Justice Department, Microsoft can ship Windows 98 -- with the Internet Explorer Web browser -- to computer makers on Friday as planned.
Microsoft hailed the ruling as a "victory for the consumer."
"This is a gratified victory for the consumer," a Microsoft spokesman said. "It gives Microsoft the ability to move ahead with a great product and integrate a new technology. Customers will be gratified that they can incorporate Windows 98 into their systems."
A preliminary injunction issued last year by a U.S. District Court judge prevented Microsoft from forcing PC makers to include Internet Explorer in the Windows 95 operating system "or successor versions."
Last week, Microsoft argued to the appeals court that the 1997 decision should not apply to Windows 98. The court agreed with that interpretation on Tuesday.
Court calls Windows 98 argument 'weak'
"Whatever the United States' chances of winning permanent injunctive relief with respect to Windows 95 in the proceeding currently in the district court, they appear very weak with respect to Windows 98," the order from a three-judge panel said.
Tuesday's ruling also means the government will have to open a new antitrust case, specifically targeting Windows 98, if it is to seek any injunctive action against the operating system.
The court ruling capped a busy day for the software giant. Earlier Tuesday, Sun Microsystems Inc. added to Microsoft Corp.'s legal troubles Tuesday by asking a federal court to block shipment of Windows 98 software with incompatible versions of Sun's Java language.
In two separate motions for preliminary injunctive relief, filed in U.S. District Court in San Jose, Calif., Sun did not expressly ask the judge to block the shipment of Windows.
Rather, company officials asserted they merely want guarantees that Windows 98 is shipped "with a compatible implementation of the Java platform," a programming language that allows software developers to write programs to run on any computer platform, regardless of the operating system.
Microsoft calls move a publicity stunt
Nonetheless, Sun's action could effectively delay or block the forthcoming shipment of Windows 98, the successor to Windows 95 that runs on most personal computers.
The action by the Palo Alto, Calif.-based firm drew a sharp retort from Microsoft. Officials there said the company remains on target to ship Windows 98 to computer stores by Friday for retail sale beginning June 25.
Sun's motion brings to a crescendo a months-long legal standoff with Microsoft over purported violations in its use of Java technology.
In a federal lawsuit filed last fall, Sun alleged that Microsoft had breached its contractual obligation to Sun to deliver Java-compatible products.
In a subsequent motion last November, Sun asked a federal judge to bar Microsoft from using a Java-compatible logo in its Internet Explorer Web browser. Sun claimed the technology used in that program and related products does not pass compatibility tests, and therefore, falls short of licensing agreements.
A judge granted Sun's request at the time. But company officials asserted Tuesday during a conference call with reporters and analysts that Microsoft had since shown little willingness to comply with the relief order.
"It is very clear that Microsoft is continuing to seek ways to flout its contractual obligations," Alan Baratz. President of Sun's Java software division said.
In a separate statement formally announcing the court injunction, Baratz characterized the new motions as extensions of previous efforts to force Microsoft into compliance on Java.
Create a level playing field
"Our goal is simply to ask the court to define a level playing field that developers can rely on during the time it takes for the court to fully deliberate our contract dispute with Microsoft," he said.
Microsoft spokesman Jim Cullinan said he found Sun's timing "curious," given the fact that Sun has known about the delivery date for Windows 98 for about a year and presumably could have acted earlier.
Cullinan suggested that Sun is acting now because of "the anti-Windows 98 frenzy developing around media reports".
Tod Nielsen, Microsoft's manager of developer relations, said: "From our perspective it appears sort of like a PR stunt to come after Windows 98 now."
Cullinan stressed Microsoft's long-standing contention that it offers "the best and fastest" implementation of Java's "virtual" program.
The Sun challenge is just the latest in a barrage of legal assaults against the Redmond, Wash.-based software colossus.
A torrent of legal worries
More than18 states also have threatened legal action against Microsoft in recent weeks aimed at blocking the introduction of Windows 98. The Justice Department declined to comment Tuesday on whether it intends to join the states in their effort but the states are expected to file their lawsuit on Thursday.
Last year U.S. District Judge Thomas Penfield Jackson ordered the software giant to stop forcing PC makers to license the Internet Explorer browser with copies of Windows 95. The company appealed the ruling and is awaiting a decision from the appeals court.
Tuesday's decision does not pertain to the government's case for Windows 95.
At issue is whether the software titan is using its dominance in the operating system market to elbow out rivals by forcing PC makers to feature other Microsoft products as a condition of their license agreement for Windows.
Sun executives dismissed suggestions Tuesday that the motions amounted to an 11th-hour ultimatum that Microsoft can't possibly hope to meet. Specifically, they noted, the motions give Microsoft several options - including scrapping all versions of Java in Windows 98 if it can't meet the compatibility requirements by Friday's shipping date.
As things currently stand, Baratz said, the version of Java on Windows 98 is "tainted technology" that violates the original designers' "write once, run anywhere" principle.
Earlier this month, a group of high-tech heavyweights, including Compaq, Intel Corp., Dell Computer Corp. and Hewlett-Packard Co., rallied around Microsoft, urging the government not to block the release of Windows 98.
The companies said a delay in the launch date would hurt their marketing plans as they gear up for the holiday buying season.
Delay may be unlikely
Even before Tuesday's appellate court decision, an antitrust expert said it was unlikely that the Justice Department, the states or Sun Microsystems would be able to block shipment of Windows 98 at such a late stage.
William Kovacic, a professor at George Mason University School of Law, said even if all three parties asked a court to grant a preliminary injunction against Windows 98, the court would have to schedule a hearing to determine the course of action. Any hearing, he added, would not likely happen before Windows 98 ships to computer makers on Friday.
"They would be asking the court to stand in the way of a major product introduction," Kovacic said. "The courts usually do that only if there's an extraordinary risk to public health and safety.
"A more likely scenario," Kovacic added, "is that the Justice Department will let Windows 98 ship but ask the court to schedule a hearing on whether Microsoft should change its behavior."
Microsoft shares closed at 85-11/16, up 1-7/16. 
-- by staff writers John Moore and Douglas Herbert
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