Microsoft lays constitutional challenge to states' case

Seeks to block bid for antitrust remedy

By Lyle Denniston, Globe Correspondent, Thursday, February 28, 2002

WASHINGTON - Microsoft Corp. unleashed yesterday a wide-ranging constitutional attack on nine states' demands for strict antitrust curbs on the way the software company does business.

Urging a federal judge to put an immediate stop to the states' efforts, the company accused them of "seeking to override decisions about the enforcement of federal law made by officers of the United States."

The company cited a half-dozen provisions of the Constitution in its boldest gesture yet to thwart demands by Massachusetts, eight other states and the District of Columbia for what the company called "Draconian" measures to remedy Microsoft's violation of antitrust law.

Although Microsoft has been arguing since December that the states are not entitled to any share of antitrust remedies for its conduct, before yesterday it had not asked US District Judge Colleen Kollar-Kotelly to dismiss the states' case entirely. The plea came as an 11th-hour request, since the states' case is to go to trial in 12 days.

Iowa's attorney general, Tom Miller, said in a statement that the states "will resist strongly" the request to end their case. "The Microsoft position would undermine lawful, proper and practical enforcement of our country's antitrust laws by the states and perhaps by private parties," he added.

A source close to the states said they will file a formal reply to the dismissal request within the next week.

The states' case is one of two antitrust proceedings going forward in Kollar-Kotelly's court. In the other, the judge is weighing whether to approve a settlement of the Justice Department antitrust case against Microsoft - a settlement that would result in far less restrictive antitrust remedies.

The judge is to hold hearings next week to review the settlement, after she has studied a stack of new paperwork filed in that proceeding yesterday. The Justice Department, Microsoft and nine states that are joining in the settlement filed legal briefs defending the deal. The department also filed its reactions to thousands of negative criticisms of the settlement, filed by Microsoft's business rivals and others.

If the judge does not throw out the other states' sweeping request for more restraints on Microsoft, the company wants it to give them no more than the terms of the settlement deal.

In asking the judge to put an end to the broader demand, Microsoft argued that the Justice Department settlement would do all that is necessary to remedy a court ruling last year that the company illegally attempted to protect its Windows operating system monopoly.

The states that are still suing it, Microsoft said, have suffered no harm to their own interests from the antitrust violation, and the Constitution does not allow them to seek any remedy for harms done to the nation's economy as a whole.

The nine states, it contended, are "requesting remedies for the benefit of Microsoft's competitors that would confiscate Microsoft's intellectual property rights and seriously impede, if not destroy, its ability to compete commercially and through innovation."

Their remedy demand, it added, "would restrict Microsoft's ability to enter into routine commercial arrangements in all 50 states and abroad."

Among the specific constitutional challenges the company made were claims that the states are undermining the power of the president to decide how to carry out antitrust laws, seeking to displace the Justice Department as the principal enforcer of antitrust laws, interfering with Microsoft's ability to operate on a nationwide and a worldwide scale, seeking to impose their ideas for a remedy on the nation as a whole not just within their own borders, and seizing Microsoft's copyrighted computer codes for use by anyone without payment.

The holdout states' case, the company said, "will result in an inevitable collision between the role of the US as enforcer of federal antitrust laws for all American citizens and the much narrower role of the nonsettling states, which is limited to seeking redress for state-specific injury."

This story ran on page C4 of the Boston Globe on Thursday, February 28, 2002.
© Copyright 2002 Globe Newspaper Company.