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Microsoft trial set for Sept. 8
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May 22, 1998: 5:19 p.m. ET
Judge orders two suits to be combined; Microsoft to roll out Win 98 early
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NEW YORK (CNNfn) - In a mixed decision, a federal judge set an early trial date for the government's antitrust lawsuit against Microsoft Corp., but he postponed a decision on an injunction that would force dramatic changes in Windows 98 until September.
The decision by U.S. District Court Judge Thomas Penfield Jackson to begin the trial on September 8 left both sides unhappy. Microsoft wanted to delay a trial until December while the government was hoping the court would rule on the injunction quickly.
By delaying a hearing on the injunction until the trial starts in September, Microsoft can continue to ship copies of its new operating system Windows 98 all summer.
Because Windows 98 will have been available for two months by September 8, the government's motion for a preliminary injunction becomes a motion for a permanent injunction.
The Justice Department and 20 states filed separate antitrust suits against Microsoft on Monday, charging the software company was using hardball business tactics to drive its rivals out of business.
On Friday, Jackson said the two cases should be combined into one.
Both sides claim victory
"The decision today puts us on a very fast track to the ultimate resolution of the issues at stake here," said Richard Blumenthal, attorney general of Connecticut.
"The judge has moved out the date," said Microsoft general counsel William Neukom said. "That will give us a chance to prepare our case, to assemble our evidence and law and to make a very powerful case in order to protect the principle of the right to innovate on our products."
The states also put their own spin on the significance of the trial date.
In a statement released after the hearing, New York Attorney General Dennis Vacco said, "Microsoft has suffered a crushing legal defeat by now having to defend our request for preliminary relief and our antitrust lawsuits on the very same Sept. 8 trial date."
Adam Sohn, a Microsoft spokesman responded, "The government is clearly as adept a PR machine as there ever was one."
Seven months is too long
During the hearing, Jackson took exception to Microsoft's request for a seven-month delay, telling the software maker it has had plenty of time to prepare a defense.
"By the time that you propose [for a hearing] there will be 16 to 18 million horses out of the barn, and that's too late," he said, referring to the release of Windows 98, Microsoft's new operating system.
"With the greatest respect for your Honor, that isn't enough time for us," Microsoft attorney John Warden said.
"I tend to believe it is," Jackson replied.
To keep the case on track, Jackson set the following deadlines:
- July 28 - Deadline for Microsoft to formally respond to the lawsuit.
- August 10 - Deadline for Microsoft to respond to the government's request for the preliminary injunction.
- August 24 - Deadline for the Justice Department and the states to reply to Microsoft's responses.
Charles Rule, a partner with Covington & Burling in Washington and an outside advisor to Microsoft, said the company was pleased the court did not block shipments of Windows 98.
"We're going to get to ship Windows 98 with all its Internet functionality intact… and that's the key," said Rule.
The government had sought an order that would force Microsoft to remove its Internet Explorer browser from Windows 98, or at least put a rival browser of Netscape Communications Inc. on the system.
Jackson was the judge who issued the preliminary injunction last December which prohibited Microsoft from forcing computer makers to include the Internet Explorer Web browser in each copy of Windows 95 installed on their machines.
A lengthy trial could favor Microsoft financially, because it will allow for sales and shipments of Windows 98 to proceed while the case plays out.
In its motion for delay, Microsoft said the government spent two years on investigations before filing thousands of pages of documents Monday, when the suits were officially filed in what could the biggest antitrust action in more than a generation.
Speedy trial expected
William Kovacic, a professor at George Mason University School of Law, said "for a matter of this complexity," it was somewhat unusual for a judge to set the preliminary injunction hearing and the opening of the trial on the same date.
"What this means is the suit will not go on for 20 years," Kovacic said.
He added even if the case is appealed all the way to the Supreme Court, it will likely be over by early 2000.
"That's a relatively fast track in this business," he said.
Experts also anticipate a speedy decision on the government's request for a permanent injunction.
"It's basically good for the government that they get a quick hearing," said Spencer Waller, associate dean at Brooklyn Law School. "Judge Jackson will make a quick decision. He hasn't messed around with this case."
Pending appeal will have impact
Kovacic said the U.S. Court of Appeals decision on the Windows 95 preliminary injunction will set the tone for the new trial, adding a decision will likely be reached before the new trial begins.
In December, Microsoft appealed Jackson's ruling for an injunction that forced the company to stop forcing PC makers to include Internet Explorer in Windows 95.
Earlier this month, Microsoft gained a partial victory when the appellate court ruled that the Windows 95 injunction did not apply to Windows 98. If Microsoft wins the appeal outright, Kovacic said it would increase Microsoft's chances for victory in the new trial, but only a bit.
"The appeals court may say it is only talking about Windows 95 in its interpretation of the consent decree," Kovacic said. "It does have an influence. The Court of Appeals will inevitably say something about the appropriateness of Microsoft's behavior."
Kovacic added the appellate court's decision will also establish the boundaries Judge Jackson will abide by in the new trial.
Windows 98 to hit shelves on June 15
Microsoft began sending copies of Windows 98 to PC makers on Monday. The software giant originally planned to have retail copies available on June 25, but on Friday the company said PC makers can begin selling computers outfitted with Windows 98 as early as next week, and stores can start selling the software on June 15.
A company spokesman said releasing some PC's with Windows 98 on them before the official release date is a common practice.
"The more time Microsoft has, it makes it harder [for the government] to establish a remedy that would limit Microsoft's flexibility in selling Windows 98," Kovacic said. "Each month that goes by makes it harder to obtain effective relief."
Although the states had asked Jackson for preliminary relief before June 25, a spokesman for one of the states said an injunction granted on Sept. 8 could hit Microsoft even harder because that's the beginning of the holiday buying season.
International Data Corp., which tracks sales and trends in the computer industry, has forecast 12 million new shipments of Windows 98 for the year, along with 6.9 million upgrades from Windows 95 to the new operating system. It is in the process of adjusting its forecast in light of Friday's announcement.
Microsoft (MSFT) shares closed at 85-9/16, down 9/16. 
-- by staff writers Jamey Keaten and John Frederick Moore
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