Court of Appeals offers full hearing on Microsoft appeal

WASHINGTON - At its first opportunity, the U.S. Circuit Court of Appeals said Tuesday that a full complement of its judges would hear Microsoft's appeal of a sweeping breakup order imposed for antitrust violations.

But the government may still be able to bypass that court in favor of a direct hearing before the Supreme Court.

In a preliminary victory for the giant software manufacturer, the circuit court acted before U.S. District Judge Thomas Penfield Jackson could hear the government's request to bypass the circuit court and send the case directly to the Supreme Court.

The government and Microsoft are engaged in legal maneuvering to determine whether the company's appeal will go straight to the Supreme Court or first to the circuit court, where Microsoft won a ruling in an earlier phase of the case.

The circuit court said because of the case's ''exceptional importance'' and the disqualification of three of its 10 judges, it would hear the company's appeal with all seven remaining judges. This would skip the normal three-judge hearing, followed by a full court rehearing.

The circuit court acted shortly after Microsoft almost simultaneously filed a notice of appeal with Jackson and a motion with the circuit court to stay Jackson's penalties, even though Jackson was also considering a Microsoft stay motion.

Government attorneys were filing their expediting request with Jackson late Tuesday. They had to wait until Microsoft filed its notice of appeal.

If Jackson approves expediting the case, as he has indicated he is inclined to do, the Supreme Court itself would decide whether it would take the appeal directly from the district court or would have the circuit court hear the appeal first.

The Justice Department called Microsoft's filing in the circuit court as Jackson was considering its stay request ''an ill-conceived attempt to end-run the Expediting Act,'' which allows for antitrust appeals to go directly to the Supreme Court in cases of major national importance.

One legal expert said the company, with the circuit court's help, had gained some advantage in the struggle over which court would hear the appeal.

Rich Gray, an antitrust expert with Outside General Counsel Silicon Valley, a California law firm, said, ''This puts tremendous pressure on the government now to move quickly and get this up for consideration by the Supreme Court.

''With seven judges sitting en banc to hear this, I think the Supreme Court is far less likely to take this case,'' Gray said. ''The Court of Appeals has done its job, stepped up and said, 'We'll handle this quickly and expeditiously.' That makes it easier for the Supreme Court to simply say no and let the Court of Appeals handle it.''

Earlier Tuesday, the government won an initial skirmish on where the appeal would be heard when Jackson, just as the government asked, reserved judgment on Microsoft's motion to stay his antitrust penalties until the company filed notice of appeal.

The government wanted that delay so it could file a request for direct appeal to the Supreme Court, and Jackson could consider both the stay and the direct appeal request together.

The appellate court's decision came after regular trading ended on the Nasdaq Stock Market, where shares of Microsoft finished regular trading at $67.875, up $1. In after-hours trading, shares of Microsoft jumped $2.563 to $70.438.

The company's stay motion in the court of appeals reviewed many of its reasons for arguing that Jackson's ruling against it should be overturned.

The Microsoft stay motion said Jackson made ''an array of serious substantive and procedural errors that infected virtually every aspect'' of the trial and sentencing in the district court.

The company's stay motion said Jackson's breakup order ''imposes harsh and unsustainable burdens on Microsoft, the software industry and the public.''

After finding that the company abused its monopoly over personal computer operating systems to harm consumers and thwart innovation, Jackson ordered the company split into two and imposed restrictions on Microsoft's business conduct while it appeals the dismemberment.

Jackson himself delayed the breakup until the appeals are finished, but his restrictions on Microsoft's business conduct will go into effect in 85 more days unless some court grants the company the stay it seeks.

The government attached its expediting motion as an exhibit to a brief on Monday before the motion could officially be filed. In it, the government said Jackson should send the case directly to the Supreme Court, because ''consumers should not have to wait too long for the benefits of competition to be restored.''

Even if Microsoft were to win on appeal, the public interest would be served because a prompt Supreme Court decision ''would end uncertainty ... facing Microsoft's employees, stockholders and firms in the technology industry and throughout the economy that do business with it,'' the government said.

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On the Net:

Microsoft: http://www.microsoft.com/presspass/trial/default.asp

Justice Department: http://www.usdoj.gov/atr