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Charles Compton On The Microsoft Appeal
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Charles "Chris" Compton is an attorney for the firm of Wilson Sonsini Goodrich & Rosati in Palo Alto, California, where he specializes in trade regulation and antitrust issues. He also handles many cases involving intellectual property litigation. Compton is the author of "Where Now for Microsoft?" which examines the Microsoft antitrust case. He joined Law Chat by telephone at noon, Wednesday, February 28, 2001. CNN provided a typist for him. Law Chat is produced with Findlay. The following is an edited transcript of the chat.
CNN Host: Thank you for joining us today, Charles Compton.
Charles Compton: I'm very happy to be with you today.
CNN Host: Are the appellate court's criticism of Judge Thomas Penfield Jackson valid, in your opinion?
Charles Compton: Well, I'm afraid they are. The judges were extremely tough on him Tuesday. There seems to be no question that at the very least that Judge Jackson violated the canons of ethics with his extrajudicial comments and interviews, particularly those during the course of the trial.
Unfortunately, whether he was actually biased or not in his rulings, his comments created a public impression of bias, which the appellate judges were rightfully critical of.
CNN Host: Is it unusual for an appellate court to take on a lower court judge?
Charles Compton: Yes, it is. Although this appellate court has done it before. In fact in connection with Microsoft when they took on a decision by Judge Stanley Sporkin, who some years ago rejected a proposed consent decree between the government and Microsoft as being too lenient.
But this case is substantially different and quite unusual since it involves some very extensive and critical comments by the trial judge, both against one of the parties, Microsoft, and even comments critical of the appellate court that is now reviewing his decision. The real question is what effect will this have on the decision by the appellate court.
Question from Chat Room: If Jackson had not spoken in public, would they have been so tough on him?
Charles Compton: Well, if he had not spoken in public there is some possibility no one would have known. But assuming he was found out, I suppose they might have been less critical. But his comments during trial would still have been a violation of the canons of ethics whether made publicly or not.
CNN Host: Do you think the appellate court will overturn Judge Jackson's decision?
Charles Compton: Yes, I think the appellate court will overturn at least some parts of his decision. It seems absolutely clear, for example, that the order breaking Microsoft into two separate companies will not stand.
Furthermore, it is quite likely that the conclusion the judge reached -- that Microsoft had attempted to monopolize the browser market -- will be reversed and sent back for further action by the district court.
It is entirely possible, if not likely, that the "tying" claim will be overturned. And at this point I think the most serious question is whether the appellate court will at least affirm the core of the government's case, which is the charge that Microsoft acted illegally to maintain its monopoly in the PC operating systems market [in violation of Section 2 of the Sherman Antitrust Act]. These are conclusions that many of us would not have reached, I suspect, two days ago before the arguments.
Question from Chat Room: The appellate judges have found other faults with the findings of fact and subsequent ruling of Judge Jackson, is that not so?
Charles Compton: Yes, the appellate court -- in fact two of the current judges were on the earlier panel, Judge Williams and Judge Randolph -- in 1998 reversed Judge Jackson's injunction that had required Microsoft to unbundle the Internet Explorer browser from Windows.
CNN Host: How will the decision in this case affect the average Microsoft user?
Charles Compton: In the short term probably not very much. The case will likely go back for further proceedings by a district court judge other than Thomas Penfield Jackson. And those proceedings could take months. At that time, assuming there has not been a settlement of the case, further appeals could be taken which could stretch out an ultimate decision for several more years. I personally think the most likely scenario is a settlement after this case is sent back to the district court. But Microsoft in any event is unlikely to be required to separate the browser from the operating system, and is very unlikely to ever be divided into multiple companies.
Question from Chat Room: Will there be a fine levied against Microsoft?
Charles Compton: There is no fine involved now. And what could happen with retrial of some of these issues later is anybody's guess. But the government has not sought a fine, and that would not seem to have any particular utility in this case. Obviously any fine would unlikely be material for any company Microsoft's size.
CNN Host: Does this case have the potential to rewrite antitrust laws?
Charles Compton: Yes, it does. In at least a couple of respects. I think most interesting is the question of some clarification of "tying" law as it affects the integration of software features and functions, as exemplified by the alleged tying of the browser to the Windows operating system.
The district court judge here, in finding Microsoft guilty of tying, relied on a 1984 Supreme Court decision called Jefferson Parish, which was not a technological tying case. And which ruled that consumer perception and demand was the correct benchmark for assessing whether two products were separate under a tying analysis.
The court of appeals for the federal circuit here has already articulated a different test, saying that where software or computer functions are integrated, they are immune from antitrust liability if there is any plausible consumer benefit associated with that integration. Resolution of this legal issue could be extremely important in technology industries going forward.
Question from Chat Room: How does the federal case affect the ongoing state cases against Microsoft?
Charles Compton: The ongoing state cases are integrated with the federal case. These are all one case in the federal appeals court. Nineteen states have joined this action brought by the United States government. There are of course many private lawsuits that have been brought separately, and those could be very substantially affected by the appellate court decision here, on some of these key legal issues.
CNN Host: Do you have any final thoughts to share with us?
Charles Compton: I think I have two primary reactions right now.
One -- These two days of arguments have been rather extraordinary, both in their length and also in the level of hostility shown by the appellate judges to the district court's conduct and opinion. Normally appealing parties are given only an hour or so to make their arguments as distinct from the seven hours allotted here. Consequently there was a great deal more latitude for the seven-judge panel to express itself, and they took full advantage of that opportunity. We therefore have a much more clear vision of at least some of the likely results. This case will go back to a different district judge for further proceedings.
My second thought -- How ironic it is that Judge Jackson sowed the seeds of the undoing of significant parts of the government's case. This is a judge who took firm control of the trial and showed remarkable administrative skills in getting an expedited set of hearings and a quick decision, by contrast, for example, to the 10-year odyssey of U.S. v. IBM in the 1970s.
But Judge Jackson then did several things that have really undercut his own decision. First, he made all these temperate and ill-advised comments about Bill Gates and about Microsoft's lawyers, and even about the appellate court.
Second, he rushed to the remedy of breaking up Microsoft without hearings, which was sharply criticized Tuesday and rightfully so.
And thirdly, he even had a number of findings of fact that gave Microsoft considerable assistance in the long run -- for example, his finding that the integration of the browser with Windows did contribute to improving the quality of Web-browsing software, thereby benefiting consumers.
Even Judge Jackson's determination in favor of Microsoft [that its contractual restrictions with other companies did not constitute unlawful "exclusive dealing" under Section 1 of the Sherman Antitrust Act] may have seriously undermined his ultimate decision that Microsoft engaged in monopoly maintenance in violation of Section 2.
The important thing for all of us at the end of the day is to get this case finally resolved by settlement or otherwise, and hopefully get some further guidance about the boundaries for appropriate conduct by a monopolist in technology industries.
CNN Host: Thank you for joining us today.
Charles Compton: Thank you very much for having me. We will all look forward to seeing the end results.