Microsoft has issued its appeal against a federal court injunction banning the bundling of Internet Explorer with Windows 95, warning that it won?t just be the software supplier that suffers if the ruling is not quickly overturned but the US economy as a whole. But the Justice Department has now asked for the supplier to be held in contempt of court.
In papers filed on Tuesday with the US Circuit Court of Appeals for the District of Columbia, Microsoft argued that Judge Thomas Jackson?s ruling last week cast doubt on whether the supplier would be able to proceed with its planned release of Windows 98 with IE bundled as part of the package.
This uncertainty could have serious repercussions on the stock market at large, warned the company. "Indeed, significant segments of the US economy may be affected by doubt surrounding the release of Windows 98," it is claimed in the court papers. "It is no exaggeration to say that the public generally has a significant interest in the prompt disposition of this appeal."
This argument holds no water for the Justice Department, which responded by asking a Federal Court to hold Microsoft in contempt of the earlier order by offering a series of options to OEMS, including a non-IE version of Windows 95 alongside the existing version. The Justice Department accused the company of cynically trying to evade the will of the court.
In documents filed on Wednesday, the Department insists: ``Microsoft's naked attempt to defeat the purpose of the court order and to further its litigation strategy is an affront to the court's authority. Microsoft has cynically acted as if the preliminary injunction permits it to perpetuate the very ... (condition) the court enjoined."
The Justice Department had requested a $1 million a day fine be imposed on the supplier, claiming that it breached a 1995 consent decree forbidding anti-competitive practices which the department said included forcing PC makers to ship IE as part of the operating system. But Judge Jackson passed this aspect of the case over to a legal expert until next May and issued a temporary injunction forbidding Microsoft from forcing PC suppliers to carry IE.
Microsoft contends in its appeal that this decision went beyond the original request made by the Justice Department. It complains formally that it was not given an opportunity by Judge Jackson to present its own evidence on the unbundling issue rather than the alleged violation of the consent decree. "The district court did not give Microsoft notice that it was even considering a preliminary injunction and Microsoft had no reason to anticipate such unorthodox action," it claims. "As a result of this complete lack of notice, Microsoft had no opportunity to argue that a preliminary injunction as wholly inappropriate as a procedural matter."
The injunction when made ?radically altered the status quo? according to Microsoft by forcing it to provide a stripped-down version of Windows 95 without IE, a product which it said earlier this week would be ?substandard? and may not work. The Justice Department filing dismisses this argument, insisting that the uninstall feature in some versions of Windows 95 allows users to deactivate IE without harming anything else. This should be included in all versions of Windows, argues the Department.
It is, alleges the Justice Department, all a ruse to flout the court ruling and carry on regardless with its existing practices. Its complaint alleges: "Microsoft?s options leave OEMs with no options at all and have the practical effect of perpetuating the very conditioning the court enjoined. Microsoft?s transparent attempt to rewrite the injunction to permit precisely what it precludes consitutes a flagrant disregard of this court?s lawful authority and warrants holding Microsoft in civil contempt."
Joel I. Klein, assistant attorney general for antitrust, said: ``Microsoft has gone from tying its products to tying the hands of its vendors. The more Microsoft continues this practice, the more consumers are harmed.''
The Department wants two new restrictions to be placed on Microsoft. The first would require it to offer the most current version of Windows 95 that has the IE icon and other "visible" Internet features removed. The second would force Microsoft to give the Justice Department 30 days notice before the commercial release of any operating system or Internet browsing products, including upgrades to existing products, and to spell out exactly how the products comply with Judge Jackson's order.
Microsoft continues to complain that the court is forcing it to ship a product the poor quality of which will damage the Microsoft brand name. ?Microsoft has never licensed a degraded version of Windows 95 as required by the district court?s preliminary injunction," it argues. "By directing Microsoft to license to computer manufacturers a version of Windows 95 that does not include IE, the district court has forced Microsoft to license an operating system that is plainly deficient and that Microsoft should not be required to have associated with its name."
The supplier?s troubles continued elsewhere with the revelation that representatives of a number of the largest states in the US met last week in Chicago to step up their own plans to take legal action against Microsoft. Present at the meeting were delegates from New York, Texas, Florida and Illinois among others. At least nine states are known to have attended.
The three day meeting was described by a spokeswoman for the Illinois attorney general as "a working group looking into certain anti-trust issues that are related to Microsoft?s bundling of service features with its operating system."
To date, Texas is the only state to have taken action against Microsoft when its attorney general Dan Morales last month sued the supplier over contractual obligations requiring Microsoft licencees to inform the company if they were asked to give evidence to state or federal officials.
Meanwhile Microsoft rival Netscape is using the injunction as a chance to get tough with a PR stunt offering to tell IE users how to disable the browser without damaging Windows 95 functionality, something which Microsoft says is not possible.
Netscape will run what it calls an "Explorer switcher campaign" called "Customer Choice" on its Web site. This will take the form of a button that will make it easy for users to replace IE with The company also hopes to persuade 30,000 other sites to carry the button.
In a further development, Netscape chief executive Jim Barksdale told reporters that he refused to rule out the possibility that the company might give away its browser free to counter Microsoft?s own strategy of doing the same. "We think about giving it away from time to time," he admitted.
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