U.S. High Court Rejects Microsoft Case

Microsoft Corp. (Nasdaq: MSFT) won a round Tuesday in its appeal of the antitrust judgment against it when the U.S. Supreme Court ruled that the software giant’s appeal should first be heard by a lower appellate court.

The U.S. Department of Justice (DOJ) — which along with 19 states filed the antitrust suit against Microsoft in 1998 — had asked the Supreme Court to hear the appeal under a federal law that allows major antitrust cases to bypass the mid-level appellate court and move directly to the Supreme Court at the discretion of the justices.

The Redmond, Washington-based software behemoth argued that because of the number of court errors made during the trial, the case should first go to the U.S. Court of Appeals for a detailed review. The company argued that the appellate court should “clear out the procedural and factual underbrush” before the case is heard by the Supreme Court.

The high court is likely to hear the case after the appellate court enters its decision and one or both of the parties seek further review.

Breakup Delayed

Tuesday’s ruling was the first battle won by Microsoft in the landmark case in some time. In early April, U.S. District Judge Thomas Penfield Jackson ruled that Microsoft had engaged in anti-competitive conduct in violation of federal antitrust laws. Then, in June, the judge ordered the company split in two entities.

The judge later postponed enforcement of the breakup order pending final resolution of the appeal.

The Supreme Court’s 8-1 vote to send the case back to the lower appellate court means that Microsoft has gained at least six months — possibly as much as 18 months — before the appeal is finally decided.

The case is now headed to an appellate court widely believed to be sympathetic to Microsoft’s position. The U.S. Court of Appeals for the District of Columbia sided with Microsoft in an earlier antitrust suit brought by the DOJ.

The appellate court acted quickly in response to the Supreme Court’s ruling, ordering the DOJ and Microsoft to propose schedules for the appeals process by October 2nd.

Calling the Supreme Court’s decision “a small procedural step,” Microsoft CEO Steve Ballmer appeared on television within minutes of the announcement and said, “We’re just glad to have the opportunity to start the appellate process in either of the two courts.”

Dissenting Opinion

The lone dissenter to the decision, Justice Stephen G. Breyer, issued a two-paragraph opinion stating his view that the Supreme Court should hear the appeal immediately because it “significantly affects an important sector of the economy — a sector characterized by rapid technological change.”

Breyer added, “Speed in reaching a final decision may help create legal certainty. That certainty in turn may further the economic development of that sector so important to our nation’s prosperity.”

Rehnquist Denies Bias

Attached to the ruling was a statement from Chief Justice William Rehnquist refusing to recuse himself from the case, even though his son works for a Boston, Massachusetts law firm representing Microsoft in another antitrust case.

“My son’s personal and financial concerns will not be affected by our disposition of the Supreme Court’s Microsoft matters,” Rehnquist said. “I do not believe that a well-informed individual would conclude that an appearance of impropriety exists.”

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