Massachusetts Hammers Microsoft

Remedies in the Microsoft antitrust trial do not stop the software maker's anticompetitive behavior nor does it "deprive Microsoft of the marketplace benefits achieved through its misdeeds," and so it should be tossed out in appeal, the Massachusetts attorney general has argued.

"If this is the remedy in a case of this magnitude, then there is little reason why any monopolist or would-be monopolist should hesitate to embark on a similar course of unlawful conduct," says the document filed with the U.S. Court of Appeals for the District of Columbia Circuit. The filing Wednesday is the latest in a series of briefs by Massachusetts and Microsoft about proposed penalties that are more stringent than those in the settlement agreement approved by the U.S. District Court last year.

Microsoft has argued that the Massachusetts proposal would benefit the company's competitors and not consumers, and calls the recommended remedies "extreme."

More Charges

Massachusetts remains the lone hold-out state in the antitrust case. The state refuses to sign on to U.S. District Court Judge Colleen Kollar-Kotelly's remedy ruling, which approved a settlement agreement worked out by plaintiffs and Microsoft. Eighteen states, the District of Columbia, and the U.S. Department of Justice were plaintiffs in the case. Microsoft was found to have an illegal monopoly, illegally using its market dominance in operating systems to make inroads into other areas and to squelch competition.

West Virginia dropped its appeal of the settlement ruling in June, leaving Massachusetts to continue a solo fight. State Attorney General Tom Reilly announced earlier in July that his office is investigating whether Microsoft is violating terms of the settlement agreement.

The Massachusetts appeal is set for oral arguments on November 4.

The latest appellate court brief criticizes the existing settlement agreement and the District Court. Massachusetts argues that "Microsoft's illegal conduct was serious, its consequences were serious, and the failures of the decree are serious."

"The failures of the district court's remedy are profound," the document says. "It fails to stop Microsoft's illegal conduct and does nothing to restore competition to the monopolized market or to prevent Microsoft from engaging in similar means to the same unlawful end. It is predicated upon findings and conclusions that reflect critical misunderstandings of the liability theory in this case, and upon a record devoid of evidence that it would accomplish anything meaningful."

Microsoft Confident

It is notable that Massachusetts stands alone in refusing to accept the final judgment in the case, says Jim Desler, a Microsoft spokesperson.

"It's been very clear through this process that the (district) court thoroughly reviewed these issues and rejected many of the additional sanctions that Massachusetts seeks because they (the sanctions) were not good for the software industry or the economy," Dessler says.

The company will continue to "underscore the potential harm of the sanctions that Massachusetts seeks," he says, adding that "our real focus remains on full and complete compliance of the terms of the court's final judgment."

Massachusetts has proposed the court order Microsoft to unbundle its operating system from all middleware products. The state also contends Kollar-Kotelly erred by not making Microsoft disclose certain Windows application programming interfaces to third-party developers and release Internet Explorer code in an open-source license.

The final judgment approved by Kollar-Kotelly sets up restrictions related to Microsoft's licensing agreements and orders the company to release some of its intellectual property. It forbids Microsoft from retaliating against PC and software makers that offer, or consider offering, products that compete with Microsoft.