Microsoft Seeks New Venue in Antitrust Appeal

In a brief filed Wednesday with the U.S. Supreme Court, Microsoft Corp. (Nasdaq: MSFT) urged that its appeal of the antitrust judgment against it be sent back to a lower court. The Redmond, Washington-based software giant prefers that the case be reviewed by the U.S. Court of Appeals for the District of Columbia.

In its “Jurisdictional Statement,” Microsoft argues that the case should initially be reviewed by the lower appellate court because of the number of court errors made during the trial. In June, the trial court ordered Microsoft to break up into two competing companies.

The landmark judgment was based on a finding that Microsoft abused its monopoly power in the operating system market.

After Microsoft filed its appeal, the U.S. Department of Justice (DOJ) asked that the appeal be heard by the Supreme Court. The DOJ relied on a law providing that government-initiated antitrust cases of public importance go directly to the Supreme Court to protect national interests.

Numerous Errors

In its brief, Microsoft argued that the trial “went badly awry from the outset” and said the appeal raises “a morass of procedural and substantive issues that can be resolved only through a lengthy and technologically complex trial record.”

According to Microsoft, “the severity of the remedy imposed and the significance of the case to the nation’s economy make it more important — not less — that these appeals proceed through intermediate appellate review in the normal course.”

Many legal analysts agree that the case is not appropriate for Supreme Court review because the high court does not usually review the factual aspects of a case as developed at trial.

Said Joseph Angland, a partner at the law firm of Dewey Ballantine LLP in New York, “The Supreme Court, in fairness to Microsoft, would have to consider all the relatively minor issues of the case — issues that the Supreme Court would not normally bother with. In a case of this magnitude, at the Court of Appeals level, the litigant would typically raise 15 to 20 issues, and by the time it reached the Supreme Court, there would only be about two. In a direct appeal, the Supreme Court would be Microsoft’s only chance — there would be no other appeal — so they have to raise all of the issues.”

Still, the Supreme Court has the right to review the case if it chooses to take on that task.

Time on Microsoft’s Side

When the trial court ordered the breakup, it put the split on hold pending completion of Microsoft’s appeal. The court also ordered Microsoft to comply with a set of harsh restrictions on its business practices starting in September. The time pressure no longer exists, however, because the court later ruled that the restrictions would not be enforced until after the appeal was completed.

The DOJ has argued that the trial court’s decision to stay the remedies during the appeal process makes direct appeal to the Supreme Court even more important to the national interest.

The government’s brief on which court should hear the appeal is due in mid-August.

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