The decision of the US Court of Appeal in USA-v-Microsoft means that this case will now return before a new judge (similar to a judge of the Irish High Court), where he or she will re-examine elements of the US government's case against the software manufacturer. It is possible that the case will settle.
The re-examination will be quite limited as Microsoft's appeal succeeded on many points and no re-examination will be undertaken in respect of these.
In relation to the competition between Microsoft's Internet Explorer and Netscape Navigator, the court overturned the conclusion that Microsoft had attempted to monopolise the market for Internet browsers.
Similarly, the court overturned the conclusion that Microsoft had illegally bundled Internet Explorer with sales of its Windows Operating System, although this point may be re-examined by the new judge if the US government wishes to argue on fresh grounds. The court did uphold the conclusion that Microsoft had maintained its monopoly of the market for "Intel compatible PC operating systems" by illegal means, but only to a quite limited extent.
Where it had been found that Microsoft had broken the law in certain specific instances, the court was happy to uphold those conclusions.
It therefore agreed that certain of Microsoft's license agreements with original equipment manufacturers were illegal and that Microsoft had acted illegally in its dealings with Internet service providers and Apple Computers. But the court overturned more general findings of illegal conduct. In relation to the Java language, it found that while it was illegal for Microsoft to deceive Java developers and threaten Intel, Microsoft's own use of Java was not illegal.
It also overturned the finding that Microsoft's "course of conduct" was in breach of the law.
It appears to be the decision of the court that while Microsoft did overstep the mark on a number of occasions, its conduct was not illegal in general.
It points out that Microsoft's actions to protect the position of its Windows products would only be illegal if it harmed consumers, harming competitors is not sufficient. This conclusion is significant as the court also overturned the remedies originally imposed, most notably the order that Microsoft was to be broken up.
These remedies were overturned on several grounds: the failure of the trial judge to hear evidence from Microsoft on what form those remedies should take; his failure to provide reasons for those remedies; and the reality that the court had quite "drastically" reduced the instances where Microsoft had been found to be acting illegally.
The remedies will now be reviewed and reassessed by a new judge following fresh hearings. Given that Microsoft has only been found to be acting illegally in certain limited and specific instances, it may be that the new remedies imposed will be similarly limited and specific. However, the court makes it clear that it would not approve of any order to break up Microsoft.
It notes that such a drastic remedy has only been imposed in previous cases where companies had grown by merger and acquisition. Since Microsoft has always been a unified company, it suggests that break-up would encounter significant logistical difficulties.
The most controversial finding of the court may be that Judge Thomas Penfield Jackson, who originally heard the case and decided that Microsoft should be broken up, engaged in "deliberate, repeated, egregious and flagrant" judicial misconduct by talking to reporters about the case.
It decided that remedies imposed by the judge would be overturned as this misconduct had given rise to the appearance of bias. This decision may be viewed as something of an afterthought, given that the court had already listed three separate grounds on which it ordered those same remedies to be overturned. So the remedies imposed by Judge Jackson would have been overturned even if he had never talked to reporters.
In the meantime, questions will remain about the investigation announced by the EU Commission last August into Microsoft's alleged discriminatory policies on licensing and the supply of software information.
Denis Kelleher is a practising barrister and co-author of Information Technology Law in Ireland (Butterworths: Dublin). http://www.ictlaw.com
