WASHINGTON -- U.S. government lawyers may have spent four years girding for this week's Microsoft hearing before an appeals panel, but on Monday they were the ones facing the most pointed questions.
By all rights, the first day of the unusual two-day hearing before the seven appeals judges should have been a good show for the Justice Department: The topics were monopoly power and illegal tying, the linchpins of the antitrust accusations against Microsoft. The more vulnerable portions of the case -- the delayed breakup and the conduct of the trial judge -- come up Tuesday.
But during Monday's six hours of hearings, members of the D.C. Circuit Court of Appeals fired critical and far-ranging questions at attorneys on both sides, and reserved noticeably more ammunition for lawyers representing the Justice Department and the state attorneys general.
Chief Judge Harry Edwards suggested that far from helping consumers, the government's lawsuit might dislodge Microsoft and supplant its monopoly with one governed by Sun and Netscape, now a unit of AOL-Time Warner. "We're going to replace one monopoly with another?" Edwards asked.
"I can't say it's inconceivable," replied Jeffrey Minear, a career lawyer at the Justice Department. Minear also said that the government couldn't predict in which direction the software market would move.
Last year, the Justice Department and states won a near-total victory over Microsoft when U.S. District Judge Thomas Penfield Jackson ordered the company be divided into halves, saying it violated antitrust laws by strong-arming competitors. Microsoft has appealed the ruling and the breakup order, which is on hold during the appeal.
Judge Douglas Ginsburg, probably the court's most libertarian member, suggested that Java -- which the Justice Department claims was a competitive threat Microsoft tried to squash -- flopped because it was an inferior technology. "There was a time when Java first arrived that (it was viewed as superior)," Ginsburg said. "But the events seem to have overshadowed this. The potential hasn't been recognized."
Predicting which way judges will rule based on the ferocity of their questions is, of course, a little like trying to explain why a dog bit someone: Was it was merely in a bad mood, or did it truly believe the victim deserved it?
To be sure, Microsoft attorney Richard Urowsky of Sullivan and Cromwell had no easy time of it either.
Ginsburg repeatedly asked him for citations to the trial record -- "not just your assertion" -- and other panel members suggested that since Microsoft did not challenge some portions of Jackson's verdict, it would have to be bound by them. Appeals courts generally re-review all the legal issues of the case, but defer to trial judges on factual matters such as whether a meeting took place or not.
Not one member of the court seemed to like Urowsky's suggestion that federal copyright law gave Microsoft a near-complete right to object to any changes a computer manufacturer might make to Windows. "I don't see how you can get a reversal on this portion of your case," said Judge David Tatel, an outspoken liberal jurist and a Clinton appointee.
Observers view Tatel and Judge Judith Rogers, also a Clinton appointee, as the two most likely members of the panel to side with the Justice Department. Edwards was seen as a close third, but his comments on Monday may signal a more critical position.
"He is very active on the bench," Robert Levy, a lawyer at the libertarian Cato Institute, said of Edwards. "If you had to tote up the sides beforehand, you would count him among the three who are more likely to side with the government."
By those calculations, that leaves four judges inclined to take a somewhat free-market view: Ginsburg, A. Raymond Randolph, Stephen Williams and David Sentelle. Williams and Randolph already sided with Microsoft in a related proceeding in 1998.
"I think (Jackson) will be reversed on the major legal issues and this is going to go back to a trial court with new instructions to effectively find in Microsoft's favor," says Levy, a former software executive who clerked on the appeals court. "That's both what I hope will occur and what I think will occur."
Perhaps the most engaging metaphor of the day came from Edwards, who suggested that even if Microsoft has a monopoly, not all actions by a monopolist violate federal antitrust law. In a hypothetical comparison, Edwards likened Microsoft to a somewhat-nutty software monopolist who attempts to put a grocery store out of business.
"They use their connections to destroy the advertising possibilities of this grocery chain.... What's the difference between Netscape and the grocery store?" Edwards asked.
His point: Testimony by Netscape's Jim Barksdale shows that the company didn't want to compete with Microsoft in the "middleware" business, and that an overreaction by Microsoft may not have violated antitrust laws.
Ginsburg offered another good line: The Justice Department's suit is based on a false assumption of consumer stupidity. For instance, can't users choose to buy computers from hardware makers with Netscape pre-installed, if that's what customers really want? Can't Americans figure out the difference between two Web browsers?
"That's putting the burden on those who would say the consumer is too stupid to figure these things out -- in this case, the government," Ginsburg said.
Ginsburg also hinted that the appeals court may forward the case back to a district judge for more proceedings. He told the Justice Department that since the government didn't challenge a certain section of Jackson's ruling, it lost the right to do so if the case were remanded. "This issue will not arise again," Ginsburg said.
One reason the appeals court may take such a step is the out-of-court conduct of Jackson, the trial judge. Microsoft has taken Jackson to task for his tendency to gab with the media about the trial and make unflattering comments about Microsoft executives, a practice that may violate the judicial code of ethics.
On Tuesday at 9:30 a.m. EST, the appeals court will discuss Jackson's conduct, his breakup order and the charges of attempted monopolization. The audio of the proceedings will be webcast on abcnews.com and c-span.org.
